The Blockchain and its Smart Contracts have often made it into the news. Especially the cryptocurrencies Bitcoin and Ethereum are big in the news with steep price increases 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 the business world. The application examples for the Blockchain technology are sown very broadly and we have brought together the most important possible applications from banking, business, government 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 key benefits of Blockchain technology since many are listed below again
- Integrity of Data – Hashing in the blockchain makes it almost impossible to change data. Once it has been verified by consensus, the data is unchangeable and any change attempt can be tracked.
- Reliability – Since the blockchain does not have a central failure point, it’s almost impossible for it to fail. This makes it easy to withstand external attacks and disaster recovery is also easy as each system has a copy of the data.
- Speed and Storage – The blockchain stores the data in the near real-time range. This allows current and also fast exchange of large amounts of information.
- Analysis and Transparency – The unchangeable and traceable Bockchain system makes it possible to visualize transactions and their effects on the various contractors. This helps with transparency and accurate analysis as this information can not be changed.
Blockchain application examples for banks and financial institutions
Since we have already heard of the crypto currencies like Bitcoin, Ethereum and Co., we start with the possibilities of blockchain in the financial world. Blockchain is a heavily encrypted database, split across thousands of servers, where each entry is verified and encrypted. When it comes to banking transactions, one can imagine the resulting consistency and transparency. The encryption ensures that the data is secure and the mutual verification makes it safe and secure.
The point behind this is to use the same as the bankruptcy. Even banks themselves are currently in the process of using the blockchain to replace their 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’s twint, n26, paypal or others does matter. The aim is to enable the transfer of virtual money between individuals and businesses. Unfortunately, many of these systems have their weak points, there may be spatial restrictions or other limitations. To avoid the risk of hacking or international restrictions, Blockchain could be launched.
The ability to handle capital markets using blockchain technology is as much of an asset to big banks as Credit Suisse and Santander Bank. However, as the complexity of handling capital market transactions is much higher, much more time is needed for development. Start-ups like Axioni have already made great progress and have already received investments from JP Morgan
In 2016, the first live test of trade finance in Israel has already been carried out. A letter of credit was issued for a delivery and its payment. Normally such contracts are very time-consuming and cost-intensive, but not by the Blockchain technology. So it was possible within 4 hours to make a transaction that would otherwise take weeks.
Specifically, this slow processing of old trade finance technologies makes the $ 10 trillion market very attractive to this technology. In addition to slow execution, reduced liquidity and high bureaucratic costs are a major factor that will greatly boost blockchain technology in this area.
Protection against money laundering
The encryption also makes Blockchain a good tool to prevent money laundering. The completed contracts are completely transparent and the technology allows to make the most accurate records of which transactions were made to which persons. Through the possible identification and verification of their own customers, it is thus possible to actively prevent money laundering.
Audit and Regulatory Compliance
Due to the secure and above all unmanipulatable nature of Blockchain, it is a useful tool to handle accounting. Since there is no possibility for errors, the integrity of the data and the traceability is given. Also special is the immutability of the technology. Once a transaction has been made, it can not be changed anymore, even by the people who created those entries. Disadvantage of this use is of course that jobs like auditors can become superfluous.
Blockchain and Smart Contracts are a big example of use for insurers. Contracts and claims settlement can be regulated transparently. All contracts and all claims for damages would be managed by the network and filter out wrong claims for damages. For example, it would no longer be possible to obtain multiple 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 expensive transactions can involve many risks and require very complex contracts to minimize these risks. The blockchain technology would make it possible to stop fraudsters and simplify sales transactions. Through encryption and verification, all contracts, smart contracts, would be more transparent and would only be executed if the property and the purchase price are available.
Artists, Media & Advertising
Especially for musicians, writers and other artists, the blockchain could be very helpful. Pirated copies and the fast spread on the Internet, it is increasingly difficult to earn money there. With the help of Blockchain technology, the content created could be distributed and paid immediately as soon as it is used. The advertising industry could thereby easily offer advertisements and handle the blockchain.
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 greatly simplified. Thus, goods in containers can easily be transferred to different parties, split up or redistributed. There are already companies that use and develop this technology to simplify the supply chain and save large administrative costs on international shipments. (Examples are Faktom, Sukochain)
Because the data in a blockchain can not be changed, it can also be used to track individual products. For example, products or medicines can be provided with a code. With this, the entire course of the product would be available and you can, for example, detect dangerous counterfeit drugs before taking these potentially dangerous drugs.
By sharing the information and making the property accessible to someone for a period of time, Blockchain would also greatly change our mobility. So it would be possible to use a car to pay for it directly and you could solve problems such as electric mobility through the use of intelligent contracts through the blockchain. So the costs, ownership and usage could all be distributed on the blockchain.
Internet of Things (IoT)
For the IoT theme, the security of the data is also a big issue. Since there is a lot of data that often gets personal information, blockchain technology is a secure means of transmitting that data.
Further application areas with IoT and Blockchain:
Supply Chain Management – sensors that monitor the condition and position of individual goods and containers
Machine and System Monitoring – Sensors can monitor the activity and condition of machines and equipment as an alternative to cloud technologies
Health Care – As mentioned earlier in the chapter, smart sensors could record human biodata and be transmitted and stored protected by blockchain.
These are just a few examples of Blockchain’s possibilities and there are sure to be more in the coming months and years. The large variety of possible smart contracts will help to make our data safer and above all fail-safe, which will have a major impact on many areas.