Blockchain is the digital, distributed, and decentralized ledger that is behind cryptocurrencies. It’s responsible for logging all transactions without the need for a financial intermediary. In other words, we have a new method of transmitting funds and tracking the transaction data…and this scares banks and accounting firms to death.
What was the impetus for birth of blockchain? Blockchain is the vision of process-engineers and developers who saw the banking system as corrupt and problematic. To that point, the issue was banks act as third-parties working both ends-to-the-middle by charging fees to any and all participants in a transaction. Secondly, banks take issue with payment validation – as in, there’s no need. As a business, there is a need to make sure the books balance at the end of every day. Simple accounting. In addition, if you’re dealing with a cross-border transaction, settlement could take up to five business days. In this scenario, blockchain delivers real-time transactions – within borders or across them. And banks find themselves unable to charge the businesses a transaction fee resulting in lower costs to the companies participating in blockchain.
The following uses are other places in the daily flow of business where blockchain has real, tangible application
Payment Processing And Money Transfers
This is the lifeblood of business. The most primal use for blockchain is as a means to transfer funds from one party to another in real-time. As mentioned previously, with banks out of the picture, and transaction verification and authentication happening around the clock governed through smart contracts, the parties involved in any blockchain transaction can see each deal settled within a matter of seconds.
Supply Chain Communications
Most products are not made by a single entity but by a chain of suppliers who sell their components to a company the assembles and markets the final product. Using Blockchain proactively provides digitally permanent, auditable records that show stakeholders the state of the product (or project) at each value-added step. This process also allows businesses to pinpoint inefficiencies and locate items
within their supply chains in real time as well as measuring how products performed from a quality-control perspective.
Loyalty & Rewards Programs
Blockchain will revolutionize the consumer experience by becoming the driver and delivery system for loyalty & rewards programs. Through tokenization that rewards customers, by rewarding customers through a system that tokenizes and encrypts each transaction while storing their tokens on the blockchain, the customer is incentivized to return to a certain store/website to shop or a casino to gamble. The Blockchain would also eliminate the fraud and waste commonly experienced with paper- and card-based loyalty & rewards programs. The data stored on the Blockchain would also be used for predictive modeling on the marketing side.
There are 1.1 Billion people worldwide who cannot present proper identification. Currently, several companies have developed digital IDs within Authenticator apps to reduce this barrier. The beta versions are being used by millions of people which give users a way to control their digital identities. Think about this being used by people in impoverished regions to access financial services and eventually start their own business.
Copyright And Royalty Protection
With content being created and posted on the internet at a never-ending rate, there is no better industry to act as a test case for blockchain’s ability ensure proof of copyright and ownership than the music industry. The transparency of blockchain, in conjunction with smart contracts, creates a decentralized database establishing the artist/creator’s music rights. This, in turn, ensures transparent and real-time royalty distributions to musicians.
Digital voting will prove to be one of the most disruptive uses of blockchain technology. It ensures that those voting are who they claim to be and are legally allowed to vote – once. By casting votes as blockchain transactions, all concerned parties can agree on the final count delivered through a universally accessible audit trail providing verification and authentication of the permanent, unchanging, and legitimate nature of each vote.
Real Estate, Land, And Auto Title Transfers
A primary goal of blockchain is to remove any degree of uncertainty or confusion that occurs during the course of any transaction. It accomplishes this by creating a digital, trackable and decentralized record of each transaction that has been verified and authenticated. For most people, the purchase or sale of a home, land and auto are significant events and present substantial risk. Blockchain mitigates that exposure by storing titles on its network providing a transparent picture of each transfer and certain identification of the legal owner.
Tracing points of origin of the food that is on your plate when you sit down to dinner is no longer something that seems far off and unimaginable. Sure, consumers can’t point at a potato on their plate and say, “this is from Quinn Farms in Idaho, Field 6, Row D, Section 8.” What’s available are blockchain platforms allowing farm-to-distributor data about the progress of the food through the network, real-time. Chain of custody software provides restaurants and grocers to manage food safety (Read: Recalls). The methodology for incorporating the
food distribution into blockchain comes from using printed sensor technology, external auditors and decentralized apps to provide real-time reads on chain-of-custody. (Editor’s Note: This area has seams to be wary of.)
Immutable Data Backup
Blockchain presents itself as the perfect answer to backing up data. Because transaction history is decentralized, verified, and authenticated there are replicated histories of transactions across the network where the transaction took place. While cloud storage systems are designed to be a go-to source for data safekeeping, they’re susceptible to hackers, or even infrastructure problems. Using blockchain as a backup source for cloud data centers could resolve this concern. If this practice is employed, a variance report will be required to signal differences between the cloud and blockchain transaction history.
Tax Regulation And Compliance
Taxing agencies are looking to blockchain for the real-time transmission of tax data and payments between taxpayers and government entities. These blockchains involve taxpayers in single jurisdictions or they could cross multiple jurisdictions. Those taxing agencies are demanding real-time information from business to assess and support the tax liabilities and deductions. Blockchain increases the speed, accuracy and ease of collecting data resulting in improving tax compliance while reducing the cost of enforcement.
Another interesting use for blockchain is as a means to uphold the rights of workers around the globe. 25 million people worldwide work forced labor conditions. The U.S. State Department and other partners are working on a blockchain registry complete with smart contracts — protocols that verify, facilitate, or enforce a contract — to improve labor policies and coerce employers to honor digital contracts with their workers.
The medical sector has been moving towards digital warehousing for recordkeeping purposes for years. To that end, blockchain provides even more safety and convenience. In addition to storing patient records, the patient, who possesses the key to access these digital records, would be in control of who gains access to that data. It would be a means of strengthening the HIPAA laws that are designed to protect patient privacy.
Wills Or Inheritances
Blockchain may also be able to put your end-of-life concerns to rest. Rather than creating a paper will, people may have the option of creating and storing their digital will on a blockchain network. When used with smart contracts, which could divvy out inheritances based on when certain criteria are met (such as when a grandchild reaches a certain age), wills should become crystal clear and legally binding, leaving no questions as to who should receive what assets when you pass away.
Blockchain promises quicker trading on stock exchanges, whether in securities or commodities. The distributed nature of the technology ensures that a process previously undertaken over the course of several days is affirmed and finalized in just several minutes, greatly streamlining the entire experience. This, in turn, gives the owner access to their funds for reinvestment or withdrawal within minutes.
Managing Internet Of Things Networks
Another exciting application of blockchain involves its tie-in with the Internet-of-Things (IoT). The IoT describes devices that are connected to a wireless network and capable of communicating with users, as well as with other devices. A smart fridge could alert users about food spoilage, sending them reminders when items have been in the fridge for a long period of time. The blockchain could determine the trustworthiness of devices on a network — and continuously do so for devices entering and leaving the network, such as smart cars or smartphones.
Expediting Energy Futures Trading And Compliance
It’s not hard to understand why the energy industry is getting in on blockchain. Similar to the advantages it could bring to equity traders above, blockchain offers the ability to help energy companies settle futures trading considerably faster than they currently do. Also, it should be noted that blockchain could help energy companies log their resources as they are required to do so they can maintain regulatory compliance.
Securing Access To Belongings
Smart contracts within blockchain networks also have the ability to be customized to a businesses or consumers’ needs. As a consumer, you could use blockchain as a means to grant access to your house for service technicians or allow your mechanic access to your car to perform repairs. But without this digital key, that only you possess, these service technicians wouldn’t be able to gain access to your belongings.
Tracking Prescription Drugs
Finally, blockchain could be a means of transparently tracking prescription medicines. In a world where prescription returns do occur, and counterfeit medications are a real thing, blockchain offers drug manufacturers the ability to track their products based on serial and/or batch numbers to ensure that consumers are getting the real deal when they pick up medicine from the pharmacy.
HR & Payroll
HR recruiters will be thrilled by the arrival of a faster, more efficient way to verify the credentials of job candidates. Blockchain delivers the means to save precious time and dollars in confirming the education, certifications, work experience or skills of applicants, particularly those in the gig economy. Payroll managers will welcome this new technology’s ability to that makes payroll less complex and costly, allowing for more timely and efficient payments to employees while capturing the details for tax payments to the appropriate agencies, benefits administration for employees, court decree withholdings as directed by judges, and retirement fund distributions with real-time updates.
Blockchain solutions could also come in particularly handy in the healthcare sector, which has been steadily moving away from paper and toward digital applications for years. In its simplest form, blockchain could store patient records, with the patient possessing the key to determine who gets access to this information. It would be a really nice way of beefing up HIPAA laws protecting patient privacy.
Smart contracts provide a way for organizations to automatically handle large amounts of inter-related transactions – like those that run across supply chains, delivering inventory to the appropriate manufacturing units, and then delivering the finished goods to retailers. Smart contracts can be used to integrate services across different businesses without divulging sensitive or proprietary information. Not to mention, the addition of smart contracts should improve supply chains and help reduce contract disputes since digital contracts are viewed as more legally binding.
Energy Trading, Resource Logging, And Compliance
The energy sector could also be a prime beneficiary of the blockchain revolution. In particular, blockchain ledgers are the perfect means for executing and recording energy trades, along with resource samples, in a transparent and immutable platform. As mentioned previously, energy trades on blockchain can settle considerably faster than with traditional trading networks. Meanwhile, blockchain has allowed mining operations to record resource samples on a single ledger, replacing traditional paper records in the process which demonstrates compliance to regulators in real-time. This will provide efficiencies and cost-savings certain to drive regulators to demand universal application of blockchain standards for document submissions.
20 Real Uses For Blockchain Technology by Sean Williams, Motley Fool, April 11, 2018