Ryan Worsley, CTO at iov42
The rise of crypto and non-fungible tokens (NFTs) over the last few years has dominated headlines and popular culture. Stories like Tesla’s sale of 75% of its holdings in Bitcoin, helped to fuel a lack of confidence in crypto and uncertainty as to whether it is the future or a fad.
Amongst these discussions, the relationship between crypto, blockchain and Distributed Ledger Technology (DLT) has become increasingly murky. Most discussions about the potential of blockchain (an application of DLT) stop as far as cryptocurrencies and the ability for artists and creators to monetise their work. However, the capabilities of blockchain, and DLT as a whole, go way beyond that.This lack of awareness about the possibilities of this technology is what has prevented many industries from taking advantage of its innovative solutions to real-world challenges.
As the industrial world continues to develop, our focus on technological advancements is increasing. This digitisation has made it even more important for businesses to invest in solutions like DLT that can help build bonds of trust in their processes and partnerships through increased traceability.
DLT has the potential to combat challenges across multiple industries including the supply chain, music, finance and tech industry – whether that is to combat illegal deforestation, help to end child labour in battery metal mining or to support businesses with complying with incoming regulations. In all of these areas, DLT manages to offer safer, more efficient and cost-effective ways for businesses to run in a digital world.
So, what are some of the use cases of these innovative and lesser-known uses of DLT?
Increasing traceability in the Timber supply chain
Supply chains are under the microscope more than ever, as their role in helping to reach ESG targets has become more of a focus following the 2021 United Nations Climate Change Conference, COP26. As such, businesses are searching for solutions that can help prevent corruption and delays.
Natural commodities as a whole often fall prey to illegal activity, with The World Bank estimating that around 15-30% of the industry’s timber is harvested and exported illegally. This has huge knock-on effects for biodiversity, environmental issues and the violation of human rights.
DLT can aid in securing sustainable supply networks, as it utilises data to uphold stronger systems of accountability. This is done through the optimisation of how products are audited and verified, with the digital ledger of information able to allow importers of timber to carry out the checks they need to confirm that products haven’t been sourced through illegal activity. This technology has benefits for a number of industries from beauty to food, as not just incoming regulation, but increased consumer demand is adding pressure for companies to provide information on how they source ingredients like palm oil, rubber and cacao, to name a few.
Making the music industry fairer
The music industry has become more digitalised than ever before with the rise of streaming services, creating both complications and solutions for creators and contributors wanting due credit and ownership for their work. The number of people in the UK listening to music through music streaming services has risen from 16% in 2015, to 23% in 2017 and to 45% in 2021.
Digitalisation has created constant challenges, with numerous stories about artists having to fight for rights and royalties due to a lack of a thorough, global database of rights.
Current systems that aim to combat this issue are usually complex and costly for artists. Since much of intellectual property management is still paper based, the actions required to log, prove and dispute ownership of assets is resource intensive, leaving smaller artists and businesses more vulnerable.
DLT can change the game completely, by bringing efficiency and trust to an often chaotic and inefficient industry. Using this technology to take on an identity-centric approach can help to create transparency and accountability for rights creation, transfer and use.
Fighting financial crime with visibility
With recent changes to anti-money laundering (AML) regulations, AML systems remain top of mind for businesses. Companies often struggle in today’s financial world as it has shifted to the online realm, especially as money launderers have continued to develop more sophisticated tactics, such as money mulling, smurfing and round tripping.
Software that takes advantage of DLT in unique AML solutions can bring greater visibility to global financial markets, helping to both prevent the laundering of money whilst also safeguarding personal privacy and confidentiality.
Ensuring that product authenticity is a must, not a luxury
Cheap counterfeit products are increasingly difficult to distinguish from well-known luxury brands, with the UK government reporting that the annual loss to the economy through counterfeiting and piracy is already at £9 billion – causing 80,500 job losses each year.
These inauthentic goods are costly and also erode buyer trust. One essential way to combat this industry – accounting for 3.3% world trade – is the introduction of DLT tools like product tagging technology to create a reliable system of customer-friendly and tamper-resistant certificates that can provide proof of a product’s authenticity. This can help to introduce a new level of protection for brands and their consumers, especially if endorsed by industry leaders.
Promoting software security with traceability
One of DLT’s biggest areas of potential is its ability to promote software security. The advancement of software has become an integral part of so many changing industries – from financial trading to driverless vehicles. Digital transformation is top of mind for most businesses in their strategy for the future.
The value of software in our daily lives is what makes its risks so difficult to fully protect against, as human error and hacking pose such a huge threat to individuals and businesses. That is what makes security such an important component of what DLT can achieve, with its ability to make sure that software is secure, reliable and auditable.
The opportunities for DLT to change the way we live are limitless, with each application altering how we think and feel about technology for good. In today’s digital world, transparency, trust and authenticity are essential values for businesses to integrate into their approach to technology. Paving the way for a more sustainable, ethical and secure future will take an active effort from businesses, governments and societies to invest in the right technology – and DLT is a big part of that.