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Blockchain Solutions and Problems P1639 May 2021

Author: Sean R. Barulich (Send us feedback.)

Blockchain technologies and cryptocurrencies continue to attract the attention of investors.

Abstracts in this Pattern:

Companies continue to explore the use of blockchain technologies to enable automated data-management systems for various applications in health care, workplace collaboration, and logistics. Recent developments suggest increasing interest in decentralized blockchain networks for software applications and web technologies. For instance, Twitter (San Francisco, California) is currently developing an open and decentralized social-media standard through its Bluesky project. Similarly, start‑up LBRY (Manchester, New Hampshire) provides a blockchain-based service for hosting videos and other types of digital content. The service operates as a decentralized alternative to YouTube (Alphabet; Mountain View, California).

Blockchain-technology developers are also enabling ways to secure the transfer and ownership of nonfungible tokens (NFTs)—unique digital assets that reside on a blockchain that certifies that the assets are unique and noninterchangeable. Although NFTs can be any form of digital media—music, artwork, sports memorabilia, and other collectibles—digital artwork is responsible for driving the bulk of current NFT demand. For example, the creator of the famous Nyan Cat animation recently auctioned a remastered version of the animation on the Foundation (Foundation Labs; San Francisco, California) blockchain-based art marketplace. The animation sold for 300 ether (Ethereum Foundation; Zug, Switzerland), which was worth approximately $590,000 at the time of the sale. Digital-artwork NFTs have been gaining popularity, and several digital marketplaces have emerged to offer digital artwork in a range of media.

Cryptocurrencies have generally failed to improve traditional financial systems and continue to see use in criminal markets, creating hurdles for technology developers. For example, German prosecutors recently confiscated more than 1,700 bitcoins (https://bitcoin.org)—worth approximately €50 million ($60 million) in February 2021—from a fraudster who hijacked computers to mine bitcoins; however, they have been unable to collect the bitcoins because the fraudster has not provided the password for the encrypted digital wallet on which they reside. Despite such problems, companies continue to experiment with and invest in cryptocurrencies and blockchain technologies, enabling new blockchain-based technologies that may improve automation in various industries.