Though blockchain technology came to existence with Bitcoin, blockchain has a far-reaching potential outside of the cryptocurrency today. Besides cryptocurrency, blockchain provides various applications in financial services, supply chains, and the public sector. To support blockchain applications, governments are legislating new laws to promote the use of blockchain. For example, signatures secured through blockchain technology are approved under state law in Arizona.
Governments and organizations are using the system to serve a variety of purposes such as fast, efficient and transparent transfer of value, keeping transparent and immutable records of transactions etc. Find below numerous blockchain applications bringing efficiency and speed to industries and business functions:
Industry specific solutions
Financial Services
Investment Management
The image above summarizes blockchain’s impact on different investment management activities. While tracking/reporting and trading/settlement can significantly benefit from blockchain, impact to portfolio management is limited. Blockchain offers various capabilities to improve investment management processes by improving:
- collaboration by enabling everyone to access a single source of truth easily
- transaction validation. Transparency of the blockchain supports each party to easily validate transactions
- improving the overall data security since data is stored in immutable records
Cross-Border Transactions
Globalization leads organizations to make more cross-border transactions. According to Smarter Payment Tracker, cross-border B2B payments accounted for $125 billion in revenues in 2018. Blockchain has the potential to enable secure, efficient payments in cross-border transactions by removing the need for intermediaries. Multiple organizations are taking advantage of blockchain to enable cross-border transactions
For example, Ripple is a company that focuses on instant, reliable cross-border transfers for financial institutions by using blockchain technology and digital assets.
Banco Santander announced the launch of a new international payment service using blockchain-based technology in 2018. The service used blockchain technology to reduce the number of intermediary banks so that organizations or individuals can transfer money across borders faster, more securely and more efficiently.
Trade Finance
Existing trade finance processes are inefficient (i.e. analog paper processes) and have vulnerable points (e.g. absence of a trusted central authority) that allow fraudulent trading. Blockchain can digitize trade finance to enable
- transparent governance
- reduces complexity and the number of intermediaries involved
- faster processing
- lower capital requirements
- reduced risks of fraud, counterparty and human error
For example, TradeIX and R3 launched Project Marco Polo which is an end-to-end open account trade finance business network.
Capital Markets
Debt or equity-backed securities are traded in capital markets. Survey responses indicate that the total annual budget for enterprise blockchain applications across the capital market and banking to be around $1.7 billion.
Blockchain changes the structure of the capital market and has an impact on each phase of the capital market trade processes. As the image below highlights, blockchain has benefits across pre-trade, trade, post-trade and securities servicing.
Public sector
Transparent Budgeting
Corruption Perceptions Index shows that two-thirds of the countries are considered highly corrupt. A potential application of blockchain technology is bringing transparency to government’s budgeting decisions by making them accessible to the public. This could lead governments to act more responsibly and avoid waste.
Digital Voting
The reliability of the voting process has been a problem since the beginning of democracy. Stalin secretary claimed that Stain famously said “It’s not the people who vote that count, it’s the people who count the votes”.
Blockchain technology can decentralize the voting process so that elections can happen securely with transparency. In a decentralized system, there is no single point of weakness. This creates a system that is more robust.
FollowMyVote is a start-up that uses blockchain technology to ensure a transparent online voting platform. Individuals who are eligible, receive a token that allows them to vote only once and each vote is stored as a node in the blockchain.
Common solutions
Internet of Things (IoT)
Smart Appliances
Smart appliances make up the Internet of Things (IoT). By storing the data collected from these devices in blockchain, users can make the data immutable and increase the difficulty of tampering with services by cybercriminals.
For example, Patently Walmart is a blockchain solution for IoT. With Patently Walmart, each device receives a unique identifier and users hold a password accessible via their smartphones. This password enables users to manage each device knowing that all transactions and messages are encrypted and going through a secured network. All configuration changes to the devices are stored in a tamper-proof blockchain solution making all configuration changes auditable.
IoT monitoring
Blockchain offers digitization of assets with IoT sensors so that organizations can label their assets and provide a transparent tracking system. Digitization enables to identify the location and condition of items. The blockchain can store, manage, protect and transfer all this information.
Smart Contracts
Smart contracts are another application area of blockchain technology. These contracts remove the intermediary by resolving problems related to trust so that agreements between two parties can be made more efficiently. We’ve already written a smart contracts in-depth guide and entered into details about its use cases. Blockchain use cases in smart contracts category include:
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Smart contracts in insurance
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Supply chain management
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Financial data recording and management
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Copyright management
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Clinical trial tracking
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Property ownership transfer
Personal Identity Protection
Digital IDs (Passports, Personal IDs, Marriage Certificates)
The blockchain could make record-keeping more reliable by encrypting these personal identification IDs and allowing citizens to access this information. With blockchain technology, individuals can be in control of their digital data and the way in which it is utilized by different parties.
Wills and Inheritances
Digital wills and signatures are a convenient way to create testaments, they are at the risk of fraud. Individuals can benefit from blockchain technology to prevent tampering of their wills. Testators can distribute their assets to inheritors via a crypto-will network that can be accessed by related parties. This can be built in the form of a smart contract that can be automatically executed after the death of the testator.
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