You may have heard of blockchain.
But as an investor, why should this technology matter to you?
Let us explain by providing a few key examples on how multiple industries, including governments can stand to gain from this promising technology.
1. The cryptocurrency market
Cryptocurrency has been a hot topic in recent years, with digital currencies such as bitcoin, litecoin and ethereum gaining massive popularity.
Following the recent bullish run of bitcoin to US$61,243 in March this year, many have hopped on the bandwagon to grab a piece of the crypto pie.
Just last year, DBS Group (SGX: D05) also recognised the trend of tokenisation and the usage of digital assets.
It has since utilised blockchain technology to launch its full digital exchange.
Should you then invest in cryptocurrency?
As a Smart Investor, proper research is needed before deciding to put your money into any asset.
Hence, it is important to consider investing in cryptocurrency in the same way as you would invest in stocks.
2. Blockchain-as-a-Service (BaaS)
Blockchain-as-a-service is a similar concept to software-as-a-Service (SaaS) where customers leverage cloud-based platforms for solutions and services.
BaaS is a cloud-based infrastructure that allows customers to build, host and operate functions related to blockchain as well as blockchain applications.
Some major companies in the BaaS space include : Microsoft (NASDAQ: MSFT)，Amazon (NASDAQ: AMZN) and Alibaba Group Holding Ltd (SEHK: 9988).
For instance, Amazon Web Services (AWS) launched Amazon Managed Blockchain, a fully managed service that simplifies the creation and management of blockchain networks.
BaaS could potentially open doors for many more technological companies to value-add to their current operations or even spin off new BaaS-centric companies.
3. Development of Project Ubin
Project Ubin is a collaborative project between the Monetary Authority of Singapore (MAS), J.P. Morgan (NYSE: JPM) and Temasek experimenting with blockchain and DLT.
This project has explored and confirmed the possibility of cross-border payments, digital currencies and asset tokenisation.
Currently past its final phase, this prototype has shown the prospects for future blockchain related collaboration in Singapore.
Capital markets stand to gain from the venture by offering more efficient services that serve the same function of exchanges and Over-The-Counter (OTC) markets.
The technology does so through the targeting of financial assets and investors who are currently underserved.
This shows how the government is actively seeking solutions in the blockchain space and is moving a step nearer to commercialising the above functions.
4. Implementation of Smart contracts
Smart contracts are pieces of code programmed onto a blockchain that defines the terms of a particular transaction.
Similar to a written contract, smart contracts are verifiable and entail an agreement.
This digitised contract will only be executed if a certain condition is fulfilled.
The insurance industry is a prime example where policy terms are encoded into the smart contract.
In the event of critical illnesses or accidents, medical tests are provided as input to the system.
The input triggers the smart contract to automatically release payment to the policy holder.
Even in the education sector, smart contracts have been implemented to verify and issue certifications.
Ngee Ann Polytechnic is one of the 18 institutions benefitting from OpenCerts, a blockchain platform.
Smart contracts are essential for many businesses that are implementing blockchain.
The use of smart contracts could be a differentiating factor when looking for companies that are harnessing or exploring blockchain technology.
Get Smart ：A paradigm shift
Blockchain has the potential to overhaul many antiquated and laborious processes in various industries.
This technology also represents a paradigm shift for numerous businesses as it opens up a new way for them to transact securely and quickly.
The range of investment opportunities has widened considerably as blockchain heralds a new age of efficiency and higher productivity.
Although blockchain is still a nascent technology, it holds vast potential for a multitude of businesses and is a trend that investors should not miss out on.
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Disclosure: Jia Yi does not own shares in any of the companies mentioned.
