The technology landscape is abuzz with a new yet promising technology, ‘Blockchain’. The distributed ledger technology (DLT), has disrupted the IT landscape in ways that has not been witnessed since the arrival of internet. The technology that underpins Bitcoin will make organizations more transparent, democratic, decentralized, efficient, and secure. While the most apparent application of Blockchain Technology is in the Financial services industry, the technology has also found application across several other industries.
What is a Blockchain and How Does it Work?
Blockchain – A distributed ledger technology is perceived to be a disruptive technology that has the potential to transform the traditional business models and other networking technologies. However, the truth is that it is more of a foundational technology that can create new paradigms for sharing transactional data, both within and outside global enterprises. In fact, businesses are trying to figure out ways to leverage this ledger technology to save time as, well as costs and redefine business processes.
Based on a distributed and peer-to-peer network, Blockchain allows data storage on thousands of servers. Furthermore, anyone in the network will have the authority to view any transaction or entries made by any participant in the network. This makes it practically impossible for an entity to take control of the network. What makes this technology more alluring is the ‘Data Immutability’ feature that doesn’t allow minutest of alterations in the data uploaded. This means that each data structure block is not just linked to previous blocks but is timestamped with a cryptographic hash.
All these features allow autonomous management of blockchain ledgers for information exchange between different members. This does away the need for a centralized administrator as every blockchain participant is an administrator, which makes it a decentralized technology. Another extremely important feature that makes Blockchain – a full-proof platform for transactions is the automatically executable Smart Contracts or scripts that predefines certain conditions for an error-free transaction. For triggering a transaction, one or more than one set of inputs or conditions need to be created by the users.
Exploring Interesting Use Cases of Blockchain
Given the transparent, distributed, decentralized and immutable elements of Blockchain, forward-thinking enterprises including Fortune 500 companies are exploring new ways to use this distributed ledger technology. We have listed below some extremely interesting Blockchain use cases spanning across multiple industries. Have a look:
1. Currency Exchange and International Remittances:
Issues such as high transfer cost, inadequate money distribution methods, high liquidity requirements, transactional risks, limited brand options etc. are plaguing the financial services industry. Blockchain can be used for resolving these challenges with international remittances while enhancing pricing transparency along with better transfer security. In fact, several Banks and Remittance companies are adopting digital currencies like Bitcoin or platform like Ripple for streamlining remittance services.
2. Peer-to-peer Lending and Payments:
Peer-to-Peer (P2P) Lending using cryptocurrencies and Smart Contracts in a Blockchain network is disrupting the traditional peer-to-peer lending. It cuts out the need for intermediaries for transaction settlement and management. Additionally, it helps in better management of KYC records, User Authentication and Collateral Management (if applicable).
3. Audit Trail:
In certain law and accounting firms, the need to have untampered records of conversations, documents etc. shared between different parties is very important. A great way to ensure data security is to store documents or files that are either crypted or unencrypted on a Blockchain database. Besides ensuring data immutability, users can view who and by whom were these documents added to the Blockchain. This can provide businesses with an unalterable audit trail.
4. Smart Contracts:
One of the most important applications of Blockchain is creating smart contracts. Smart contract does away with the need of intermediaries and facilitates transaction in a seamless and hassle-free way. These “self-automated computer programs run on Ethereum and other Blockchain platforms, just the way they are programmed that too without the interference of any third party or fear of fraud, censorship and downtime. For instance, when a business enters into a smart contract with a supplier, the supplier immediately receives the payment after the iOT sensors notices the arrival of goods from the supplier at the warehouse.
5. Regulatory Compliance:
The current compliance regulations that have been implemented across the globe requires proper structuring and reporting of risk data. However, it isn’t easy to keep pace with the ever-evolving regulatory environment, which is further compounded by aggregating data, legacy IT systems and information overdose due to legal and regulatory barriers. Blockchain has the potential to assuage all the bottlenecks and challenges faced by organizations in a bid to keep up with today’s evolving regulatory landscape. Moreover, Blockchain does away with the need to collect, store, settle and aggregate the information for regulators as all the transactions conducted within the blockchain are documented securely and immutably on the ledger. This provides a precise, permanent and secure audit trail.
6. Supply Chain Communication:
Usually things that we buy aren’t made up of a single thing or entity. In fact, most of the businesses function in a multi-partner supply ecosystem where in several suppliers sell their components to businesses who further assemble, market and sell the final product. However, the problem with this conventional system is that it is prone to theft, counterfeiting and increased regulatory pressure. This could be resolved by integrating Blockchain into the supply chain to get immutable, permanent and auditable records that show stakeholders the status of the product at every step.
7. Electronic Voting:
The current electronic voting systems are centralized by design, which means the codebase and database is controlled by a single supplier. Since, a centralized system fails to provide an open-source and autonomously verifiable output, it fails to acquire the reliability sought by election organizers and voters. By up loading voting records in a blockchain, the reliability and trustworthiness of the electronic voting process could be ensured.
8. Cloud Storage:
Blockchain offers companies looking for Cloud storage with a fast, secure and cheap solution. The distributed ledger technology offers end-to-end encryption to ensure data security while in transit. As compared to conventional cloud storage companies, the DLT-based cloud storage offers improved data security, increased uploading and downloading speeds that too at low costs.
9. Government Records:
Government organizations are dealing with inefficient operations and processes. Apart from this, they are also dealing with increased security issues of their ever-growing volume of confidential data. Blockchain technology can be leveraged by Government organizations for improving operational efficiency while establishing trust through increased transparency and fraud prevention.
10. Digital Identification:
Blockchain can be used for storing all types of data and business transactions in a secure way due to its distributed nature. By creating an identity on blockchain, individuals can have greater control over those who have access to their personal information. Furthermore, a digital ID can be generated by leveraging upon the decentralized element of Blockchain, and then assigned to every single online transaction.
11. Internet of Things:
The convergence of Blockchain and iOT paves way for several interesting use cases including that of supply chain. For instance, journey of perishable food items such as milk right from the dairy farm till the table is regulated by certain specific conditions such as maintaining the right temperature during transit, etc. By instrumenting individual milk containers with an IoT-enabled temperature sensor, data pertaining to temperature of milk at different point of transit is gathered. This data is sent to the Blockchain where it gets stored to be viewed by each participant involved in the transaction. Since, the connected iOT sensors gather accurate and irrefutable data about the management of milk during transit and transmit it automatically to the Blockchain, there’s no chance of data tampering or recording of incorrect data. Rather the information received is timely, as well as accurate. The use of Smart Contracts here helps manage the SLAs.
12. Smart and Collaborative Transportation:
This involves smart utilization of already existing resources and infrastructure, rather than creating new ones. This includes real-time ride sharing i.e. enabling people with cars to share their journey with people travelling in the same direction. Being a decentralized platform, Blockchain does away the need of intermediaries and connects users directly with each other.
13. Online Gaming:
One of the most interesting use cases for Blockchain is online gaming. Cryptocurrency casinos are leveraging blockchain technology in majorly two different ways. One by making remittances or accepting payment with Bitcoin or any other cryptocurrency and the other by providing fair gaming experience through open source functions, required for operating fair algorithms such as hashing, random seed and number generation. In short, users can enjoy a reliable, seamless and trustworthy online gaming experience by introducing Blockchain.
14. Proof of Authorship and Ownership:
Every day and every minute, millions of users are generating huge volumes of data on the internet. This data is used by internet giants such as Google, Facebook etc. to monetize their services. However, users have little to no ownership over the digital data created by them or the value that could be derived from it. Though, these companies claim to secure the integrity of their user data, they do not have a proper back up to secure their data in case of server failure or any similar situation. As a decentralized database, Blockchain data is simulated across several disparate nodes. As a result, no single node can undertake control of their data. Consequently, users can access the information they have stored on the blockchain through encryption keys, irrespective of the facility that generated it.
15. Eradicating Cyber Attacks:
Blockchain offers several security advantages over the conventional data warehouses due to their distributed nature. Given the fact that Blockchain networks do not have a single point of access for penetration, the danger of hacking is reduced significantly.
The aforementioned use cases are a proof that blockchains will be used by different companies within their funnels, in the years to come. However, businesses should scrutinize each idea to create its dependency on blockchain while identifying promising blockchain use cases.
There are indeed numerous applications of Blockchain that can largely impact the existing transaction systems for the better. Stay hooked for the next edition of our blog to get an overview of many other use cases of this innovative technology.
Sofocle Technologies – One of the early adopters of Blockchain Technology Sofocle offers Enterprise Blockchain solutions that help businesses in their digital transformation journey and gain competitive advantage. To know more about our products and solutions, drop us an E-mail at [email protected] or Contact Us.