Rise Of Blockchain Technology: Why Does It Matter? – Interview
In this “Future of Tech” episode interview learn about the future of Blockchain technology, its potential, and risks. At Qubit Labs outstaffing company we are creating teams from scratch for our customers and we have a couple of teams in our company with blockchain expertise.
Recently, we started to receive a lot of questions about blockchain technology from our current and potential customers. The questions revolve around the following topics:
- What is the potential of this technology?
- How to use it [blockchain]?
- Should we add it to our product if we don’t have it [blockchain]?
- Is it going to stay relevant next year, or is it just a blockchain hype going around?
So, we decided to interview Helen, our good friend who has great expertise in this industry. Alyona Petraschuk is one of the partners at 4ire Labs, where they research and work on innovative FinTech and Blockchain-based products. Company has the delivery offices in Kyiv and Stockholm. 4irelabs has been working since 2010, which allows them to feel confident in traditional finance and stay the most progressive blockchain dev company. Recently 4ire Labs has become a member of Parity Substrate Delivery Partners Program.
4ire Labs completed projects from the open-source solutions for the Web3 Community to blockchain-based projects funded by government entities and corporate banks in the EU.
They are participating in multiple hackathons (including Web3 summit), develop the open-source projects for ETH Community, co-organized the international community dedicated to distributed governance called Dgov. Quality and value. That’s what 4IRE labs are all about.
Helen, please introduce yourself and tell us more about your expertise and your company.
My name is Helen Pertashchuk and I am a CEO at 4ireLabs, the biggest blockchain DeFi company in Ukraine. We have delivery offices in Kyiv and Stockholm. Our main focus is blockchain development, FinTech, and banking. 4ireLabs was established in 2010. We work directly with Blockchain protocols like Polkadot and are partners with this platform.
Also, we cooperate with Near protocol and help them develop ecosystems, commercial projects and pay considerable attention to EVM compatible blockchains. Besides, we ensure a full delivery, namely from idea validation to providing complex blockchain projects like protocols, bridges, and other stuff.
Great, as I know, most of your customers are from the FinTech industry. Is this correct?
Yeah. To be more precise, FinTech and DeFi decentralized finance.
DeFi is an umbrella term for peer-to-peer financial services on public blockchains.
We are capable of handling projects like yield farming, platforms for providing carbon credits on blockchain technology for enterprise clients, decentralized exchanges, and centralized exchanges. Also, we pay attention to security issues and work with smart contracts..
Okay. So, let’s start from the basics. Can you please tell us what exactly blockchain is and how it works?
Blockchain is a technology explained as a chain of blocks with timestamps. Each of them has a link to the previous block, and all of them are stored on different computers. It helps to optimize links between chains, resulting in more effective work.
Currently, this technology is super popular in DeFi where you could make it in a decentralized way. These also include payments, reimbursements, etc. We have smart contracts, meaning you don’t have the backend, but you have the full logic on our smart contract. This technology is applicable for the gaming industry because you could easily tokenize some assets inside the game, such as virtual assets unless you’re working with virtual stuff in an immutable way.
Okay, thank you for your answer. Would you please tell us how blockchain is changing the Internet and the world as a whole?
I think it has a significant impact, especially on DeFi, because it boosted this year. Notably, Paxos, a regulated blockchain infrastructure platform, revealed that Bank of America joined its $300 million Series D round. Some people say that blockchain platforms, like Polkadot, could even replace the SWIFT system because they’re faster and more secure.
And this year, the critical point was that there is no way to return to the usual way of things. The reason is that the blockchain ecosystem is developing rapidly; it’s becoming more sophisticated. Now, the communication between blockchains is much easier because you could transfer some assets from one network/protocol to another. Many issues, like breaches, are being addressed. There are a lot of bridges that resolve these issues.
Blockchain bridges enable users to access the benefits of different blockchain technologies without having to choose between platforms.
The same with transactions and charging activities. Blockchain is applicable in many industries. We have big customers, well-established customers, and big enterprise clients that invest a lot of money in using Blockchain technology for supply chain, lottery services, or neo banks.
I could say that Revolut is one of the most popular neobanks. If you look at their financial reports, they make a significant profit from the commission of crypto transactions or credits. I believe that such an approach will be trending in the next 10 years.
Speaking of 4ireLabs, we build our strategies based on the fact that the banks will eventually come to the blockchain, abandoning traditional approaches to finances.
Wow, great. Thank you. You said that a lot of stuff has already been done in this industry. But, in your opinion, what do you think is the future of blockchain technologies in the financial markets in the next couple of years?
This year boosted DeFi and NFT markets. But, we foresee that the next significant boost will take place in a couple of years. I’d say that if you’re already participating in great projects, like a token holder of projects on Polkadot, you will feel a significant boost in two years. Why?
The thing is that right now, big players are investing in blockchain projects because of financial troubles. Traditional financial institutions invest in crypto projects because it helps them make significant money. They both are in such a situation due to COVID. These players are switching their focus to crypto projects and actively investing in them.
To sum up, we don’t expect to have a so-called “crypto winter” ‘, as it was up to 2017. There will be a slowdown, but there will be a significant boost in this industry in a couple of years.
Now let’s speak about NFT. “NFT” is 2021’s “Word of the Year,” why?
I guess we owe it to the hype because NFT isn’t something unique. It’s like the good old token where we store unique metadata, which you could also transfer to another person.
Currently, there is an NFT boost in gaming. Big companies like Sony and Disney are trying to make NFT marketplaces inside the game where you could buy and store collections with some unique assets.
So, I think next year will be the year of NFT gaming. But in 2021, NFT boosted DeFi because it provides an understandable logic on how people can make money on it. For example, if you buy NFT for 10k, you will sell it for 20k. It’s the same with DeFi. You have an understandable mechanism for making money, and it attracts attention.
Okay, that’s excellent information to use in the next year. As I mentioned at the start of our interview, I received questions from different companies. For example, they wonder if they should use blockchain now or later or don’t pay attention to it at all.
And you said that most of your customers are related to FinTech. Yet, can you please give us examples of your clients from other industries? What do they actually expect from blockchain?
We have a notable project from a US-based company that works in the film production industry. We’re building a platform that will help with issues for fundraising for different kinds of film projects. This is like a unified platform. It’s amazing how you use blockchain technology even in film production.
We also had a remarkable case in Israel when we used a Corda platform for blockchain in the MedTech industry. We helped the company get specific information from laboratories in a distributed way. Blockchain is perfect for pulling sensitive data and sharing it securely, which is critical in this area.
Also, one could use Blockchain technology in green finance in various ways, from providing carbon credits for enterprise clients to issuing green bonds. Our company works on such projects and authorities fund them. So, even traditional institutions and governments invest in such projects.
Another industry I can highlight is logistics. Blockchain helps to reduce the human factor and store it on blockchain to automate the processes and improve security. Also, I’d like to emphasize manufacturing. One of our clients, a Ukrainian healthcare company, uses Blockchain technology to monitor the data on the conditions and temperature in medical storage and ensure this data’s safety.
I got you. And what do you think about the future of blockchain technologies for voting?
We had requests from government authorities and researched this topic a lot. We work on discovery phases, consulting, and validating this idea. But there is an issue — it’s impossible to implement this in Ukraine. Not all citizens have ID cards, and it’s impossible to implement this concept without the unique identification code people could use for voting. And it’s pretty costly as well. Also, the thing is that locals aren’t really interested in leveraging this opportunity, so the problem is not just about technology; it’s about the infrastructure too.
Okay, got it. So, my next question will be about health care. Based on my information, the global market size of blockchain technologies in healthcare is expected to reach $231 million by 2022. With a growth rate of 63% over the next six years. How can health providers use blockchain technologies?
As I mentioned, it could be applicable for data storage and distributing data. This comes in handy for insurance companies, laboratories, or hospitals when people need to have access to sensitive information. Blockchain allows accessing it in a distributed way without showing the full data to people who aren’t allowed to see it.
Although we don’t have a lot of cases in healthcare, this industry confidently entered the blockchain market. Numerous hospitals and companies would like to automate their reimbursement processes by using blockchain technology and smart contracts.
In your opinion, what industries will be the last to incorporate blockchain?
Oh, I think it’s GovTech. You might have heard that the Ukrainian government is going to launch a CDBC (Central Bank Digital Currency). It is a great idea when governments could make big payments directly to enterprises without intermediaries and track their expenditures. But, there are too many negotiations with national banks, banks, tax authorities, the Minister of Finance — and they’re simply not ready. A lot of people in the Ministry of Finance don’t even understand what this technology is, and it’s hard to explain it to people who are over 50 years old. Again, it’s all about the human factor.
Okay. We hope that digitalization will take place sooner than expected. Another question is: when do you expect the wide adoption of cryptocurrency by average customers? We’re interested to find out your opinion based on your experience.
I think in three, five years, everybody will have bulletins on their smartphones.
Bulletin, in blockchain, means a short report about the recent news about the crypto industry.
Recently, one of the mobile providers in our country established a platform for crypto trading. So, the adoption of crypto comes down to education. Currently, it’s pretty hard to explain to older people what crypto is and how it works. But in three, five years, it will be standard practice, I think.
Do you think that’s enough time to regulate all the crypto processes worldwide?
Let’s look at this question from the following perspective: when your taxi driver uses a crypto trading platform and asks you for a piece of advice, this means the changes are just around the corner.
Okay, great. Another question I often stumble upon — “is blockchain secure?” or “what kind of risk will people face if they use this technology in their projects?” Could you please explain the risks of this technology, not only for FinTech but also for the industries in general?
First of all, this is a rather costly solution because even the deployment of a smart contract in a network has a high price. For example, one of our clients paid $4k to deploy one smart contract.
Many expenses have to be considered, including development, infrastructure, and marketing costs. It’s critical to invest in marketing because it’s the key to involving your community. That’s why Blockchain marketing agencies are also in huge demand nowadays. And the quotation from the marketing agencies is considerable as well. I would say this sum is equal to the one you’d spend on development or higher.
If we’re talking about the permissioned blockchain, like IBM blockchain, it’s a super costly solution, and only big enterprise clients can afford it. That’s why the companies should understand who will handle the expenses, such as a commission for transactions. Users rarely pay them, so the company has to have enough money to cover all these transaction fees because the numbers can be much higher than businesses expect.
Another risk is the lack of engineers. If the company aims to scale up fast, it’s hard to find suitable talents. Since blockchain is primarily based on Rust, a super complex programming language — it takes a lot of time for companies to find skilled Rust engineers. Attracting professional programmers is a challenge because most of them are already involved in large-sized projects that have enough money to pay huge salaries.
Also, there are fluctuations in the market. Previously, there was an NFT boost, now it’s NFT gaming, and a new NFT “something” will take place later. Yes, it’s not hard to raise money but attracting the talent to build trust in your community is a real challenge.
Okay, thank you. So I have the last question for you. Let’s imagine I am the owner of a middle-sized company; for example, it could be a marketplace or gaming, and I don’t currently use blockchain. I have thoughts about using blockchain, but I don’t understand whether it’s worth it in my case. Could you please give me advice on what I need to do to add blockchain to my product and how to manage the changes associated with it?
The best way is to start with a discovery phase with experts like a Solution Architect and Business Analyst who could analyze your product, understand the competitive features, and value of blockchain technology for this product.
You need to be sure that your company needs blockchain and that it will benefit from it. These specialists will prevent you from giving rein to the hype and help you leverage the technology without wasting money to stay “trendy.”
The consulting and discovery phases are critical to understanding how the blockchain technology will be potentially integrated and what kind of protocol will be applicable (the choice depends on the business limitations, transaction speed, and load). It’s essential to select the protocol that will be compatible and make its integration smooth. Also, during this phase, you’ll understand how long it will take and plan the budget based on the analysis results.
Based on my practice, there are two most popular cases of using blockchain — to resolve the problem and eliminate intermediaries in some processes or to hype.
Okay. So, before leveraging blockchain, you need to understand why exactly you need it and whether you need it at all. If you’re ready to use it and it’s not for hype — you should go for it, right, Helen?
Yes! Or, it can be an additional boost for the project that helps you attract crypto specialists, gives an extra push, and draws more users.
Okay, so these were all my questions. Thank you so much, Helen, for being with us today. I hope our readers enjoyed this article and will leverage the mentioned information to help their businesses skyrocket. Feel free to contact us with a request for development team.
If you want to understand whether you should use blockchain on your current project, please feel welcome to reach out to Helen and get all the answers during the Discovery phase at 4ireLabs.