The top-five enterprise blockchain priorities for 2022
Over the past five years, smart contracts and enterprise blockchain have gone from being just an exciting technology with potential, to a technology that has started to provide immense value to enterprises. 2021 was an exciting year for users of both, during which we saw several announcements from corporations, governments, and investors taking tangible steps towards adoption of these technologies. What was even more exciting was the resurgence of decentralized public blockchain applications such as NFTs and DeFi.
The benefits of smart contracts and blockchain grow increasingly tangible, and rapid innovation is driving users to find solutions to the most commonly cited objections of privacy and performance.
In 2022, the biggest trends in enterprise blockchain appear to be stemming from the realization that new capabilities and innovation in customer engagement, product design, business models, and enterprise technology architecture must be considered from the perspective of how they will play with emerging trends in public blockchain technology. If not, the risk of being left behind is too great.
Based on the evidence we saw in 2021, let’s look at five key trends to watch for in 2022. We must acknowledge that there is so much going on in this dynamic space, this list is by no means exhaustive. In addition, these projects should not be construed as strategic advice, so be sure to do your own research before making any investments or business decisions.
1. NFTs for customer engagement & marketing
NFTs (non-fungible tokens) are an ownership record of a digital or physical asset on the blockchain. Being on the blockchain means that ownership is now publicly verifiable. For example, Twitter is planning a service in which they will certify that a user owns an NFT if that user has it as their profile picture. The underlying asset could be entirely digital (e.g., a digital art, or an ebook), or something physical (e.g., an oil painting). Just like any premier product, NFTs are best created for items that are in limited quantities and are of an exclusive nature, so as to enhance their attractiveness to buyers. The most popular trends so far include “limited-edition” products, such as the exclusive wine in finely crafted bottles available for collectors in limited numbers, heritage NFTs launched by Budweiser, and digital art that helped Beeple raise money for charity. There are many innovations cropping up, such as NFT galleries where new NFTs are showcased, communities, and marketplaces.
So far, much of the corporate focus around NFTs has been on brand marketing. As we move to 2022, we predict that NFTs will be used to enhance customer engagement and boost retention. To do so, NFTs will move from being just limited-edition, exclusive items that are owned, to providing access to associated services and new experiences. They will likely be integrated tightly with business processes running on enterprise blockchain. NFTs become even more powerful when issuers can pack rights and obligations within the NFT. For example, VeeFriends are NFTs issued by Gary Vaynerchuck with built in benefits, just like a digital pass.
This programming around NFTs makes them exciting for true, long-term customer engagement, rather than only brand value. Since Daml, a blockchain programming language, is a language of rights and obligations, these contracts can be quickly created in Daml.
Below is an example of what such a programmable NFT on enterprise blockchain might look like. A band can issue NFTs that give owners the rights to attend a certain number of concerts. Benefits can be redeemed, and also added as time goes on.
If you are looking for a blockchain programming language to create powerful tokens and truly engage customers with immersive and engaging experiences, get started on Daml with our free video course. Critically, Daml also allows users to integrate important processes, including compliance and customer engagement.
Moreover, users of Daml are not limited to a specific blockchain. Daml blockchain programming language applications will be portable across blockchains.
2. Metaverse: Integration of the physical and virtual worlds
If you read about the metaverse, it can begin to feel like science fiction. Just like in iconic movies like The Matrix, actions in the virtual world have ramifications in the physical world, and vice versa. While we’re not there just yet, we are heading in that direction. We will soon see several important, related enterprise blockchain applications in 2022. With Facebook and Square both having adopted new blockchain-themed identities, where their next innovations will come from is a topic of debate.
In 2021, we began to see renewed interest in virtual worlds, such as Decentraland. It’s already easy to buy a piece of land in the virtual world; you can then construct properties where you can buy, sell, and rent goods of various kinds. A simple way to think about it is that the video games you have been playing can now start offering you a way to be a part of the game itself — Nike, for example, has already created their own world on Roblox. On the other hand, projects such as Gods Unchained are taking a different route by giving you ownership of the assets you buy in a game.
In 2022, we believe that businesses will look at enhancing their appeal by offering integrations with the virtual world. Some common applications we could see are smart homes, tourism, and shopping malls. For example, someone could buy something in the metaverse and it could then be shipped to them in the physical world. It is not far-fetched to think that completely new experiences will be offered to maximize commerce and customer experience.
However, there are some basic enablers that will need to be put in place: The ability to maintain private identities, the privacy of avatar actions, and the ability to make and receive payments, among others. That’s where Daml can come in, with it’s privacy-first design and bundled rights and obligations that model real world contracts, and can bridge permissioned distributed ledger technology (DLT) blockchain and public blockchains.
Below is an example showing a retailer and manufacturer participating in the metaverse and transacting offline over an enterprise blockchain. The manufacturer will not be able to see the StockedItem contract, even though they both can see their supply contract and the shipment. This is just one example of how Daml controls sub-transaction privacy and is an ideal blockchain programming language.
3. B2B collaboration: Supply chain, healthcare, & finance
2021 saw the launch of multiple large-scale enterprise projects with smart contracts and enterprise blockchain. For example, the Australian Securities Exchange went live, Deutsche Börse announced a new post-trade platform, and Xpansiv is scaling their platform for ESG commodities.
In 2022, we will likely see this trend of enterprise blockchain applications accelerating. To meet emerging business demands, it is critical to bridge data islands and harmonize business processes across enterprise boundaries.
Enterprises are able to finally connect external collaboration with internal business processes. Blockchain programming languages should provide a way to rapidly develop applications and should be able to run cross-platform — on databases as well as across multiple blockchains. This dramatically reduces data reconciliation needs and improves privacy. For example, medical insurance claims should be able to achieve straight-through processing and rigorous privacy without the need for data duplication, as the workflow executes from the customer through to the provider, to the insurer, and back. At all times, all parties should be able to see only what they are supposed to see, and nothing else. The same is true of financial transactions, inventory management in supply chain, and other use cases.
Daml is an ideal smart contracts and blockchain programming language. Explore this healthcare claims use case example, and this example on how an end-to-end supply chain process can be modeled.
4. Tokenization for business processes
This considerably less glamorous aspect of tokenization on the blockchain is set to gain more traction in 2022. Goldman Sachs announced its tokenization program to reduce counterparty risks, improve settlement efficiencies, reduce reconciliation, and improve overall liquidity.
What makes these and other initiatives interesting and noteworthy for 2022 is the adoption of smart contracts and enterprise blockchain by different financial market operators, such as the Hong Kong Exchange (the world’s largest exchange), the Australian Securities Exchanges (ASX), Deutsche Börse in Europe, and Bursa Malaysia (see the previous section for links to some of these programs). These ecosystems will be used to launch additional projects that aim to solve problems across multiple areas. For example, the building assurance project by KPMG and the compliance solution for securities by DigitalX have been launched using the platform that the ASX has set up in Australia.
Other areas of interest in 2022 are likely to be in the areas of tokenization in supply chain to tackle fraud and counterfeiting, used luxury goods marketplaces, and resiliency of healthcare supply chains.
These significant programs in enterprise blockchain will enable any asset to become a token on the blockchain. Interoperability between networks will be important. With Daml, you can easily begin your tokenization projects. Daml also allows users to deploy across multiple blockchains and bridge public and private boundaries. Watch this short tokenization masterclass to review.
Finally, read this blog by Bernhard Elsner on why privacy and protections are paramount for this trend to be adopted mainstream.
5. DeFi coming of age
DeFi, or decentralized finance, is on a rapid upswing, with significant value now locked up across several different protocols. Indeed, several new platforms (in addition to Ethereum) are emerging to provide extremely fast and cheap transactions.
In 2022, we will continue to see the rise of DeFi, but we will also see mitigation strategies for risks that participants encounter. The SEC is clearly aiming for more compliance than enforcement, and it has identified transparency and pseudonymity as two of the biggest challenges to solve. We are also seeing DAOs emerging as governance mechanisms. DAOs may also open up the way for regulators to be part of the disclosure and transparency solutions that are put in place. Enterprise and DLT blockchain can likely be the vehicles for that collaboration.
As this space matures further, and adoption becomes more widespread, governance will likely start becoming an important consideration. Further, as the organizational complexity increases, business-process workflows will have to transcend both permissioned and permissionless ledger boundaries. They must also be able to support transaction privacy beyond the pseudonymity provided by public blockchains. Daml, with its multi-party rights and obligations structure, is well-poised to be used as the language of choice as new ledger integrations are built out.
Here’s a simple delegation contract being implemented in Daml. Such contract structures will be crucial as DeFi enables more complex workflows on both public and enterprise blockchains. Daml also makes controlled disclosures easy by using the authorized parties principle — comprised of signatories, controllers and, observers. Daml is ideal for these use cases because it is a fully portable (run on multiple ledgers), smart contracts, and blockchain programming language.
Include enterprise blockchain in your strategy
These five enterprise blockchain trends for 2022 are rapidly taking off. It’s important to note that these trends are also interconnected. Particularly when it comes to enterprise technology, it will be important to look beyond the buzz. Enterprise architecture roadmaps would do well to include a review of how enterprise blockchain technology will interlink with the innovations on the public blockchain. As ecosystems expand, interoperability needs will begin to strongly exert themselves in order to meet evolving customer expectations. Read this post by CEO Yuval Rooz explaining how the presence of data and process islands is a pervasive problem. Much like how the cloud has done, the only way to meet the emerging trends head on will be to bridge internal and external business processes and not be locked into underlying ledger technology. The benefits of blockchain and smart contracts technology are just too great to ignore for future business and tech innovation.
About the Author:
Manish helps leaders in technology products and services develop actionable playbooks that generate predictable sales pipelines and improve brand perception. In his own words "I'm a Daml advocate because it works across platforms and can realize the vision of a connected world." He has written 2 books on customer engagement. To learn more about his approach to creating a growth playbook, visit https://www.manishgrover.com/