Blockchain is the underlying technology that powers cryptocurrenecies like Bitcoin, Ethereum and Tether. It is a virtual, public ledger that records all the transaction data securely and transparently. Blockchain is secured by cryptography, immutable and decentralized; its transaction ledgers can be made public and do not depend on the system of trust.
The transaction ledger can be written with new information and the previous information that is stored in the blocks cannot be edited. This is what makes Blockchain a very unique technology platform – public, immutable, uneditable, audit trail and secure. The application of the Blockchain technology is not just limited to cryptocurrencies. It is far from it. The business applications of Blockchain technology is immense and disruptive!
In this article, we shall explore blockchain applications in businesses. Though we can use blockchain for all kinds of business applications, whether or not blockchain is suitable for a particular business depends on the nature of the business, the business model, the requirements, and many other factors.
These are some examples of Blockchain applications in various industries:
Blockchain provides enhanced accuracy and information in the financial services ecosystem. With blockchain technology, blockchain apps can perform cross border money transfer services, peer-to-peer lending, crowdfunding and provision of bank guarantees. These can be performed using smart contracts that will record transactions or information that is stored in the blocks and cannot be edited. This will enhance the accuracy and security of information in the financial services sector.
Data Authentication & Verification
This includes immutable storage, personal data, digital signatures, and encryption. Data in almost any format can be stored in the blockchain. Blockchains can create public-private key pairs and also be used for generating and verifying digital signatures. Therefore, it can be used for data authentication & verification.
One of the best usages is counterfeiting prevention. For example, Luxtag, a Malaysia-based blockchain company, has patented an anti-counterfeit technology. This technology enables businesses and their customers to protect the authenticity and ownership of their valuable assets by providing digitized certificates using blockchain technology. They have rolled out their first product, known as e-Scroll, for a consortium of Malaysian public universities to verify and validate certificates using a blockchain-powered web application.
Another area related to authentication and verification is data provenance. One of the most successful companies in this area is Everledger. This company has built the Diamond Time-Lapse Protocol, a traceability initiative built on a blockchain-based platform for the diamond and jewelry industry. The system is to ensure that there is transparency along the entire diamond’s lifetime journey, instilling consumer confidence and driving industry growth.
Another application is supply chain management. The most notable is the initiative by Walmart using blockchain technology to ensure food safety. Walmart has been working with IBM on a food safety blockchain solution requiring all suppliers of leafy green vegetables for Sam’s and Walmart to upload their data to the blockchain by September 2019. By placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital.
Other business applications could be medical records management, insurance, KYC management for banks, and more.
Digital Asset Management
Any asset that can be digitized is considered a digital asset. Digital assets include ebooks, digital art, images, video, music, journals, newspapers, audio books, online training courses, recipes, and more. With the invention of blockchain technology, digital assets also include crypto assets. Crypto assets can be cryptocurrencies like E3T, Bitcoin, Ethereum, and other altcoins, or the tokenized version of a real-world asset such as gold, silver, oil, land titles, property, paintings, etc.
Currently, most digital assets are traded over the Internet via the centralized e-commerce marketplace. However, digital assets can be traded more efficiently over the decentralized peer-to-peer that blockchain platforms.
Some real world use cases for digital assets management in blockchain include:
- AlphaPoint. Provides enterprise-grade software that enables institutions to convert assets to securities tokens and trade those assets on an exchange.
- Polymath. Enables trillions of dollars of securities to migrate to the blockchain.
- Harbor. Offers a digital securities platform for compliant fundraising, investor management, and liquidity.
- Powerledger. Provides a platform for peer-to-peer energy trading.
A smart contract is a programmable contract that enables auto execution of a contract the moment it fulfills certain terms and conditions. It is akin to a vending machine – you get your product by inserting some coins or banknotes.
According to Investopedia, smart contracts are:
“self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.”
Almost any blockchain business application involves the use of a smart contract. Blockchain-powered supply chain management makes use of smart contracts to handle transactions between manufacturer, suppliers, wholesalers, and retailers.
In the insurance industry, the client who wishes to buy insurance can provide personal information including sensitive data like medical records via a smart contract to the insurance company. In the health care industry, a patient can get faster and more accurate diagnoses and treatment via a smart contract that allows them to share medical records.
Lack of transparency is observed during and after transactions in buying and selling the property. The blockchain can check the possible fraud and errors in public records. With blockchain technology, the land office will be able to keep and store proper records with greater transparency and accuracy of property information without the fear of fraud and dubious land title.
In conclusion, Blockchain technology is an industry game changer. It is considered one of the emerging technology platform, that provides ways to have secure and transparent validation of transactions. The adoption of Blockchain should not be equated to creating cryptocurrencies. Blockchain as a technology has many positive benefits and uses which could prove to be disruptive innovations within industries. Hence, the importance of Blockchain technology in the future of business is indisputable.
(Article co-authored by: Andrew Wong and Dr Liew Vui Keong)