5 Prime Industries for Blockchain Disruption
Technologists and industry veterans alike are excited by the long term implications of blockchains. As you have likely read in recent news, blockchains are poised to cause massive disruption in a variety of industries. However, without specificity and context, it can be hard to grasp the true potential of this technology.
So what is most important to understand?
Blockchains, at a very fundamental level, make up a decentralized system for managing and authenticating information. Within a blockchain network, no one entity controls or owns any of the data. Rather, algorithms and ‘Smart Contracts’ supplant the need for a third party, therein supplying a simple, yet robust network that verifies and authorizes marketplace transactions automatically. All of the data generated via these interactions is then stored and logged into a cryptographically secure digital ledger that protects against the threat of manipulation and hacking.
As you can imagine, implementations of this technology, like Bitcoin, are poised to fundamentally impact many of the world’s most complex and important industries. Here are five industries primed for imminent blockchain disruption.
One of the biggest advantages of blockchain systems, versus conventional alternatives, is that all of the information stored on these networks are encrypted and secured. In other words, the data is far less prone to the growing threat of a cyber-attack. Furthermore, the physical storage of the data is decentralized, meaning there is no single point of entrance for a wide-scale attack.
Distributed systems of record also have a number of advantages over typical options. Rather than store everything in a centralized location, which is vulnerable to hacking, these blockchain networks rely on cryptographic algorithms to authorize access to information. These networks operate without human intervention or handling. Less human input reduces the margin of error and manipulation, restoring power back to the individuals in the network.
2. Real estate
Though the residential and commercial real estate sector is responsible for a significant portion of the modern economy, it is still fraught with inefficiencies. The space is heavily reliant on paper-based manual processes, and is subject to both fraud and corruption. Plagued by brokerage services and regulations, the real estate industry needs more transparency and liquidity.
Luckily, startups like TrustToken have found ways to leverage blockchains in order to bridge the gap between digital ownership and real world assets. Their platform enables real estate owners (timeshare, rentals, homes, etc.) to issue tokens for each property, so that those properties can be easily traded on a globally liquid exchange. It’s akin to being able to “IPO” individual properties. Real properties, and baskets of properties, can then be traded globally the way Bitcoin and other cryptocurrencies are traded today.
Their tokenization platform uses a new type of trust, backed by the top trust law attorneys in the world, that appoints “beneficial ownership and control of the assets in a trust to a smart contract.” The tokenization of real estate will eliminate the threat of fraud, currently present in the real estate community, and align incentives among buyers, sellers, brokers, and renters.
As we witnessed in 2016’s presidential election, the threat of mass voter-fraud is alive and growing. While this was not the first time a party was accused of rigging an election, it certainly brought attention to and called into question the legitimacy of the American democracy. In many ways, it also highlighted the number of error-prone processes and misaligned incentives that exist throughout the federal government.
Within the next 20 years, it is likely that we will see a major transition from paper-based systems to entirely digital voting. During that shift, we can begin to leverage the power of trustless blockchain technology to serve as the permission-holder of the voting system.
4. Supply chain management
Supply chains are the backbone of our modern, international economy. The billion-dollar problem, however, is that they are largely built on top of legacy architecture that relies on manual processes.
As a result, in any given supply chain, there are often dozens of intermediary third-parties that increase friction and decrease ownership throughout the lifecycle. This not only dramatically raises cost, but also carries plenty of industry-specific, auxiliary effects that slow down momentum throughout the funnel.
Thus, there is a massive opportunity in applying blockchains as a means of automating past the various inefficient processes that currently exist across the world’s most complicated industries (shipping, oil, healthcare). From labor to transaction to waste costs, all of the data generated in any given supply chain can be automatically logged in a blockchain ledger.
Though unpredictable in nature, cryptocurrencies are perhaps the most widely popularized and highly anticipated application of blockchain technology. Optimistic technologists predict that cryptocurrencies, and digital assets broadly, will entirely replace fiat systems of finance within the next decade.
Cryptocurrencies can be used to enable an entire generation of adults who currently lack access to basic financial services like banking and investing. This is a fundamental shift toward a globalized economy that will be accessible to anyone with stable internet, thereby empowering the next generation of entrepreneurs and professionals.
For instance, Bitcoin and Litecoin, two of the more popular tokens on the market, can easily be sent across borders almost instantly. This, along with significantly reduced fees, is far superior to our current monetary system.
The author has had a working or personal relationship with one or more companies mentioned in this article in the past. Access to mentioned company’s management and information was made through the author’s personal network. All information was vetted prior to posting.
This essay is not intended to be a source of investment, financial, technical, tax, or legal advice. All of this content is for informational purposes only.