Blockchain Technology - So Much More
Than a Payment System

Blockchain technology has become a technological infrastructure far beyond the realization of crypto money transfers since 2008 when it entered our lives –about 14 years ago. Blockchain technology is the basis of the applications we encounter in both daily and business life, especially in the financial world, such as Web 3.0, FinTech (financial technologies) and DeFi (decentralized finance). Today, many FinTech companies use blockchain technology to reduce risks, reduce the possibility of errors, ensure security, and enable transparent transactions.

From Payment Systems to Tokenization

Blockchain technology has provided an infrastructure where cryptocurrencies can be exchanged, allowing natural and legal persons to pay with cryptocurrencies. Especially in terms of transfers between different countries, there have been significant reductions in both time and costs. In this system, banks have also found a place for themselves. It is possible to modernize the banking sector with the inclusion of blockchains in banking services. Thus, blockchains offer new banking services that benefit both banks and customers by enabling faster, cheaper, safer and more inclusive transactions. Banks can perform custody or payment services for centralized, blockchain-based crypto-assets or currency-like instruments, including stablecoins and central bank digital currencies (“CBDC”).

With the development of blockchain technology, the concept of tokenization has gained a new dimension. It is possible to represent objects, rights and assets in the real world or digital world with tokens on the blockchain and the transactions related to these can be carried out on the blockchain. While it is discussed how these “tokens” are legally characterized all over the world, tokens are used for fundraising, collection, and investments such as “initial coin offerings” (ICO) and “security token offerings” (STO-security token offering). Tokenisation has been used in many sectors and has achieved a large transaction volume. Tokenisation is also the basis of NFT sales, which have been on the global agenda since 2021.

Real estate companies are leveraging blockchain technology to perform rental, purchase, investment and even lending services efficiently and transparently. With the use of blockchain in the real estate sector, it is possible to reduce paperwork, eliminate the need for intermediaries, and facilitate access to records and finance.

Registration and Tracking with Blockchain Technology

It is possible to store important documents such as birth certificates, wills, and diplomas on the blockchain. Blockchain can also be used as an electronic database to keep central registers such as the land registry or commercial registry. As early as 2016, Sweden started the necessary infrastructure works to keep the land registry on the blockchain. Some countries, such as Poland and Georgia, have taken steps to use blockchain technology to make land registry records more secure and transparent.

In the blocks in the blockchain network, data such as information about a real estate transaction, such as the parties to a land registry transaction, information about the owner of the real estate, the amount of the desired transaction, and the payment method can be securely recorded. Since it is not possible to copy the blockchain, keeping the land registry in the blockchain prevents illegal transactions and forgery.

An example of the possibilities offered by the blockchain regarding tracking is the use of blockchain in the tracking of supply chains. Supply chains are a network of natural and legal persons, activities and technologies involved in the process from the raw material stage of the products to the customer/end consumer. By using blockchain applications, sharing of information between parties can be realized faster and in real time, information asymmetry between supply chain points is reduced and traceability is ensured. Thus, both the efficiency of the supply chains is guaranteed, and the costs can be reduced.

Blockchain technology has also become an infrastructure that forms the basis for paperless trade. The Covid-19 pandemic has raised the already existing concerns about the circulation of paper trade documents such as bills of lading and other negotiable instruments and has accelerated steps to be taken to make regulations in this regard. In April 2020, the International Chamber of Commerce (“ICC”) encouraged all governments, as an emergency measure, to remove all legal requirements for printed trade documents and make longer-term changes to their legal frameworks to give validity to electronic documents. In addition to the work carried out by international organizations, the legal infrastructure has begun to be established for the implementation of electronic commerce documents in countries like the United Kingdom and the United States.

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Blockchain and Digital Identity

Digital identity refers to the address, identity number, passport number, tax number information of a person. Digital identity information is collected, stored, and verified electronically. When this data is collected and recorded in (often more than one) central database, the customer’s identity information is stolen when one of these documents is compromised.

Some methods used in identity presentation and proof, besides being costly and need to be repeated constantly, are prone to error. However, if identity information and personal documents are kept in the blockchain network, the data cannot be changed without permission, the accuracy of the data is ensured, and the accessibility of the data from anywhere, if allowed, is increased. At the same time, individuals can control their own data and share the content they want with the people and institutions they want. Thus, a paperless and reliable digital identity system emerges.