Blockchain applications were never meant to be limited to hi-tech sci-fi labs. It was conceptualized a lot like the internet of today – an integral part of everyone’s life. To understand this better, let us look at the internet of the past. It dealt with things that were intangible and not necessarily an integral part of our lives. We exchanged thoughts through emails, ideas on forums and read and shared articles we liked.
The internet today handles hot assets and a lot of valuable items. These are items that are immediate or essential and need to be protected. Consider something like internet banking. The assets are safely encoded in a network-to-network ledger or blockchain where participants can see who others are doing business with. Besides the obvious advantage of security and theft prevention, this also makes business simple, adds speed to the process, reduces errors and eliminates the need for hiring a third party.
A decentralized blockchain changes everything from the way business transactions happen to asset management pans out. It also impacts how you use a machine, rent a car, vote or identify yourself before authorities. Over time, major institutions like banks, companies, hospitals and even governments will undergo the impact of this technology.
Digital coins or cryptocurrencies are coins that go through an electronic network. Transactions are done through cash, wiring or check. Virtual currencies like bitcoins can also be used with electronically coded addresses to make transactions.
As transactions become valuable, the risk of theft also goes up. Traditionally, financial institutions hire mediators like bankers or remittance companies for the singular purpose enforcing trust. That is not to say that different solutions have not been tried. Islanders of Yap kept a record of what was owned and referred to this community distribution of records when disputes arose.
Essentially, the Blockchain is a community distribution of this record on a wider, larger and digital scale. The extension of the network spills beyond the traditional banking system. Nodes are placed in Qatar, Tokyo, Sydney and a bunch of other places in the world. Each transaction is verified and then cross-verified by every node in the network.
Every transaction on the network is considered a ‘block’ that needs verification before entering the system. The verification process is subject to a set of questions. Does the transaction include any money? Do both the sender and receiver have a clean reputation? Is it a legitimate request? There are more questions that follow these.
All computers on the network compete with one another on unraveling the answers. The one that wins gets to add the ‘block’ on the Blockchain. The winning computer publishes the proof which is visible to the rest of the network. The proof is then checked and verified, after which the network queues the block and completes the transaction. The parties involved in the transaction move ahead with the assurance that the participants have vetted the transaction. All of this amounts to safer, quicker transactions with lesser chances of fraud.
Blockchain Applications in Business – Financial Services
The issues with traditional systems predate some of our oldest traditions. They are cumbersome, sluggish and mind-numbingly slow. Intermediaries are often called in for process mediation or conflict resolution. This results in high time, money and stress compensations. Users see Blockchain as cheaper, transparent and more effective than traditional methods. It doesn’t come as a surprise that an increasing number of financial services are making use of the system to power innovations like smart contracts and smart bonds.
Asset Management: Settlements and Trade Processing
Most traditional trade process methods involving asset management are deemed risky and expensive, especially when the transactions are international. Participating agencies like settlement managers, brokers, and custodians keep their own records, creating immense room for error and major inefficiencies. With the Blockchain ledger, such inefficiencies can be eradicated with the encryption of records. Concurrently, the ledger makes the process simpler by neutralizing the necessity for intermediaries.
Claims Processing in Insurance
Processing claims can be thankless and frustrating in equal parts. Most insurance processors need to sift through fraudulent claims, abandoned policies, inaccurate data sources, and a lot of other significant deficiencies. Moreover, these forms require manual processing, which further complicates the process and expands the room for error. The blockchain is the perfect platform for transparent operations and risk-free management. Its unique encryption property lets insurers take over the ownership of assets that need to be insured.
Blockchain Applications: International Payments
Traditional payment modes around the globe are prone to error, cost-ridden and easily gamed by money launderers. It still takes up to a week or longer for a payment to move from one part of the world to another. We already have Blockchain powered solutions in this area with companies like Abra, Bitspark and Align Commerce offering end-to-end remittance services fueled by Blockchain.
A few years back, Santander merged Blockchain technology into their payments app. The results were outstanding – customers could make international payments all 24 hours a day and it would take just a day for the payments to clear.
It is possible to embed smart technology into tangible, intangible, movable or immovable properties like houses, cars, property titles, company shares, and patents. The registration of the properties can be stored directly on the ledger. Contractual details of other people that are allowed ownership in the property can also be stored on the same ledger. After the verification of the contact, the ledger makes room for the storage and exchange of the smart keys.
Another advantage of working with a decentralized ledger is that it can also be used as a system for registering, recording and managing property rights. In case of loss of records, the ledger also helps in duplication of the smart contracts.
Smart property facilitates risk mitigation through fraud alleviation, waiving off of mediation fees and unethical business. Concurrently, it adds speed, trust, and efficiency to the process.
Hard Money Lending
The traditional lending system can draw a lot from smart contracts. If there are unconventional money lenders or service borrowers with poor credit scores and requirement for loans, they can pay somewhere between two and ten percent of the loan amount while using the property as a collateral.
The process can be undercut with Blockchain when a stranger loans you money and takes your property as collateral. There’s actually no need to flash a work or credit history to the lender. Neither is there any requirement to process every document manually. The encoding of the property is done on the Blockchain so that all can see it.
Cars and Smartphones
We already have some live examples of primitive forms in the smart property. For example, the key of your car can be customized with an immobilizer, triggering activation only when the right combination/protocol is fed into it. A simpler example of this is your smartphone – it will only function when you feed the correct PIN into it. In either case, it is the underlying mechanism of cryptography that secures your ownership.
The singular biggest problem with primitive forms of smart property is with their physicality. It is almost always a physical container that holds the key. Imagine something like a SIM card or a car key. This means the key cannot be easily copied or transferred. The Blockchain ledger does away with this problem by facilitating replacement and replication of lost protocol by Blockchain.
Internet of Things (IoT) and Blockchain
In loose parlance, all physically tangible objects are denoted as things. The internet of things happens when these objects work with an on/off switch that connects these objects to the internet and to one another. Connecting something like a car to a computer network makes it more than just another object. It becomes a part of the several permutations between people and things. Most major industry studies estimate that there will be anywhere between 26 and 100 billion connected devices by the year 2021.
So how does IoT work exactly? Your printer becomes self-aware of a low-cartridge and with sufficient pre-acquired permissions, orders new cartridges from Amazon. The alarm clock changes the coffee-brewing time while the oven makes a fine cooked Turkey for Thanksgiving. All of these are just some examples of the IoT and Blockchain working together.
On a bigger scale, governments and cities can make use of the internet of things to make environments cleaner, generate energy efficiently and build ‘smart cities’ that improve the way we work and live.
How Blockchain impacts IoT
In tune with its application all around the industry, the Blockchain ledger adds the security layer on top of the Internet of Things. When a billion devices are connected to one another, there is the obvious risk of a security breach threatening to compromise all the devices at once. This worries cybersecurity experts. The priority, of course, is to keep all the distributed information secure.
How do companies ensure the safety of their systems? How do inventors protect their ideas from getting stolen? What do governments do to protect classified information from espionage?
Even if there’s a way to handle these, there’s still the issue of sourcing, organizing and analyzing all the immense information that comes pouring in from this network of related devices.
Here’s where we introduce the Blockchain ledger that ensures only trusted parties can accept or have access to the protected information.
Smart appliances are internet enabled devices that give users more access and control to information than before. Sample this – a simple code connecting your device to the internet can send you phone notifications when your laundry is ready or the cookies are baked.
Such alerts serve to keep your appliances in top shape and save you time, energy and money with the added incentive of controlling your devices when you are away from home. Doing this with the help of Blockchain helps in secure transferability while protecting your ownership.
Sensors in Supply Chain
Companies gain better visibility of their supply chain with the help of sensors. The data on the location and condition of the supplies are transmitted around the globe with the help of blockchain. A 2016 report by MHI and Deloitte where 99 leading supply chain companies were surveyed, pointed out that at least one in every two companies were making use of sensors. Moreover, 87% of these industries also suggested that they planned on using such technology by 2021.
The supply chain sensor industry is growing at nautical speeds. By 2030, the market will be flooded with 10 trillion sensors, as indicated by the MHI and Deloitte report. All this smart information will rely heavily on Blockchain technology for storage, management, protection and transferring.
The “if-this-then-that” or IFTTT digital code on smart contracts makes them self-executable. In reality, there’s often an intermediary that ensures that all parties abide by the terms. Blockchain summarily dismisses the need for a third party while simultaneously ensuring that all the participants contract details. The most crucial part is that Blockchain also imposes the terms of the contract depending on what conditions are met.
Smart contracts can be used for all kinds of situations, be it insurance premiums, financial derivatives, crowdfunding agreements or property laws.
Blockchain in Government
Self-organization is one of the long-promised Blockchain objectives. The fundamental incentive is the facilitation of self-organization by giving a self-management platform for NGOs, government agencies, foundations, academics, and individual citizens. The exchange of information among parties can become both global and transparent. Imagine something like the Google Cloud but less risky and way larger.
Smart contracts make sure that once electorates are elected, they do what they are supposed to do and not otherwise. The expectations of the electorate are specified within the contract and the electors get paid only upon the fulfillment of those promises. This way, the expectations of the electorate become way more important than that of the fundraiser.
Identity and Blockchain
Privacy is no more a possession we can secure at will. Online companies know a lot of different things about us. Companies you may or may not purchase from sell your identity details to third parties. These third parties are either advertisers or people that sell to advertisers.
The Blockchain effectively blocks such theft of identity by created protected data points whereby users choose who they want to share their information with. As an example, you enter a bar and all that the bartender needs to know is that you are over 21 years of age. On the Blockchain, identities are protected by encrypting and securing you against marketing schemes and promotions.
It was in 2014 when the first Github passport launched, helping users identify online and offline. The process is rather simple. Take a simple picture and stamp it with a public and a private key. Proper encoding on the two different keys is important to tell people that the document is legitimate. The passport is stored on the ledger and has a bitcoin address along with a public IP.
Documents for birth, marriage, and death are absolutely essential when claiming certain necessary rights and privileges. Nevertheless, there is still plenty of mismanagement in the way these important documents are treated. A 2013 report by UNICEF indicated that one in three children under the age of five does not have a birth certificate. Blockchain can usher the much-needed reliability in record keeping by encrypting birth and death certifications.
Personal Identification Documents
Don’t we move with an awful lot of personal identification documents on us? The driver’s license, identity card, computer password, social security ID and then some more. The Blockchain ID is a secure digital key that can replace all these forms of physical identification mechanisms. In the very near future, you could use just one digital password/combination/signature to sign up at any registrar.
Conclusion: Blockchain Applications
For Blockchain to fulfill all of the above promises, it will be very important that the node-to-node network is motivated to work under a common ethical standard. As and when this shroud of doubt subsides, Blockchain can become a powerful tool for conducting fair trade, improving business, conducting societies fairly and inducing democracy into the global economy.
Futran Solutions specializes in delivering composite blockchain solutions and resources. As Blockchain technology is evolving, so are the resources that shoulder the needs of the industries. Speak to a Futran blockchain resource specialist today to find out how we help you achieve your business and marketing objectives.