Blockchain technology can be endlessly flexible and applicable. Its most famous application is for enabling cryptocurrencies like Bitcoin and Ethereum, or non-fungible tokens (NFTs). But the world of blockchain solutions is much broader than these areas.
Built around the concepts of decentralization, automation, transparency, and immutability, blockchain can be utilized in other industries and in other ways – everything from healthcare to smart contracts, energy providers to supply chain management, or intellectual property to better government record-keeping.
Understanding these different ‘use cases’ will give you a better grasp of the crypto and blockchain-based ecosystem as a whole. Accordingly, in this article we outline some of the most important use cases of blockchain.
We’ve written more about the functionality and technology underpinning blockchain elsewhere, so we won’t go into detail here. But just remember that it is essentially an online ledger shared on a specific computer network, where every new ‘file’ in the ledger is verified and secured based on its relationship to every other ‘file’ in the ledger.
With all that said, let’s dive right in, starting with the big one.
Banking & Finance
Given that blockchain is a secure digital ledger, and therefore facilitates connections and information exchanges, it should come as no surprise that it is widely applied across the world of international payments and financial services.
Banks realized the potential of blockchain in this regard fairly early on. As only one example, in 2018, the Spanish bank Santander launched the first ever blockchain-based money transfer service, called “Santander One Pay FX.” This service allows same-day or next-day international money transfers using xCurrent, a software product by the blockchain company Ripple.
Through xCurrent, the process of making international transactions has been fully automated, reducing inefficiencies and making everything cheaper. Accordingly, Santander’s private and retail clients can make transfers quicker and cheaper, which in turn allows for wider financial fluidity.
For similar reasons blockchain-based systems have the potential to enhance capital markets. The consultancy giant McKinsey recently issued a report on this front, identifying benefits including operational improvements and quicker clearing and settlement. And because capital markets are always looking for an edge or a boost in efficiency, there is huge demand for companies that craft distributed ledger technology specifically to manage equity transactions or other capital exchanges in real-time.
Blockchain also allows for peer-to-peer trading, allowing for more direct and immediate transactions between any two (or more) traders in the world.
From a different angle, blockchain is also useful for compliance, auditing, and accounting purposes, something that financial institutions or banks obviously need to care a great deal about.
Because of blockchain’s inherent security (it is extremely difficult to tamper with or to be targeted by hackers) and automation, blockchain is very useful for reducing human error and guaranteeing the integrity of corporate records. For instance, a company can automatically and immediately update its books throughout a given business cycle. And, once updated, these records cannot be manipulated for illicit financial gain like ordinary records can.
This is good from a regulator perspective, but it is also encouraging for stakeholders, because they can place greater trust in the financial position of the company they hold a stake in.
Another use of blockchain is in the area of trade financing, or the capital flows that facilitate international trade. Currently, cross-border trade can involve mountains of paperwork and painfully slow processing. In turn, this slows down business. Blockchain has the potential to revolutionize the sector by streamlining the process by which trade is financed and managed at national entry points.
If merchants or countries can make payments quicker and more securely and submit paperwork through specifically-crafted blockchain networks, then trade will flow in greater volume in marketplaces of all kinds.
Government & Record-keeping
This area of use cases is a little untested, as governments are inherently slower than companies when it comes to taking on new innovations. But the possibilities here are just as enticing.
Just like with corporate accounting, governments have a clear interest in effective and cheap record management, as all levels of government are ultimately responsible for maintaining citizens’ personal records. Doing this all via paper or even digital forms can be difficult, error-prone, and expensive. Meanwhile, transferring the system onto blockchain can simplify the government’s record-keeping, as well as offering greater traceability on where exactly each record comes from, who adjusted it last, and where it sits within the broader civilian database.
Similarly, identity management, something that is extremely important in the age of the internet, identify theft, and constant cybersecurity threats, can be transitioned onto blockchain networks. Instead of relying on flimsy cards or social security numbers, what if your identity could be managed and protected via an encrypted blockchain service? Based on how the software works, people should only be able to provide the bare minimum of information to prove their identity.
And when it comes to voting, a topic of increasing scrutiny and controversy, blockchain could also help to make government processes more accessible and secure. Voting registration managed through blockchain would massively reduce overhead and inefficiency, and the chances of voter fraud would be essentially impossible for blockchain-verified ballots.
Beyond the above examples, there are countless other industries that stand to benefit from blockchain solutions.
Healthcare, for example, often depends on reliable and secure medical histories and health data. Every year people die or receive the wrong treatments because of the slightest mismanagement of personal health records. Furthermore, we all know the frustration (and wasted time) of filling out medical forms. Having a totally secure, private, and constantly up-to-date blockchain ‘medical record’ that hospitals can immediately access would ultimately make healthcare cheaper, safer, and more responsive.
Similar to other use cases we’ve already mentioned, the energy industry can use blockchain technology to manage energy supply transactions, but they can also transition their metering, billing, and clearing processes onto blockchain networks. This would reduce overhead costs and simplify the sometimes Gordian-knot complexity of determining and then issuing electricity bills. In turn, energy companies could charge their customers less and make their billing processes more transparent.
Real estate is one last industry worth mentioning. The real estate market is often in constant flux, with people buying and selling properties throughout their lifetime. The process is often inefficient and slow because of all the hoops people have to jump through to verify their finances and mitigate the risk of fraud. Blockchain could expedite this process, instantly sharing the relevant financial records, preventing fraud through encryption, and offering greater mutual transparency between buyers and sellers.
Much of the above discussion is still hypothetical or prospective, as the full integration of blockchain technology still remains a possibility in the future. And it’s possible that not all of the above applications will come to pass exactly as we’ve outlined here. It’s also possible that there will be other applications we can’t yet imagine from our vantage point in the present.
All that matters is that the future of blockchain looks bright and is set to become much greater than crypto or digital currencies alone. And as the world continues to change and progress, it will be exciting to try and stay informed about (and possibly get ahead of) all the exciting developments to come.
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The opinions presented in this article do not in any way constitute trading, investing or financial advice.