The Blockchain and its Smart Contracts have often made the news. Especially the crypto currencies Bitcoin and Ethereum are big in the news with steep price rises and many speculations. But behind the technology of digital currencies is a so-called distributed ledger technology that has a lot of potential to change our world and especially our business world. The application examples for the Blockchain technology are very broad and we have compiled the most important possible applications from banking, business, public sector and other industrial sectors to give you an overview of what is possible with this technology.
But why Blockchain?
We have briefly listed the 4 most important advantages of the Blockchain technology as many are listed below again
- Data Integrity – The hashing in the blockchain makes it almost impossible to change data. Once it has been verified by consensus, the data is unchangeable and every attempt at change can be traced.
- Reliability – Since the blockchain has no central point of failure, it is almost impossible that it could fail. This makes it easy to withstand external attacks and Disaster Recovery is also easy because each system has a copy of the data.
- Speed and storage – The blockchain stores the data in the near real time range. This allows large amounts of information to be exchanged quickly and efficiently.
- Analysis and transparency – The Bockchain’s unchangeable and comprehensible system makes it possible to make transactions and their effects on the various contractual partners visible. This helps with transparency and accurate analysis, as this information cannot be changed.
Blockchain application examples for banks and financial institutions
Since we already mentioned above the crypto currencies like Bitcoin, Ethereum and Co., we start with the possibilities of the blockchain in the financial world. Blockchain is a highly encrypted but shared database on thousands of servers, where each entry is verified and encrypted. One can imagine that the resulting consistency and transparency can lead to advantages when it comes to banking transactions. Encryption ensures that the data is secure and mutual verification makes it secure both externally and internally to avoid errors.
The purpose behind this is to use the blockchain to process payments internationally, without an intermediary like a bank, thereby reducing transaction costs and simultaneously increasing the speed of transfers. Banks themselves are also in the process of using the blockchain to replace their manual international transactions with a simpler and more efficient system.
Peer-to-Peer (P2P) Transactions
There are various providers for direct transactions between individuals, whether it is Twint, N26, Paypal or others is not important. The aim is to enable the transfer of virtual money between individuals and businesses. Unfortunately, many of these systems have their weaknesses. Spatial restrictions or other limitations may exist. To avoid the danger of hacking or international restrictions, blockchain could be used.
The possibility of processing the capital markets with the help of Blockchain technology is also interesting for large banks such as Credit Suisse and Santander Bank. However, since the complexity for the processing of capital market transactions is considerably higher, much more time is also required for development here. Start-ups such as Axioni have already made great progress and have already received investments from JP Morgan.
The first live test of trade finance in Israel was carried out in 2016. A letter of credit was issued for a delivery and its payment. Normally such contracts are very time- and cost-intensive, but not due to the Blockchain technology. This made it possible to complete a transaction within 4 hours that would otherwise have taken weeks.
Especially this slow processing of the old technologies for trade financing makes the 10 trillion market very attractive for this technology. In addition to slow execution, reduced liquidity and high bureaucratic costs are a major factor that will strongly drive Blockchain technology in this area.
Protection against money laundering
The encryption also makes the blockchain a good tool to prevent money laundering. The contracts concluded are completely transparent and the technology allows the most accurate recording of which transactions were made to which persons. It is therefore possible to actively prevent money laundering by identifying and verifying one’s own customers.
Audit and Regulatory Compliance
Due to the secure and above all unmanipulable nature of the blockchain, it is a useful tool for accounting. Since there is no possibility of errors, data integrity and traceability are ensured. Another special feature is that the technology cannot be falsified. Once a transaction has been made, it can no longer be modified, not even by the people who created it. Disadvantage of this use is of course that jobs like auditors can become superfluous.
Blockchain and Smart Contracts are a great application example for insurers. Contracts and also claims settlement can be regulated transparently. All contracts and all claims for damages would be managed by the network and false claims for damages would be filtered out. For example, it would no longer be possible to receive several claims for damages from one client for the same case.
Blockchain applications in the business area
The average person sells a property up to 12 times in his life. However, these large and complex transactions can involve many risks and require very expensive contracts to minimize these risks. Through the Blockchain technology it would be possible to stop fraudsters and also to simplify sales transactions. Encryption and verification would make all contracts, smart contracts, more transparent and would only be executed if the property and purchase price were available.
Artists, Media & Advertising
Especially for musicians, writers and other artists the Blockchain could be very helpful. Due to pirate copies and the fast distribution on the Internet, it is becoming increasingly difficult to earn money there. With the help of Blockchain technology, the created content could be distributed and paid for as soon as you use it. Also the advertising industry could offer thereby completely simply advertisements and over the block chain let.
Supply Chain Management
Blockchain can play a major role in the future, especially for the supply chain. Simple contracts and continuous tracking of goods are thus considerably simplified. Thus, goods in containers can easily be transferred to different parties, divided or redistributed. There are already companies using and developing this technology to simplify the supply chain and save large administrative costs for international transports. (Possible examples are Faktom, Sukochain)
Since the data in a blockchain cannot be changed, it can also be used for tracking individual products. For example, products or medicines can be coded. With this the entire course of the product would be callable and one can uncover for example dangerous medicine falsifications before one takes these potentially dangerous medicines.
By the possibility to share the information and make the property available to someone for a certain period of time, Blockchain would also greatly change our mobility. It would be possible to use a car, pay directly for it and solve problems such as electromobility by using intelligent contracts through the block chain. So the costs, the property and the use of everything could be distributed on the blockchain.
Since the blockchain can be set up so that only certain people have access to the data and one can still use the worldwide distributed network to store the data, it is perfectly suited to store sensitive data. Thus, patient records, disease progressions, reports and much more can be stored in the blockchain and can only be activated for someone who is also allowed to receive this information. Currently, individual databases are being created, so-called silos, which are mutually shielded and are only forwarded on special request. This leads to inconsistent data and can also lead to problems during treatment.
It would also be possible, for example, to connect special devices to one’s own patient profile and thus create an interactive medical record. For example, the values of the blood glucose measurement and the insulin pump could be automatically compared with the file and adjusted by the doctor if necessary.
Especially in the complicated energy market, great progress could be achieved through the transparency and traceability of the Blockchain technology. This would make it easier for private solar systems to charge, make energy tracking easier, facilitate asset management and make it easier to issue certificates of origin. This good regulation and transparent tracking should have a great influence on successful change, especially in the energy transition. Another example would be electric cars, where the energy can be allocated to each car individually, no matter where they fill up in the grid, for example, and thus facilitate billing.
Blockchain application examples from the public sector
Data management of citizens
Since the system is secure and cannot be modified, encrypted and yet mobile, it can also be used in the public area to store data about persons such as date of birth and death, relationship status, current residence permit, health insurance number, etc. The system can also be used in the public area. Many administrations still rely on paper-based systems, which are often fragile and impractical for citizens. In this way, changes could be made quickly and easily online without having to go to an office yourself.
A well-developed solution would also allow Blockchain to create a solution that could verify people’s identities. With enough data it would even be possible to identify and verify the person only with a little information like a date of birth. This would make it easier to issue passports, identity cards and driving licences, it would be impossible to forge them and even impossible to lose.
A blockchain system would actually be what one would expect from an electoral system. It can be made anonymous, cannot change the past and is completely fail-safe and tamper-proof. This would make it possible to track your vote, see if it was counted correctly and it is absolutely impossible for a vote to be modified or even faked.
With enough information in the blockchain, it would be relatively easy to calculate and pay your taxes in the future. The system would be very simple, comprehensible and if, for example, the information on wages, expenses, etc. could be recorded automatically and thus the taxes could be delivered automatically. This avoids human error and massively reduces administrative costs.
NGOs and Non-Profit Organizations
Trust in the organisations is dwindling every year. Many negative headlines make people think that NGOs and non-profits do not manage the money properly and therefore no longer make donations. With a blockchain system it would be possible to make the transactions traceable and one could track exactly what the money was used for and where the money went.
Compliance and legislative controls
Mit “RegChain” the first project was started in Ireland to make reporting easier and more transparent. This has led to better compliance, greater transparency and more secure data storage.
Further examples for blockchain applications
The same thing that can happen in public elections is also the case here. The system will make it relatively easy for shareholders to exercise their voting rights. The blockchain generates an election token based on the shares held and can then be selected transparently. Voting rights can then also be easily traded.
Since the technology encrypts the data and duplicates and incorrect entries are no problem, the data records can also be easily managed and protected against fraud.
Various problems appear on the Internet due to fraud or hacking. The secure encryption and fail-safe infrastructure solve many problems and increase security for users.
Diplomas and Certificates
As more and more forgeries of university certificates or diplomas are in circulation, an international standard could also be created here. Blockchain technology would allow universities, institutions or public offices to issue unalterable dimplomas and certificates that can be easily retrieved with a personal key. Worldwide availability without notarial certification and without costly original dispatch would thus be possible. MIT started its first Project.
Big Data & Data Storage
Since the data is stored unchanged and every computer in the network works as a node for verification and storage, this technology is also suitable for securely storing large amounts of data.
Internet of Things (IoT)
The security of the data is also a big issue in the IoT topic. Since there is a lot of data that often also contains personal information, the blockchain technology is a secure means of transmitting this data.
Further areas of application with IoT and Blockchain:
- Supply Chain Management – sensors that monitor the condition and position of individual goods and containers
- Machine and plant monitoring – Sensors can be used to monitor the activities and condition of machines and plants as an alternative to cloud technologies
- Healthcare – As mentioned in the previous chapter, intelligent sensors could record people’s biodata and transmit and store it protected by the block chain.
These are just a few examples of the possibilities of the blockchain and there will certainly be more in the coming months and years. The wide variety of possible smart contracts will help to make our data more secure and, above all, fail-safe, which will have a major impact on many areas.