Blockchain first appeared in a 2008 whitepaper authored by the anonymous individual or group known as Satoshi Nakamoto. More than a decade on, the potential blockchain applications beyond cryptocurrency are garnering attention. Industries from retail and finances to education, healthcare, and government are toying with blockchain, intrigued by its promise of security and efficiency.
But what is blockchain? What are some practical blockchain applications? And will we soon be living in a future enabled by this unique technology?
What Is Blockchain Technology?
We won’t get too technical here. But, a basic understanding of blockchain will shed light on its advantages and potential practical applications.
In short, blockchain is a way to record information that makes it extremely challenging or impossible to change or delete. In other words, it eliminates the risk of malicious actors cheating the system.
A blockchain is a digital ledger of transactions that is duplicated and distributed across a network of computer systems. Each block in the chain contains a set number of transactions. When a new transaction executes, a record of that transaction is added to every computer system across the network.
This kind of decentralized database, known as distributed ledger technology, is not new. Blockchain is a type of distributed ledger technology in which every transaction is secured with an immutable cryptographic signature called a hash.
Its immutability is one of blockchain’s primary benefits. The ledger is essentially unchangeable – records cannot be tweaked, faked, or erased.
Even with a basic understanding of blockchain technology, its potential beyond Bitcoin and cryptocurrency is clear. Let’s examine five practical applications of blockchain across several industries.
Blockchain in the Financial Industry
The global financial services industry is fraught with expensive mistakes, human error, and, unfortunately, corruption. According to research, the asset management industry could slash yearly costs by upwards of $2.7 billion by embracing blockchain technology.
The practical applications of blockchain in the financial services industry could include onboarding, recordkeeping, client screening, data management, security, privacy and transaction and trade processing.
The insurance industry is also subject to costly mistakes, scams, and ingenuine claims. According to the FBI, more than $40 billion vanishes through fraud across non-health insurance sectors. Blockchain can streamline and secure the claims process by shouldering the time-consuming burden of validation.
Blockchain and Smart Contracts
Legal contracts and agreements are often required in the business world, whether that be transferring the title of a property or entering into a partnership with a tech vendor.
Customizable, self-executing smart contracts powered by blockchain technology can help parties maintain ownership rights and adhere to privacy laws.
Smart contracts could be beneficial in the entertainment industry, for example. Issues with royalties and ownership rights are commonplace. Blockchain provides a traceable, real-time reporting network that cannot be edited but can be accessed by all involved.
Blockchain for Identification
Did you know that more than 1.1 billion people worldwide have no way to prove their identity? It is an incredible statistic, especially when companies and financial organizations need to follow more rigorous know-your-customer (KYC) policies than ever before. And, to complicate things even further, rules and regulations vary drastically from jurisdiction to jurisdiction. This often makes it difficult for individuals to meet identification standards.
Blockchain has the potential to provide a standardized network of identification information that can be stored securely, accessed by select institutions, and validated in record time. This system could be used across the financial, healthcare, travel, and education industries.
Blockchain and the Internet of Things (IoT)
By the end of 2020, there will be more than 20 billion devices connected to the Internet of Things, with some estimates suggesting that the market will surpass $3 trillion annually by 2026. This includes devices with some aspect of artificial intelligence.
However, there is still a long way to go before IoT systems are adopted on mass across industries subject to stringent privacy and security laws. The blockchain could be a viable solution, allowing IoT devices to operate faster and more securely on both the business and user end.
Blockchain and Disruptive Business Models
Blockchain’s potential ability to improve efficiency and security within existing organizations is evident. But its true disruptive power lies in creating brand-new business models.
For example, in the education industry, start-up Woolf University has set out to become the world’s first blockchain-powered, non-profit, borderless university. The innovators behind the project will use smart contracts to manage relationships between learners and educators.
The goal is to cut tuition fees and increase faculty remuneration by automating expensive, time-consuming administrative tasks, securing student and faculty information, and minimizing overhead costs using the blockchain.
Will the Future Be Powered by Blockchain?
Blockchain technology has been around for over a decade now. And, we still have not seen the widespread use promised by early adopters. Perhaps it was Bitcoin’s fleeting popularity among mom and pop investors that eclipsed blockchain’s underlying potential. Or maybe it was the unwillingness to change tried-and-true systems that are good enough despite their flaws.
Whether or not the future will be powered by blockchain is yet to be seen. But the promise it holds is undeniable. The key to unlocking practical solutions to complex economic issues and mounting security concerns could already be here. Time will tell.
Michael Brenner is a keynote speaker, author and CEO of Marketing Insider Group. Michael has written hundreds of articles on sites such as Forbes, Entrepreneur Magazine, and The Guardian and he speaks at dozens of leadership conferences each year covering topics such as marketing, leadership, technology and business strategy. Follow him @BrennerMichael.
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