Surprise! Blockchain is not only about going all-in on Dogecoin for a (potential) 500% profit. The applications of this technology are much broader.
When we talk about blockchain, many people get their minds stuck on cryptocurrencies. Thinking about their speculative value and how you can make – or lose – a lot of money with them. Yet, this is not doing justice to the incredible technology that is blockchain. Indeed, current and future developments could transform many industries.
A blockchain is essentially a huge database with completely transparent access. A blockchain is a digital ledger where every transaction is recorded and distributed across a network. Each time a transaction is made, it is added to a block. This block is then recorded using an immutable cryptographic signature. If A gives B $5, the transaction will be recorded in both of their ledgers, as well as in the ledgers of C, D, E, and every user of the ledger.
Because each person has access to the same ledger, a block cannot be easily changed, as a change requires the consensus of every user. If a block showed a $4 transaction instead of $5, it would be easy to check millions of other participants in the network to see which one is fake. If a hacker wanted to corrupt the system, he or she would have to change every block on the chain. Every version distributed to users would have to be modified. Such a hack would be so costly, with so few chances of success that the reward would seem unworthy of the risk. Thus, the system is both very transparent and very secure.
But what can this technology be used for? As you will see, it goes way beyond payments and money transfers.
Let’s address this evident element first. With bitcoin leading the way, blockchain has quickly been used to transfer currency. With the technology allowing transactions to be made in seconds, money could be exchanged at an alarming speed with minimal costs. According to ComputerWorld, blockchain could save between $8 billion and $12 billion a year for financial institutions, just by eliminating bureaucratic middlemen and reducing third-party fees,
Many well-established payment systems such as are now integrating cryptocurrencies into their services. Visa, PayPal, and Square are some of the companies already doing it. Mastercard said in November that it would allow partners on its network to buy, sell and hold cryptocurrencies, using a digital wallet.
Smart contracts are perhaps one of the most transformative features of the blockchain. They are like paper contracts, except that the rules are embedded in computer code, and applied in real-time on the blockchain.
Let’s take a concrete example. In the case of a lease, imagine that a sum of money is kept on a blockchain to pay for possible damages. In a classic contract, there is the owner, the lessor, and an arbitrator in case of disagreement. Imagine a situation where the property is handed over at the end of a lease agreement and repairs are needed, but the tenant doesn’t want to pay them. The blocked deposit is thus disputed. On one side, the tenant wants to retrieve some and go on with his life. On the other side, the landlord wants to finance the repair of the damaged apartment. Without a smart contract, both sides would have to engage in a legal fight to determine who is right. This would cost an unnecessary amount of time and money. Now, let’s imagine that both have a key unlocking the sum and that a third key is given to the arbitrator. If the contract is coded so that at least 2 keys are needed for the sum to be distributed in either direction, the arbitrator can judge the damages and use his key in the appropriate direction. The money would go where it needs to without incurring more legal costs. This would be one of the many situations where smart contracts could enhance the fluidity of the procedure.
The Internet of Things (IoT) has millions of applications as devices become increasingly smart and connected. However, it’s also an opportunity for hackers to steal your data, whether it’s from your Alexa, your refrigerator, or your car. Adding blockchain technology to the mix ensures that data is kept safe and is only accessible to the user or authorized third parties.
We can take the simple of truck leasing to illustrate the combination of IoT and blockchain technology. If equipped with IoT sensors, truck leasing companies could charge renter’s fees based on the torque of the load rather than on mileage, the current practice. This would not only help record key events on the blockchain but also help manage the fleet’s whereabouts. It would also open the door to more meaningful billing practices.
The next element might be surprising to some. Proving your identity and keeping it to yourself can sometimes be a real challenge. Every year, millions of people are victims of identity theft or fraud. But the problem is even larger. According to the World Bank, approximately 1.1 billion people don’t have a way to claim ownership over their identity. Creating a ledger with a digital identity for every citizen of the world would empower users. It would also allow these people to access financial services. Keeping names, social security numbers and birth certificates on a decentralized ledger could provide a legal existence for many people and reduce identity abuse. Forget the issue of losing your passport, you might not need it anymore.
Digital ID could not only be inclusive, bringing, legal existence to many, it is also expected to contribute greatly to economic growth worldwide. A McKinsey study reveals that reaching the unbanked population in ASEAN countries could grow the economic contribution from $17 billion to $52 billion by 2030. This is one of the crucial steps for a more globalized and inclusive system.
Healthcare is perhaps one of the segments where the most inefficiencies can be eliminated. Providing a secured distributed database with clear rules as to which information can be shared – and with whom – could significantly speed up processes and reduce costs. For example, you could go visit a new doctor or clinic that could have access to the necessary data within minutes, and they in turn could ensure that any pharmacy knows what they are authorized to give you to treat your condition. Forget papers files and excessive paperwork, everything will be much simpler
As mentioned above, one of the biggest problems in healthcare is the fragmentation of data across many providers and hospitals. Patientory proposes a solution in the form of a blockchain-based medical record system. This would ensure that the record is always complete and up to date and that it is only accessible to authorized individuals, be they patients, doctors, pharmacists, and other healthcare professionals.
As logistics are getting increasingly more complex with more and more parties being directly or indirectly involved, it could benefit greatly from the help of blockchain. Indeed, one of the biggest ills of this sector is the lack of communication and transparency, within a company or between different providers. There are hundreds of thousands of shipping companies in the world, which gives rise to recurring bottlenecks and information losses. Blockchain could enable the accurate identification of items in the supply chain, eliminating any need for paper-based information transfer. Combined with IoT, it could track each item while assessing its status and quality in real-time. Not only would this be safer, smoother, and more automated, but it would by extension save the industry billions of dollars.
Some large logistics companies, such as DHL, have already embraced blockchain. The company keeps a digital record of shipments and logs every transaction. DHL is at the forefront of blockchain adoption, ensuring more traceability, transparency, and greater process automation.
Unless you’ve been living in a cave for the past year, you’ve probably heard of NFTs or “Non-fungible Tokens”, unique digital items stored on a blockchain. Thanks to the blockchain, users can buy unique digital content (a painting, a piece of music, a collector’s item) and have proof of ownership giving them commercial value.
The rarity of NFTs can make them reach colossal values, as seen in the $69 million sale of Beeple’s The First 5000 Days at a Christie’s auction. Many online marketplaces sell NFTs, such as OpenSea, Solanart, or Dapper Labs. There are also many projects in development, such as NFT concert tickets that could impose a maximum price to combat the black market, or a fixed percentage of secondary sales distributed back to the artist or concert venue.
Blockchain could also help many states operate more smoothly. In addition to securing records, improving bureaucratic efficiency, accountability, and thus financial burden, blockchain could also eliminate millions of hours of inefficient work each year through smart contracts and a transparent public record.
Finally, this technology could be applied to voting. How can voter fraud be considered when every vote is immutably recorded in the blockchain? The “one vote per person ” rule could be more easily enforced with a system that ensures the unique use of one’s voting token on the blockchain.
Today, it has become difficult to enforce copyright protection on digital media such as music and movies. Blockchain could be a good solution for digital content downloads to ensure that artists and content creators receive their fair share of compensation. Making digital files unique and preventing them from existing in multiple places at once could make piracy virtually impossible.
One example is Open Music Initiative, a Boston-based nonprofit that has created an open-source protocol to identify original creators and music rights holders. By entrusting the data to the blockchain, it is easier for artists to be recognized for their work and paid accordingly.
Bitcoin has been heavily criticized for its energy consumption, but we can also use blockchain to save the planet. Not only are there new protocols that plan to reduce CO2 emissions like RubiX, but there are also many green projects based on blockchain are emerging.
A great example is the startup Single.Earth, a company that creates revenue from trees without cutting them down. Single.Earth is a digital platform that connects landowners with businesses. Businesses have the opportunity to offset their carbon emissions and protect biodiversity by paying landowners to conserve their forests and wetlands. This is an indirect way for companies to balance their carbon footprint to achieve eventual carbon neutrality. Single.Earth’s platform turns the environmental benefits of trees, such as absorbing CO2 and increasing biodiversity, into a tradable asset. This gives landowners an incentive to protect the environment because they are paid to do so.
As you’ve seen in this article, blockchain technology is applicable in many areas. And it goes far beyond the speculative fun of cryptocurrencies. One blockchain cannot solve every problem. But this technology does and will continue to provide new and innovative solutions in many areas.