Tech
Why embracing Blockchain technology is essential to staying ahead
Navigating the complexities of the cryptocurrency market and seizing the opportunities requires a blend of innovation, ethical practices and a deep understanding of distributed ledger technology (DLT).
As blockchain technology reshapes the traditional financial sector and paves the way for the expansion of decentralized finance (DeFi), staying informed and adaptable is the key to success. Therefore, the transformative potential of DLT highlights the impact on financial inclusion, payments efficiency and the broader economic ecosystem.
The move to tokenization
Hedera President Charles Adkins told BeInCrypto that blockchain technology has emerged as a critical force in transforming transactions, lending and investing. He attributed the success to the inherent capabilities that allow simultaneous access, validation and updating of records.
This innovation is particularly impactful in cross-border paymentstrade financing and end-to-end payment transfers.
It allows banking institutions to conduct near-atomic international deals with reduced manual intervention and lower costs. Indeed, such advances improve the efficiency of payment models and extend financial services to previously unbanked populations, driving greater financial inclusion.
“Blockchain technology aims to enable individual collaboration and enable companies to play a role in determining the future of technological innovation. DLT, for example, has created new levels of trust that allow individuals, businesses and governments to generate collective social impact without the risk of bad actors gaining influence,” Adkins said.
To know more: Blockchain Infrastructure Deployment: Challenges and Solutions
Distributed ledger technology in trading. Source: Greenwich Coalition
DLT is at the forefront of financial innovations such as fractional tokenization, promising to democratize access to wealth opportunities. For example, a recent one study conducted by the Greenwich Coalition revealed that stakeholders in the derivatives industry prioritize the adoption of tokenization. It helps improve collateral management with respect to implementing generative artificial intelligence (AI).
In fact, for end users, tokenization has emerged as the most significant potential innovation in trading and clearing workflows.
“Many large asset managers are working on projects to test its potential for use [tokenization] to move cash and securities more efficiently. From their perspective, turning financial assets into tokens and using distributed ledgers to manage transfers could lead to a substantial reduction in time and costs,” wrote the Coalition Greenwich analyst.
For this reason, Adkins imagines a future in which DeFi and traditional financial technologies converge, improving the financial system for institutions and individuals.
Blockchain beyond financial markets
The potential of DLT extends beyond financial markets to address pressing issues such as climate change and greenwashing. By enabling accurate tracking and reporting of carbon emissions, DLT enables organizations to optimize their processes, align with environmental standards and offer transparency to consumers and policymakers.
However, building trust and understanding between developers, politicians and the public is key to achieving this. Commitment to education, cryptocurrency advocacy, and collaboration across Web3 projects exemplify efforts to ensure safety and transparency in the public and private sectors.
“DLT plays a critical role in preventing greenwashing attempts by organizations, an issue that has become increasingly relevant due to difficulties in verifying whether companies are adhering to sustainability goals. Because the data is publicly available on the distributed ledger, organizations cannot falsify their carbon footprint or make unsupported claims about their sustainability efforts,” Adkins emphasized.
A notable project, as discussed in a study from the University of Copenhagen, involves the use of blockchain technology create a detailed and transparent register of companies’ carbon footprints. This project, called REALISTIC, allows for the precise documentation of CO2 emissions from goods during manufacturing and supply chain processes.
Implementing such technology helps companies comply new EU legislation which requires reporting of carbon footprints. It also paves the way for consumers to check the environmental impact of their purchases through QR codes.
“[With a pen, for instance] we don’t know the carbon equivalent association of each of its parts… So when you’re trying to source the various parts of the pen, you’ll know exactly how to weigh which part comes from where and understand the carbon impact [footprint]”said Deb Kaplan, Chief Revenue Officer of SAP Sustainability.
To know more: The 9 best eco-friendly cryptocurrencies to invest in
https://www.youtube.com/watch?v=ywEN0pQZnjE
The Climate Ledger Initiative (CLI) is another key player. It focuses on integrating digital innovations such as blockchain, Internet of Things (IoT) and artificial intelligence for climate change mitigation and adaptation. The CLI supports various use cases and provides a platform to test digital innovations in real-life scenarios. Therefore, it highlights the role of DLT in scaling carbon markets and improving their environmental integrity.
Adkins believes that integrating DLT with Artificial intelligence is ready to tackle misinformation and data integrity challenges. As blockchain technology matures, it anticipates mainstream adoption, unlocking social and economic benefits, especially in wealth management and beyond.
“DLT will enable developers to address challenges with low-quality, biased and unverified data by providing data sharing infrastructures open to all researchers and developers and ensuring transparency at every point of the AI data input process” , Adkins concluded.
Staying at the forefront of markets requires an ongoing commitment to innovation, ethical governance and community involvement. By embracing the principles of DLT, individuals and institutions can ensure trust and integrity in the digital age.
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