Blockchain, Disruptor of Enterprise
What makes a good blockchain use case in the real world?
Are there real world applications for this technology?
We think so.
What is Blockchain?
Blockchain provides open access to an immutable distributed AND decentralized ledger that is verified and secured on a decentralized network. It seems simple, but is important that we do not understate that this is a first in humanity. Other firsts that have revolutionized entire human existence include the advent of: electricity, the internet, metals processing (steel), flight, you name it. Blockchain is the next iteration of these innovations and we are still only just over 10 years after launch. At present, Blockchain already streamlines the processes of cross-boarding payments, finance, accounting, and more.
What “brick and mortar” industries are already taking advantage of this technology?
The key innovation provided is actually very simple: the distributed ledger. Instead of a company’s ledger having a single point of failure and fraud, the distributed ledger on blockchain is decentralized and transactions are written into blocks which are then immutable and updated across the network. Blockchain is therefore an excellent fit anywhere data in your company can be compromised and edited by bad actors.
Major healthcare tech companies like IBM are utilizing blockchain to facilitate interoperability of data, privacy, and supply chain traceability. Health care companies are also able to optimize electronic health care systems that previously could not interact with each other.
Inversely, blockchain is a technology that can disrupt the banking industry as we know it. With the ability for untrusted parties to come together and agree on a set of financial parameters in a smart contract on a blockchain that is administered by no central party, financial services such as payments and securitization of funds can be executed without the middle man that is the banks.
The supply chain industry is one that may benefit exponentially from blockchain integration. Companies have enabled more transparent end-to-end tracking. They are digitizing their physical assets pm a decentralized immutable ledger of all transactions that allows them to track assets from the production line to delivery to the end user.
Blockchain technology facilitates the instant settlement of cross border transactions while keeping fees to dollars and cents. So, if you are a company that works internationally and on a daily basis sends cross border transactions that may take up to a week to process alongside hefty middleman fees this use case would be world changing.
Whether it be reports of chemical data regarding oil grades, or tracking shipments of electronics across the world through various ports of entry, the blockchain can be utilized anywhere there is data interacting with the real world.
There must be some innovations leading towards mass adoption.
Smart contracts have the ability to streamline the mediation process between two parties by removing intermediaries that typically drive up costs from their involvement. Not only does it streamline the process but it is cost effective by saving money on agents that normally work through this process on behalf of the companies.
There is less chance of fraud since the code is written directly to the blockchain and also has less chance of being hacked due to the decentralized nature of the chains where a hacker would need to have over 50% control of the blockchain nodes which is extremely unlikely in something like Ethereum. Validators on proof of stake blockchains are also compensated in a way that makes attacks to the network less advantageous to the validator.
NFTs are revolutionizing the digital art and collectibles world. Even in the business side, a company can mint tickets to a football game or concert to a major artist tour on chain and set parameters so that every time the ticket is resold on the second hand market, the team or artist collects royalties on those transactions set at a percentage that they determine during the minting process.
Digital assets and cryptocurrencies themselves can be used for Decentralized Finance (DeFi) which is a decentralized, permission-less integration of traditional finance mechanisms (e.g., payments, exchange, derivatives, lending/borrowing, and more).
Aave, for example, is a company that enables the decentralized lending/borrowing through two parties using smart contracts.
In the instance of decentralized loans, user A put up a digital asset as collateral to be able to access a pool of assets they could borrow from including stable coins. This pool is created by other parties staking their assets in return for some form of yield after doing so for a period of time.
Party A has a risk of his collateral being liquidated if the value of his collateral drops a certain percentage against the borrowed amount, which is why it’s important to do your own research before interacting so users do not over leverage themselves and lose their initial assets.
What about other industries that can benefit from these innovations?
Humans will have the ability to vote on-chain in a truly decentralized and transparent manner once again without the middle man. Anyone that does not live under a rock during the last U.S elections knows about the questions raised about voting methods across the country. With this technology, we can have absolute certainty in future elections to be completely fair for all involved on either side of the aisle.
The blockchain can hold digital IDs, certificates of any kind, even passports on its immutable ledger. This data can be accessed and viewed at any time in a completely transparent manner which will bolster international travel industries.
In many cases, families have to deal with wills and inheritances at some point in life. Being able to know that your will can not be defrauded or tampered with after your passing makes all the difference for your beneficiaries and your estate. This data can be entered in a smart contract that can be executed after your passing.
The Bottom Line:
In all these cases, similar to the advent of the internet, it’s more the case of what CAN’T Blockchain do rather than what it can. In short, the next few decades will be bright, a severe juxtaposition to the downturn humanity has experienced over the last year.