Bitcoin and similar cryptocurrencies like Ethereum have been on fire for the better part of 2017 and with it, blockchain technology has been a big focus for financial institutions, businesses and more.
For many people, blockchain technology seems overly complicated, relying as it does on intricate algorithms like the Diffie-Hellman Key Exchange. But at its roots, this technology is not only simple but, also, extremely practical.
When we talk about blockchain tech, we’re talking about tech whose fundamental function is providing a shared database that contains entries that need to be both confirmed and encrypted. Think of it as a PDF or Google doc but with rock solid cryptography.
The thing that’s amazing about this blockchain technology is that it puts the kind of security once reserved for governments in the hands of individuals and businesses.
Use cases and applications can serve a number of people well across a wide spectrum of industries, from finance and retail to healthcare, banks, telecom and beyond.
The beauty of blockchain use cases and, indeed, the blockchain itself, is that it doesn’t work in the way that brick-and-mortar technology works. Cryptographic locks are nothing like the Master lock you had in high school or the mechanism of a Sentry safe you pick up at Home Depot.
Whereas a safe or padlock can be dragged outside and cracked open with a crowbar or a table saw, a cryptographic lock is impenetrable. The heavy duty encryption and private key ensures this. The private key generates a signature for each blockchain transaction a user sends out.
Some have speculated that blockchains are truly safe because theft can theoretically occur, but that’s where advanced blockchain technology comes into play. Thefts are caused by a private key being stored insecurely.
Maybe you’ve heard of “cold storage” or “Bitcoin wallets” and wondered what they are. Cold storage is any method by which Bitcoin private keys are created and stored in a secure offline environment. This includes paper, hardware and software wallets.
These are just some of the ways that people are able to prevent hackers from gaining access to their digital currencies or any other data stored within their wallet.
Blockchain tech can be beneficial to any number of organizations or individuals, whether you are a venture capitalist or the owner of a big box store chain. Here, we’ll take a closer look at how these technologies can help in a range of different areas and which ones you should keep an eye on in the year ahead.
Blockchain Use Cases in Finance
Blockchain tech gives us a reliable model for securely creating a fail safe log of sensitive activity. This is why it is a terrific means of making international payments, money transfers and more. Banks and other financial institutions could utilize this to provide their customers with lower costs and less threat of loss.
Regulatory Compliance & Audit
Since data is saved into the blockchain and is unable to be altered or deleted, it performs the role of the document of proof for transfers of digital assets. But it can also serve as a record of ownership for physical property. In this way, it could be harnessed to register and record land titles, effectively digitizing real estate processes.
Because of its capacity for recording actions in the chain, it could create an audit trail for regulators looking to verify a financial institution’s compliance.
This could extend well beyond auditing to similar cases such as anti-money laundering efforts and insider trading. Banks and Bitcoin exchanges could use this technology to keep a watchful eye on what their employees are up to, thereby eliminating the potential for any malfeasance.
Nasdaq.com has even said that the blockchain could create a true peer-to-peer sharing economy. And it makes perfect sense because P2P payments services all too often limit where transactions can be made geographically.
With the blockchain, transactions can be made anywhere in the world and at any time. In the past, users of P2P services have encountered many problems, some more acute than others. For instance, one user had his Venmo account hacked and he wasn’t even notified by Venmo that his account had been compromised.
Blockchain technology remedies all of the issues people have with social-finance apps by delivering efficiency, immutability, security and privacy across the globe.
Dapps (distributed apps driven on a blockchain) enable you to send any currency to anyone in the world without transfer fees or delays.
Other Dapps like Bitwala have features like Bitwala Messenger that let users interact with those who they send funds to or who sends funds to them. You are able to transact with all altcoins including Bitcoin and Ethereum.
Blockchain tech can streamline trade finance because it can track goods and automatically release payments as they move around the world. It is now possible to conduct cross-border trade finance transactions with a few keystrokes.
Anyone who has spent any time in trade finance can tell you how sluggish the paper-based process can be when it comes to executing a letter of credit, but the blockchain provides real-time processing, automated smart contracts and transparency across the value chain.
What’s more, blockchain tech can be integrated as a global payments solution or decentralized document management system.
Many large companies have already begun investing in blockchain testing and using it in trade finance and receivables finance. The Society for Worldwide Interbank Financial Telecommunication has been looking into blockchain in trade finance and they seem to be enthusiastic about integrating it into their banks.
Many believe that blockchain technology could be promising for the future of capital markets. Middle and back-office functions in this industry are routinely slow and inefficient. Blockchain tech can speed the process up by giving those in the capital market game the ability to trade assets electronically in the blink of an eye.
Although these applications are being tested, the technology won’t truly find its foothold in capital markets until a wholesale change to the infractructure and value chain occurs.
Goldman-Sachs’ Investment Research arm has said that the implementation of blockchain technology could save capital markets $2 billion in the US alone.
Several experts are of the mind that blockchain tech could present a great opportunity for those in the insurance game with the automated processes it would deliver, processes that are faster, more affordable and more secure than those currently in place.
Blockchain can expedite payments, claim initiation and management, risk transfer and micro insurance on a network of trustworthy participants. This can even apply to very specific forms of insurance such as crop insurance.
Advanced algorithms can check GPS and map out weather data based on the location of the crop. This mitigates the problem of human error and speeds up the tasks that need to be performed at less of a cost to the insurer.
Blockchain Technology in Business
If you’ve ever watched an episode of Grey’s Anatomy, you’ve likely seen the specialized connected medical devices that are being used in top shelf medical facilities these days. As modern technology continues to be implemented by hospitals and clinics, it becomes common sense to bring blockchain tech into the mix.
Blockchain tech can connect those devices to a person’s medical record and store that information in the blockchain to append any new data to that individual’s record.
The CSO of FAST at Mindshare has said that blockchain tech is the future for media. In his words, “Blockchain can help resolve some of the existing tensions in the ecosystem. First of all, there is lack of trust within the ecosystem as the stakeholders are zealously guarding their own information (for all the right reasons) of what we call 1st, 2nd and 3rd party data sets.
“While we are still living with this nomenclature, what is 1st party data to one member is 3rd party to somebody else and so on and so forth. We believe Blockchain technology can neutralise this nomenclature and assemble all the data sets into one common ‘ledger’ which can be protected for privacy and anonymity through a ‘distribution’ and with a ‘hash’ that can be used as a chain to connect all of them.”
Blockchain tech can be used for everything from monetization (distributing content on the blockchain and getting paid for it immediately), advanced television (Comcast’s new ad group allows brands to buy advertisements on broadcast and OTT TV using the blockchain) and fraud (the open protocol on the Ethereum blockchain tags a section of creative and follows it on the internet to make sure people view it and track who sees it).
Blockchain Applications in Other Areas of Interest
Nasdaq has run a blockchain tech trial that determined that they could utilize it for shareholder voting. Others have investigated its potential for record management, cybersecurity, data storage, accounting and more.
All indications point to it being a valuable tool for non-profit agencies, voting places, real estate agencies (speeding up the home sale process), record managers, identity managers and more.
One of the most exciting areas in which it could be helpful is the so-called Internet of Things. By tracking the location of goods and assets, and creating new approaches to online identity.
The digital infrastructure is changing and blockchain technology will undoubtedly play a central role in that change. By protecting against data tampering, maintaining user privacy, allowing expedited transactions and doing away with the arbitrary fees we typically deal with at major banks and financial institutions, blockchain tech will improve multiple facets of our day to day lives.