Blockchain Technology: High-Profile Use Cases in the News and Other Alternative Use Cases | Polsinelli

News headlines for cryptocurrencies and non-fungible tokens (NFTs) currently focus on market crashes (sometimes framed as a crypto winter or crypto extinction), fraud and the collapse of various crypto exchange platforms – or the “wealth” created or lost through cryptocurrencies. and NFTs. Earlier, in 2021 and the first half of 2022, headlines were focused on the meteoric rise in value of cryptocurrencies, digital art marketed as NFTs, and platforms and exchanges facilitating these transactions using blockchain technology. Looking ahead to 2023 and beyond, additional legislation and regulation, along with enforcement of existing laws and regulations, are inevitable in relation to these financial, investment and otherwise speculative use cases related to cryptocurrencies, NFTs and blockchain technology.

However, the underlying blockchain technology can be (and is) used for less headline and more mundane, pragmatic and less speculative purposes, and these use cases should not be confused with the use cases commonly seen in headlines.

What the future holds for cryptocurrencies, NFTs and other similar uses of blockchain technology is hotly debated, and many people have strong feelings about these developments – especially about the value of new currencies, NFTs and the like. However, regardless of one’s feelings and beliefs in this regard, we believe that everyone should be aware that the legal and business risks vary greatly depending on the use case of the blockchain technology. At its core, blockchain technology is about securely recording and tracking transactions via a ledger that can then be used for many non-speculative purposes unrelated to cryptocurrencies or digital asset speculation, several of which are discussed below.

Alternative blockchain uses

1. Confirmation of personal information. The ability to both secure and self-authenticate information makes blockchain technology a promising tool to help authenticate and validate who should have access to personal information, including in relation to finances, healthcare, travel and other data.
2. Welfare and state distributions. With access to self-authentication, secure personal information using blockchain technology, public distributions can be made more reliable and efficient. Eligible recipients can be verified and accessed more easily, while ineligible applicants can be more easily identified.
3. Health information. Medical records could be accessed, with sensitive information held more securely, through blockchain technology used to authenticate a person’s identity. Insurance coverage can be more easily verified, administrative costs and delays can be reduced, and treatment can then be provided faster and more cost-effectively.
4. Media royalties. Blockchain technology can be used to authenticate who has rights related to music and video downloads. In addition to reducing piracy and unauthorized copying, views and plays can be logged more accurately. In addition, “smart contracts”, typically associated with crypto and NFT transactions, can facilitate automatic royalty payments.
5. Supply chain and logistics. By tracking shipments on a distributed ledger, multiple parties along a supply chain can access real-time and historical information about each shipment. Because blockchain technology can trace the chain of ownership and transactions, the presence of counterfeit goods can be more easily identified and reduced.
6. Loans and insurance administration. The use of blockchain authentication and associated smart contracts in lending and insurance can improve efficiency in various administrative and processing activities, including insurance documentation and coverage, liens and collateral.

Legal principles to consider

Blockchain is an exciting, promising and relatively secure technology, but like most technologies, its use cases and how people use (or abuse) it must be considered when entering into transactions, contracts or relationships involving the blockchain. Nothing is completely safe or secure, nor is it free from the human element at some level – including error, omission or abuse. For example, people may lose passwords or other credentials or new technologies may emerge, which may increase the potential for hacking and circumvention of the encryption mechanisms underlying the blockchain.

Time-tested and fundamental business, legal, and contractual principles should be kept in mind when considering the use of blockchain technology, including (1) counterparty and other due diligence and analysis, (2) legal and regulatory compliance analysis, and (3) robust and well-thought-out contractual provisions and protections based on the nature of the use case and application, including the allocation of risk (whether known or unknown).

If you are a supplier providing products or services that incorporate blockchain technology, reasonable and appropriate disclaimers about the technology and associated human elements should be included in your contracts. Conversely, if you are a customer or consumer purchasing products or services using blockchain technology, be realistic and cautious about the potential benefits and ensure that there are appropriate controls, safeguards, remedies and means that can be realistically enforced.

Conclusion

Just because cryptocurrencies and NFTs, which use blockchain technology, have been in the news and grabbed alarming headlines about potential fraud and massive financial gains or losses, there are still other use cases and applications of blockchain technology that, while perhaps less glamorous or newsworthy , could potentially become more profound and useful in everyday life in the future.