What is blockchain technology?
- A blockchain is essentially a digital database or ledger that stores information.
- A ‘traditional’ database or ledger records its information in standalone tables or spreadsheets, and is essentially stored and owned by a centralized source. This traditional way may have inherent flaws, as it depends entirely on the centralized owner to properly maintain validity, history, security and all types of integrity and trust risks.
- A blockchain improves upon ‘traditional’ databases or ledgers in a way that makes it extremely challenging, regardless of honest or nefarious intent, to incorrectly change, hack, or cheat the system.
- A blockchain decentralizes ownership of the database or ledger, whereby the entire network of computer systems supporting that blockchain contributes to the verification and safe-keeping of records. Blockchain Technology is also referred to as Distributed Ledger Technology.
- With a blockchain, data is stored in chunks or blocks. When each block is filled, it is connected to the previous, forming an easy-to-follow chain, and this historical record is added to every participant’s ledger.
- Each block that is filled, is verified by the network and set with a specific timestamp making it very difficult to alter. And as the blocks are part of a linked chain, no single block can be removed.
Characteristics of blockchain technology
All blockchain participants share the same documentation, which can only be updated with everyone’s agreement.
Control and decision-making in a blockchain promotes aspects such as transparency and efficient data reconciliation. It also lowers the risk of a “single point of failure.”
Blockchain provides a lifetime ledger for an asset, including where it is, where it’s been, and all the transactions in between.
Network members would notice any alterations to the ledger and split off to a new, unaffected version of the chain.
Blockchain has multiple uses
Blockchain technology is already being utilised in multiple industries, including financial services, healthcare, supply-chain management, and food safety. Its use is also being trialled across an even wider variety of industries. Anything that requires records to be kept can, in theory, be supported or assisted by blockchain technology.
For example, the global financial system relies heavily on third parties to help with asset exchange, settlement and servicing. Blockchain can disrupt this established system by offering a unique way of avoiding the inefficiencies and potential fraud opportunities posed by using a third party.
Case study: Leading retail coffee chain
The company put into place a bean-to-cup traceability initiative using blockchain technology to enable end-to-end transparency from the time a coffee bean leaves the farm, through transit, and finally to the point where it is brewed and put into a customer’s cup. Blockchain creates a new data stream that Starbucks can use for its own inventory management systems and pricing. What’s more, this is precisely the type of information today’s ethically conscious consumers want.
Applications of blockchain technology
There is already a diverse range of uses that have emerged in both the private and public sectors:
Identification – Voter registration is being facilitated via a blockchain project in Switzerland
Healthcare - A number of healthcare systems that store data on the blockchain have been pioneered
Journalism - Decentralised, blockchain-enabled journalism has the potential to limit censorship and increase transparency
Mobile Payments – One company’s blockchain ledger has been latched onto by a group of Japanese banks that will use it to enable quicker mobile payments
Energy – A test project is being developed that will help energy suppliers track the distribution of their resources in real time while maintaining data confidentiality
Advertising – A New York company has been trialling blockchain as a means of providing an advertising marketplace for publishers
Insurance – An insurer is using a smart-contract based blockchain to help save costs and increase transparency
Land Registry –Land registry titles in Georgia are now being stored on the blockchain in a project developed by the country’s National Agency of Public Registry
Music – Musicians are leading a blockchain-based initiative to ensure artists are fairly rewarded for their creative efforts
Real Estate – Blockchain is now being used to complete real-estate deals, the first of which was conducted in Kiev, Ukraine
National Security – For the past two years, the US Department of Homeland Security has been using blockchain to record and safely store data captured from its security cameras
Enterprise –A leading search-engine provider is developing a bespoke blockchain that will be integrated into its cloud-based services. This should enable businesses to store data directly with the business
Border Control – A border-control system has been devised in the Netherlands that uses blockchain to store passenger data
Fine Arts – As one project is currently proving, it’s possible to dramatically reduce art forgeries by storing certificates of authenticity on a blockchain
Railways – In Russia, a rail operator is maintaining repair requests and rolling stock inventory data on a blockchain料
Supply Chain –Two leading companies have partnered in China to create a blockchain project that will monitor food safety
Diamonds – Blockchain is being used to track the import and sale of diamonds
Shipping – Shipping is a natural fit for blockchain. One company is already testing a project within the maritime logistics sector
Why invest in blockchain technology?
Characteristics of blockchain technology
Why invest in the Blockchain innovation theme?
- The pandemic has helped accelerate the development of many useful blockchain solutions
- Amid high levels of trust in this technology, blockchain has the potential to disrupt nearly every industry.
- As it is utilised by a broader range of companies, the blockchain theme should provide an attractive, long-term investment opportunity
- There is an opportunity to invest in businesses that are the early adopters of blockchain technology. These companies will ultimately set the standard within their respective industries.
About the Fund
Available share classes
Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.
Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Fund can lose significantly more than the amount it has invested in derivatives.
Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
Market Capitalisation Risk: Investments in the securities of small to medium-sized companies (by market capitalisation) may be riskier and less liquid (i.e. harder to sell) than large companies. This means that their share prices may have greater fluctuations.
Volcker Rule Risk: The Bank of New York Mellon Corporation or one of its affiliates (“BNYM”) has invested in the Fund. As a result of restrictions under the “Volcker Rule,” which has been adopted by U.S. Regulators, BNYM must reduce its shareholding percentage so that it constitutes less than 15% of the Fund within, generally, three years of the Fund’s establishment (which starts when the Fund’s manager begins making investments for the Fund). Risks may include: BNYM may initially own a proportionately larger percentage of the Fund, and any mandatory reductions may increase Fund portfolio turnover rates, resulting in increased costs, expenses and taxes. Details of BNYM’s investment in the Fund are available upon request.
Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as acounterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss.
Blockchain Innovation Companies Risk: The value of securities of Blockchain Innovation Companies may be negatively impacted by changes in regulation and are dependent upon consumer and business acceptance of the distributed ledger technology. Distributed ledger technology is a new and relatively untested technology which could be vulnerable to fraud. The Fund’s value may be more subject to risks of developing technologies, competitive pressures and intellectual property rights challenges.
Share Class Currency Risk: Share classes may be denominated in a different currency from the base currency of the Fund. Changes in the exchange rate between the share class currency and the base currency may affect the value of your investment.
Share Class Hedging Risk: The hedging strategy is used to reduce the impact of exchange rate movements between the share class currency and the base currency. It may not completely achieve this due to factors such as interest rate differentials.
The Fund transitioned investment manager to Newton Investment Management North America.
Past performance is not indicative of future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested.
This Fund is a sub-fund under BNY Mellon Global Funds, plc (the “Responsible Person”), which is an openended umbrella investment company with variable capital incorporated in Ireland with segregated liability between sub-funds and authorised by the Central Bank of Ireland. The Fund is recognised for retail distribution in Singapore under Section 287 of the Securities and Futures Act 2001. The Responsible Person has appointed BNY Mellon Investment Management Singapore Pte. Limited (“BNYM-IM-SG”) as its Singapore Representative. The prospectus in relation to the Fund is available and a copy of it may be obtained from http://www.bnymellonimapac.com/sg/funds or at BNYM-IM-SG’s distributors. A potential investor should read the prospectus before deciding whether to subscribe or purchase units in the Fund. The value of the units in the Fund and the income accruing to the units, if any, may fall or rise. The net asset value of the Fund is likely to have a high volatility due to its investment policies or portfolio management techniques.
This document shall be used in Singapore only and shall not be used for the purpose of an offer or solicitation in any other jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised. All information herein is made for information purposes only and subject to change at any time without notice, and should not be construed as investment advice or recommendation.
Investors should seek relevant professional/financial advice before investing in the Fund and should read this document in conjunction with the prospectus of the Fund. The Responsible Person, BNYM–IM-SG and its affiliates are not responsible for any advice given to investors. Investments involve risks. A complete description of risk factors is set out in the Prospectus.
Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed. The Fund may invest in financial derivatives. When you sell your investment you may get back less than you originally invested. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Issued by BNYM-IM-SG (Co. Reg. No. 201230427E)