Blockchain, the digital ledger system which underpins cryptocurrencies such as Bitcoin, is branching out into new business applications and could prove as important an innovation as the development of the Internet itself, according to Jonathan Piskorowski, lead portfolio manager of the BNY Mellon Blockchain Innovation strategy.
Opportunity in the Metaverse
From a technological innovation standpoint, much has been made in recent months of the potential for the Metaverse – a virtual space where people can, in theory, work, play and socialize. This could also create new opportunities for Blockchain and its investors.
“The coming Metaverse could hold the potential for brands to monetize themselves in new ways. Whichever way this is used we believe some exciting innovation lies ahead and that Blockchain could bring some profound changes in the way we do business and the future of our technological development,” according to Newton research analysts.
Security drives demand
At a wider level, Piskorowski believes consumers have become increasingly wary of centralized financial and digital intermediaries which can control and use their data – particularly following the fall-out of the global financial crisis (GFC) where centralized banking systems were seen as a significant part of the problem.
While cryptocurrencies have themselves come under scrutiny in recent months, cybersecurity and the rise of ever more sophisticated hackers, he adds, have also driven demand for more secure decentralized financial systems.
“Coming out of the GFC people lost faith in centralized intermediaries they trusted with their money and this led to the rise of both Bitcoin and Blockchain. Access to financial products and services for underbanked populations remains a global issue that can be improved by regulated decentralized solutions that democratize finance for consumers.”
“Computer hackers constantly evolve and can find new ways to penetrate supposedly impenetrable firewalls. If you decentralize the information they are seeking to access, it makes it much harder for hackers to attack it as the data is not stored in a single place,” he says.
Increasingly Blockchain is being used in the transfer of goods, service, and data well beyond the financial services industry. Piskorowski sees opportunities for the application of Blockchain in sectors as diverse as healthcare, shipping, real estate, and supply chain management.
Commenting on its effectiveness and application, he adds: “Blockchain technology can provide all the aspects a business or organization could need for a decentralized ledger. Any centralized business function which involves multiple independent parties that are reluctant or unable to share information can benefit from the transparency, efficiency and asymmetric data sharing embedded in Blockchain-based solutions.
“In the area of healthcare records, for instance, you may have many different entities that all have to wait in line to go through a central intermediary to register information. Blockchain can allow these entities to execute their process in real time instead of waiting in line for their turn. This can help to eliminate friction and improve overall efficiency and patient outcomes.”
From an investment standpoint, Piskorowski says forecasts suggest Blockchain could account for a total addressable market of US $37.5 trillion by 2030i, covering a wide range of business sectors and applications, with the tokenization of assets just one area ripe for growth.
“You would be hard pressed to think of an industry that hadn’t been, in some way, transformed by the Internet and we believe this will prove the same for Blockchain over time,” he adds.
i COSIMOS Venture as of January 1, 2021.
All investments involve some level of risk, including loss of principal. Certain investments have specific or unique risks that should be considered along with the objectives, fees, and expenses before investing.
BNY Mellon Investment Management is one of the world’s leading investment management organizations, encompassing BNY Mellon’s affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally.
This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances.
Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others.
“Newton” and/or the “Newton Investment Management” brand refers to the following group of affiliated companies: Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA). NIM is incorporated in the United Kingdom (Registered in England no. 1371973) and is authorized and regulated by the Financial Conduct Authority in the conduct of investment business. Both Newton firms are registered with the Securities and Exchange Commission (SEC) in the United States of America as an investment adviser under the Investment Advisers Act of 1940. Newton is a subsidiary of The Bank of New York Mellon Corporation. Newton’s investment advisory businesses are described in their Form ADVs, Part 1 and 2, which can be obtained from the SEC.gov website or obtained upon request.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
Not FDIC-Insured | No Bank Guarantee | May Lose Value
© 2022 BNY Mellon Securities Corporation, distributor, 240 Greenwich Street, 9th Floor, New York NY, 10286