The blockchain technology was first popularized by bitcoin. However, blockchain applications have now moved beyond cryptocurrencies, with some enterprises today even adopting blockchain for IoT security. The future is bright with numerous companies, startups, and blockchain developers working on a wide range of blockchain use cases. The technology’s ability to distribute processing while ensuring the veracity of transactions may allow companies to process data far more efficiently. This, in turn, can have an impact on a variety of industries.
How blockchain works
How does the blockchain technology work? Essentially, a blockchain is a giant ledger that records and verifies every transaction. With bitcoin, each transaction is public, although the specific identity of a person behind the transaction is kept anonymous.
Blockchain gets its name from the blocks of information added to the distributed ledger (the chain) based on certain criteria. To augment the chain, each block must be verified in accordance with the consensus algorithm adopted within the chain. With bitcoin, it is done by miners—people who dedicate enormous computational powers to solve a cryptographic puzzle and thus add the next block.
Financial transaction processing
One of the most obvious blockchain applications outside bitcoin is payment processing. A public ledger that can track and verify transactions without a centralized server may be useful for companies that need to process multiple transactions such as payments.
Consider Visa, which alone processed 138.3 billion transactions in 2019 per day. It’s a resource-intensive undertaking, and credit card fraud remains a persistent threat. Visa and MasterCard are working on blockchain applications that will mitigate these challenges and risks.
Visa has launched B2B Connect, a blockchain-based platform for business-to-business transfers. International payments can take as long as five business days to process and verify. Visa’s B2B Connect enables near-real-time B2B transactions.
However, the bigger catch of blockchain-powered international transfers is in the cost. To put things in perspective, personal remittances received accounted for 0.8% of the world’s GDP in 2019, according to the World Bank. For example, Tonga has one of the highest remittance rates, which is 40.7% of its GDP.
Western Union and other MTO-model companies have been the only solid options for transferring money abroad. Although banks usually do offer this service, people are tentative about using it. Banks are notoriously known for relying on intermediaries in other countries and having long transferring times. Blockchain-based payment systems, on the other hand, enable both individuals and businesses to transfer money securely and in a matter of a few hours.
Yet, as promising as blockchain is for banking and finance, there are more blockchain use cases across industries.
Medical data management
A public ledger is both transparent and anonymous. Every transaction is recorded and displayed, yet the identity of those conducting the transactions remains anonymous. This technology’s unique quality may prove useful for a number blockchain use cases.
Consider medical records. The information contained in them must be kept confidential in accordance with various regulations (such as HIPAA in the US). Complex confidentiality and reporting requirements make healthcare a proverbial minefield. However, blockchain’s inbuilt advantages regarding confidentiality and user access may alleviate these burdens.
Currently, medical records are a major obstruction for healthcare providers. In fact, the State of Medical Communications report by TigerConnect estimates that 90% of medical providers are still relying on fax machines. This means documents must be printed, scanned, and then printed again. As a result, medical information systems struggle to keep up with the time-sensitive nature of many medical procedures.
Another primary concern regarding medical records is healthcare data security. For example, during the notorious Anthem medical data breach, about 80 million records were hacked, which resulted in lawsuits settled for the total of $115 million, with another $31 million in attorney fees. In 2019, the American Medical Collection Agency (AMCA) was hacked, which resulted in the exposure of the personal and financial information of over 20 million Americans.
As you can see from the aforementioned facts, the healthcare industry needs a major change in its approach to privacy and security. However, as these challenges become more apparent, more blockchain use cases are emerging. In 2018, Canada’s University Health Network in partnership with IBM launched a blockchain-based platform to tackle these problems. Contrary to traditional healthcare databases, patients can now control operations involving their data, and those operations cannot be altered unless the majority of the network’s participants approve it (the 51% rule). The platform also conveniently tracks who and when accesses the data. Moreover, patients’ information can now be shared only after their consent.
Such an advanced system has been proved especially useful for monitoring COVID-19 cases. MiPasa, developed by the alliance of IBM, Microsoft, Oracle, the Linux Foundation, and newly emerged startup Hacera, helps share data about COVID-19 cases on a global scale. It sources information from both large international organizations and smaller local healthcare facilities to trace infected people. Hacera uses Hyperledger Fabric and IBM blockchain platforms to gather and stream data. Moreover, the infected individuals are identified without their identity revealed, meaning that data about those people can never be used for any purpose by third parties.
Overall, this vector of healthcare software development is directed at patients’ privacy rights. Wrongdoers always find ways to use healthcare data for their personal gain, but before blockchain use cases appeared, we simply didn’t have the technology to protect patients’ data from the interference of third parties. Previously, the best option for storing data was straightforward—a centralized database, which is, unfortunately, vulnerable by design. To put it simply, with a centralized architecture, organizations are in control of patients’ data. With blockchain in healthcare, patients may finally own and manage that data.
Writing for the MIT Review, Mike Orcutt states that healthcare professionals across the globe see the blockchain technology as a secure way to optimize the sharing of medical records, protect sensitive personal data from cybercriminals and give control over data back to patients. Orcutt also notes that a custom healthcare-specific blockchain that can deal with the many nuances and regulations of the industry is yet to be built. In its current form, blockchain may not be ready for such a specific high-value application.
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Smart contracts in place of intermediaries
One interesting aspect of blockchain is its ability to eliminate the need for intermediaries through smart contract implementation. With cryptocurrencies, you don’t need a centralized bank. With medical records, you don’t need a complicated system and staff coordinating messages between medical facilities. Now, let’s apply this to contracts.
Under the traditional model, businesses and individuals need to rely on lawyers to both draw up the contracts and ensure that everyone is getting their ‘just desserts.’ For example, if an artist were to set up a royalty contract, a lawyer would need to ensure that it is worded and enforced properly.
As blockchain use cases move beyond bitcoin, coders and lawyers have realized that the platform could be used to build self-executing, or smart, contracts. Essentially, the contract itself is converted into code and then distributed among the computers running a blockchain.
As conditions are met and payments are made, smart contract platforms based on blockchain can record and verify the transactions. By now, this is still performed with the help of a trusted mediator. For a transaction to become verified, the contract should be signed by two of the three parties (usually, the buyer and the mediator).
A smart contract can also have stipulations, such as integrated punishments for late payments. If a payment is not made on time, the smart contract would automatically be updated to reflect the penalty. Likewise, if a service/product is not delivered or rendered, a refund or penalty could be implemented.
Supply chain management
Supply chain management is an art of accuracy, efficiency, and collaboration. In most cases, companies around the globe are working together to ship particular goods to an intended destination as fast as possible. This is where the first problem lies: organizations have different IT systems, which causes delays, labeling errors, and ultimately lost revenue. For example, a study by the University of Guelph reveals that at least 32% of finfish imported to Canada are mislabeled.
With Chronicled, physical assets are given a digital ID. Chronicled’s system uses smart contract applications and physical asset tracking, all through a blockchain. This allows companies to not only track goods, but also manage payments, transactions, delivery schedules, and other activities. When combined with shipping tracking, Chronicled’s system can even be used to verify the authenticity of the products being delivered.
For example, Hyperledger Sawtooth, an enterprise blockchain platform, is used to record the journey of seafood from the place of origin to the customer. The end-consumer can access a complete record of that journey, while the logistics company can adequately trace the necessary telemetry parameters including location and temperature of the product.
Another problem with modern supply chain management is transparency, which is an especially relevant topic for the food industry. It’s extremely complex to adequately trace if a particular product aligns with the quality, environmental and ethical standards. Add counterfeit products, which account for 3.3% of the world trade according to the OECD, and now we have a case for supply chain management that begs for a massive change.
The automotive industry has one of the most complex supply chain management systems in the world, where often a plethora of parties are involved. Blockchain applications have already proved useful for this industry’s purposes. For example, BMW uses blockchain to trace components and ensure that their high-quality standards are met. In 2019, BMW started a pilot project called PartChain, a blockchain-powered platform that can consistently trace and verify the data in its supply chain. The automotive giant has already seen efficiency increase and cost reduction. Currently, the platform is used by two BMW plants and three part suppliers. In 2020, BMW is planning to involve seven more suppliers into the project.
Let’s get back to healthcare now. The World Health Organization claims that 10% of medical products such as pills and vaccines are of sub-par quality or falsified in developing countries. When it comes to healthcare products, quality control becomes a matter of life and death, especially considering the current pandemic situation. To tackle this emerging problem, the pharmaceutical industry is turning to efficient blockchain use cases. Again, the trustworthiness is now justified not by a single body but a whole network of participants. Companies can now collaborate to increase data sharing speed and safety without exposing sensitive information.
For example, MediLedger Network, a consortium with a focus on pharmaceutical supply chain management, is set to verify drug authenticity. Until blockchain, it was the distributors’ job to ensure that the drugs they handle are authentic by tracking down serial numbers. This process is mandatory but time-consuming and hence ineffective. By utilizing MediLedger and barcode scanners, companies can now ensure that drugs are not counterfeited. Moreover, they can easily trace where a particular product has come from without exposing business-sensitive information to anyone.
This all looks too good, indeed. As with any digital revolution, the support of the majority of participants is required for this change to have a real global impact. In supply chain, digital and physical worlds collide, making the transition even more complex and calling for blockchain interoperability.
To put this in perspective, in some developing countries a serial number is not even legally binding. Despite that the aforementioned MediLedger project is supported by the biggest names in the industry including Walmart, Cardinal Health, and FedEx, to name a few, such pilot projects will remain only phantoms of a bright future until unified business standards are enforced globally.
However, there are definite steps in the right direction. The Drug Supply Chain Security Act, for example, enforces US manufacturers to set tracing systems by 2023. It means that any drug journey from a manufacturing facility to a patient must be somehow documented. Such regulations force businesses to look for the most effective solutions, and blockchain is an indisputable winner in this regard.
Construction workflow automation
When it comes to complex construction projects, contract processing eats up a sufficient part of the budget and slows the delivery times. To add to this, paperwork and obscure communication between all the participants involved in construction projects also make current processes inefficient. Moreover, according to the global construction and infrastructure group Aon Risk Solutions, 95% of construction data get lost on handover to the first owner.
Blockchain applications have the potential to sweep those inefficiencies in construction and make the overall process more transparent and secure for both the owners and construction firms. For example, California-based company Briq uses blockchain to digitize construction data. It creates a data repository for transparent documentation of the entire building process. This immutable recording of transactions related to all construction operations on a specific project has proved to be an extremely powerful risk-management tool.
For example, wrongdoers might want to omit any unwanted specifications in the documentation that can increase the price of a property. Blockchain applications can completely remove such a possibility.
When a product or specification needs to be found in a building, there is finally a place to go to simply search for what is actually in that building. The blockchain-encoded specifications are granular: paint colors, ceiling fixtures, LED bulbs, door hardware—plus manuals, warranties, and service life in a countdown clock that building owners can monitor.
IP rights protection
Artists, who are commonly distant from the intricacies of business aspects, are low-hanging fruit for fraudsters of all kinds. The media sector is begging for a robust solution that can trace content rights and eliminate the need for countless disputes and lawsuits. Among blockchain use cases, this one is for tracking who owes what to whom.
For example, Verifi is a blockchain-based music metadata tracking service that tackles the persistent problem of music rights management. The platform registers all data related to a music release on the blockchain that tracks changes to proprietary data. Such blockchain applications can shift the power to content creators and serve as an intellectual property protector.
With more media blockchain use cases, this industry will also see prices for digital content falling. By eliminating intermediaries from the equation, content creators can charge as little as they want and keep bigger shares of revenue to themselves.
Closing thoughts
Now that we are long past the blockchain hype, the technology’s transformative power is indisputable. With use cases ranging from blockchain for nonprofits to smart contracts in insurance, this news-buzzing blockchain ‘potential’ is confusing as it doesn’t have the qualities of a conventional industry changer.
The opportunity here is not in transforming a few processes to make them more efficient, but to change the approach to business processes as a whole. The term ‘signed document’, for example, has a noticeably more legal power in the context of blockchain applications. Upon signing, contracts become automatically enforceable. Paperwork, a notorious stumbling block in many industries, will have to be approached from a completely different perspective.
Here at Itransition, we believe that these promising blockchain applications will start to have a global impact when more companies will make the benefits of blockchain more apparent. Those significant gains attracted through blockchain applications will draw a swell of attention from other companies and make the need for the change more urgent. Governments will inevitably catch up, enforcing new required standards and regulations. But those who will start implementing this technology as early as possible have a chance of conquering larger markets.
I think in the same way that the internet forced everyone to evolve, blockchain is going to change the game again.
