Despite the bear market, enterprise blockchain has nothing to fear

With the loss of confidence from a number of established crypto-lending and financing platforms rendered insolvent by ailing financial markets and large overhyped positions, fears of a widespread contagion affecting associated protocols and businesses have grown.

Amid significant layoffs and difficult financial markets, the overall sentiment and outlook for crypto remains bleak, but the underlying blockchain technology remains unaffected – as its main potential has never been solely for speculative wealth generation, but to drive utility and innovation to solve real-world problems and issues.

There is the ongoing narrative that NFTs (non-fungible tokens) and cryptocurrency will be untethered from traditional finance and serve as a hedge against problems like inflation, but only time will tell if that is wishful thinking or more than a dream.

One thing is certain – practical applications of blockchain exist far beyond these hopes, and bear markets are the perfect time to push aside distractions to focus on grounded utility and use cases.

This is the moment for users, developers and regulators around the world to strengthen the meaningful impact of technological innovations, for they will serve as a solid foundation and become more pronounced when the haze of get-rich-quick euphoria subsides.

Wisdom in caution

Within the Asia-Pacific region, we are witnessing countries such as China, which took a strict approach to speculative assets against the hype around NFTs, especially when the markets were booming. This conservative approach is starting to seem wise as the value of seemingly innocuous digital images and encapsulations of meme culture declines with the health of financial markets.

While China is not bullish on cryptocurrency, it is on blockchain technology, introducing its own digital central bank currency, e-CNY, and developing a state-backed Blockchain-based Service Network (BSN). The latest development has seen the announcement of the Spartan network, which aims to be the new international network for non-cryptocurrency public chains.

It may come as a surprise to some, but blockchain has long been used as evidence in legal proceedings in China since 2017 and continues to steadily gain traction, especially with blockchain being a strong focus of the Chinese government’s five-year plan from 2021 to 2025 .

There is a rationale behind the seemingly conflicting approaches that governments and regulators are taking to embrace blockchain, but not speculative wealth generation, as they recognize an important fundamental benefit of the technology.

Security, transparency and immutability in law

So where do we see real use cases of blockchain technology being integrated into our existing society beyond the hype? One of the most promising use cases for enterprise blockchain is not just in unique JPEGs, but to prove ownership and chain of custody in the legal space.

More countries will benefit from taking a page out of China’s book to embrace blockchain technology to aid the courts, as it will improve the accessibility, affordability and security of legal proceedings. Printing documents is often considered far more secure than transferring legal assets and materials online, but tokenization is changing this. As the technology makes all assets, including digital claims, certificates or proof of ownership, available on the blockchain, this offers rights in a more convenient, yet secure and validable way without intermediaries.

Lawyers, notaries public and parties looking to make legal claims can all benefit as obtaining evidence, establishing proof of ownership or copyright time frame, intellectual property claims and more becomes a much simpler and transparent process.

Legal fees can also be prohibitively expensive for parties seeking to defend their innocence or ownership of assets, so reducing the need for intermediaries and lengthy processes makes the litigation process more accessible.

With growing economic problems and weakened markets, technology that makes important processes like litigation less expensive will prove increasingly valuable.

It would not be far to see a future where notarization or proof-by-blockchain becomes commonplace, but the technology providers and builders must work closely with governments and regulatory bodies to develop reliable and secure infrastructure to ensure the legitimacy of proof is not compromised.

Advantages of fractional ownership

Places like Hong Kong are notorious for being one of the most expensive for housing, and rising inflation is further exacerbating cost-of-living issues. Because of these factors, real estate is often categorized as an investment option only for the wealthy, as it usually has high capital requirements and can take a long time to liquidate.

The traditional registration, documentation and communication requirements make owning property an even more expensive and lengthy process. Tokenization can drastically accelerate all of this as it allows proof of ownership to become available and tradable on the blockchain.

Timestamps for transfers of ownership also provide immutable records, removing the need for real estate agents and middlemen, making the process less expensive.

For the less affluent and in places where house prices are increasingly out of reach, ambitious homeowners can also choose to buy into part of a property represented by the digital symbols and increase their holdings over time with shared ownership rather than having to buy the whole property at a time.

Apart from this, income from cash-positive property can also be tokenized, allowing owners to have a share of the profits from rentals or growth in property value.

Need to reduce bureaucracy

While there is huge potential for blockchain to make real estate much more accessible, affordable and fluid, many hurdles must be overcome before it can scale to an industry level.

Currently, countries, regions and jurisdictions either consider tokens as insufficient legal basis for ownership or are too strict in regulating them as securities. These extremes either raise security concerns or limit the use of blockchain and tokenization in real estate by making it inaccessible due to bureaucracy or too expensive to be feasible due to taxation.

While creative compliance solutions such as Non Fungible Assets (NFAs) are being developed, more education to address the lack of basic understanding of blockchain needs to be done – initiatives by governments and authorities to support the use of blockchain in real estate will also further strengthen such efforts.

Conservative and strategic nations such as Singapore are already trying to experiment with blockchain to solve problems of illiquid assets and fractionalization through Project Guardian, and it would not be surprising to see others in the APAC region follow in these footsteps.

While many in the crypto community may oppose the idea, some form of centralization and regulation will help minimize potential misuse of blockchain technology and improve its scalability, efficiency and adoption, allowing meaningful use cases to grow reliably and steadily over time.

Many other applications of blockchain can also help solve real-world problems and issues, but real estate and law are two key sectors that will benefit from its availability and affordability amid the growing global economic woes.

However, for its full potential and benefits to be realized, blockchain vendors and regulators must stop seeing themselves as adversaries, but as partners and educators to correct misconceptions and improve understanding of the underlying technology.