Before we get to blockchain use cases let’s start off with the basics. Blockchain is a decentralized database that maintains track of a specific set of transactions. A block is a collection of transactions, and its data may never be altered.
Blocks are joined together in a chain to form what is known as a blockchain. Blocks are timestamped and connected one after another until they’re full, at which time the preceding block is linked behind it.
The protocol has applications in fields as diverse as finance, shipping and supply chain management, digital identity and user authentication, virtual reality content distribution, manufacturing transparency, tax collection, and reporting.
It is most frequently used as a distributed ledger in which all participants agree on the “truth” of each transaction before it is confirmed as a permanent record in a block. There are a few private blockchains with just a few or no additional participants in the accounting of transactions. Despite this, blocks and blockchains continue to be identical.
The invention of bitcoin, a peer-to-peer electronic money system, was the catalyst for the rise of blockchain. Since then, applications and uses for blockchain have grown considerably.
Blockchain use cases – Banking and Finance
Blockchain technologies have the potential to improve capital markets in three primary ways. Blockchain solutions provide a variety of benefits for capital markets, including:
- Faster settlement and clearing
- Consolidated audit trail
- Operational improvements
Axoni is a startup that was founded in 2013 and specializes in blockchain-based technology for capital market improvement.
Blockchain allows you to create a tamper-proof log of sensitive activity in a secure and efficient manner. This makes it ideal for international payments and transfers of funds.
For example, Banco Santander launched the first blockchain-based money transfer service in April 2018. The service, dubbed “Santander One Pay FX,” uses Ripple’s xCurrent to allow customers to make same-day or next-day international payments using Ripple’s xCurrent.
Santander has cut the number of intermediaries typically required in these transactions by automating the whole process on the blockchain, making it more efficient.
Santander is a large commercial bank that serves numerous small and medium-sized enterprises. Santander has a lot of retail clients who would benefit from more efficient and cheaper payments, particularly in the realm of international transactions. Blockchain technology may be utilized to reduce the cost of these transfers by removing the need for banks to manually reconcile them.
Businesses have long complained about the time-consuming procedures of historic trade financing, which have frequently interrupted operations and made liquidity difficult to manage.
Cross-border trade has a lot of variables to consider when exchanging information, such as origin country and product information, which generate a large amount of documentation.
Blockchain has the potential to speed up trade finance transactions and make them more efficient across jurisdictions. It allows businesses to interact with each other more easily, regardless of their location or geography.
Money Laundering Protection
The encryption that is so important to blockchain finds yet another application in combating money laundering. The underlying technology allows for record-keeping, which aids in “Know Your Customer (KYC),” the process by which a business validates and identifies its clients’ identities.
Regulatory Compliance and Insurance
Because blockchain is so secure, it’s extremely useful in accounting and auditing because it eliminates the danger of human error while also assuring the accuracy of the records.
The account data cannot be changed, even by the record owner, once they have been secured using blockchain technology, which is another benefit. The disadvantage is that blockchain technology may eventually obviate the need for auditors and eliminate positions.
Smart contracts are a type of blockchain application that has the potential to transform the insurance industry. Customers and insurers may use smart contracts to handle claims in an open and secure way.
All contracts and claims may be stored on the blockchain and verified by the network, eliminating fraudulent claims because several claims on the same accident would be rejected.
For example, openIDL, a network built on the IBM Blockchain Platform with the American Association of Insurance Services, is reducing insurance regulatory reporting and simplifying compliance obligations by automating insurance regulatory reporting and streamlining compliance requirements.
P2P payment services such as Venmo are convenient, but they have restrictions. Some providers limit transactions by location. Others, on the other hand, charge a fee for using them.
Many are exposed to attacks from hackers, which is undesirable for consumers who are putting their personal financial information on the line. Blockchain technology, with all of its advantages, may aid in the resolution of these issues.
Blockchain use cases – Business
Health data that would work well with blockchain technology includes general information such as age, genders, and potentially basic medical history data like immunization history or vital signs.
On its own, none of this data would be able to identify any one specific patient, which is what allows it to be kept on a shared blockchain that may be read by many people without posing significant privacy issues.
With more and more linked medical devices out there, people are starting to worry about their health records. But with blockchain technology, we can connect those devices with the record and put people’s minds at ease.
Devices will store data securely on a healthcare blockchain, which will then be added to patients’ medical records. A current problem with connected medical devices is that the data they produce gets trapped in silos; however, blockchain has the potential to break down those barriers.
People tend to move houses every five to seven years on average, and in a person’s lifetime, they will likely relocate nearly 12 times. With this much movement, blockchain could come in handy for the real estate market.
Proof would expedite home sales by quickly verifying finances, reducing fraud thanks to its encryption, and offering transparency throughout the entire selling and purchasing process.
Supply Chain Management
Blockchain’s unchangeable ledger makes it ideal for activities like real-time tracking of commodities as they move and are exchanged throughout the supply chain.
Using a blockchain allows companies to implement a number of innovative solutions for transporting these items. Using a blockchain, events can be queued up in the supply chain, such as assigning new arrivals at a port to different shipping boxes.
Blockchain offers a new and dynamic approach to keeping track of data and putting it to use.
Blockchain technology might be utilized to execute energy supply transactions, as well as help lay the groundwork for metering, billing, and clearing procedures, according to PWC. Some other possible uses for blockchain technology include verifying ownership of assets, controlling renewable energy certificates, and managing emission allowances.
There are many more examples of blockchain use cases that are proven to help and simplify everyday tasks. People are willing to give it a chance and that is one step closer to efficient everyday life.
By offering enhanced security, greater transparency, and near-real-time traceability, blockchain technology may be utilized in a variety of sectors including financial services, supply chains, and the public sector, as we mentioned above.
In order to spur blockchain applications, governments are creating new legislation supporting its use. For instance, under state law in Arizona, signatures verified through blockchain technology are accepted.
Despite these efforts, a lack of understanding and knowledge of the technology is still one of the most significant roadblocks to blockchain investment.
At its core, blockchain is a digital ledger of transactions that is incorruptible and tamper-proof. This makes it ideal for numerous applications across various industries. We explore some use cases of blockchain technology in financial services and the public sector to help businesses understand how they can leverage this innovative technology in their processes.