Blockchain technology has been making waves for the past few years usually in relation to cryptocurrencies. While the idea of it has been around forever, it came into prominence in 2009 when Bitcoin was officially released. After that, blockchain has sort of become synonymous with cryptocurrency though it has much wider use cases than simple virtual currencies.
Wait, there are uses of blockchain other than cryptocurrency. Yes, there are. Blockchain technology has real-life use cases in various industries like healthcare, education, business, and philanthropy. However, to understand the uses of blockchain technology, it is important to first know about blockchain itself.
This article will, thus, answer all your questions like what is blockchain technology and how it works, where is blockchain used in real life and what can blockchains be used for.
What is Blockchain Technology?
Blockchain is a distributed ledger and a decentralized database that stores information in a chain of interconnected blocks. Each of these blocks contains information about a particular transaction and its timestamp. A new block is added to the chain whenever a transaction is verified on the peer-to-peer network.
As blockchains are run on a peer-to-peer network, there is no traditional centralized oversight mechanism here. Transactions are verified with the help of certain consensus protocols. The data is open-source and all users have access to the blockchain information. This helps in creating a system that is transparent and secure.
A complicated encryption process called hashing further ensures the security of blockchain platforms. A hash is the unique identity of a particular block and each block contains the hash of the previous block along with other information. This is what links all the blocks in a chain. Thus, any attempt to tamper with the hash of a block would be immediately caught as the blockchain records will not match.
Blockchain is, thus, heavily used for Bitcoin and other cryptocurrency transactions as it eliminates the possibility of false double spending and copying of digital assets.
Uses of Blockchain Technology in Banking
The banking and finance sector is known for its centralization of authority and governance. Blockchain can be used here to improve transparency and data protection.
Cross-border Payments
Blockchain technology is a great tool for secure and efficient international money transfers. It reduces the number of intermediaries involved in the process helping in faster settlement of transactions. This is possible because blockchain facilitates near real-time, point-to-point transfer between financial institutions.
Capital Market Improvements
Capital markets can also benefit immensely from the use of blockchain. Some such benefits include but are not limited to faster transaction settlements, operational improvements, and consolidated audit trails.Â
Simplification of Operations
Blockchains can help banks which are usually centralized simplify their operations. This is done largely by enabling real-time and multi-party tracking and management of bank guarantees and letters of credit.
Efficiency in Trade Finance
Conventional trade financing methods are slow and can make liquidity hard to manage. Such transactions involve a number of variables and generate high volumes of documents. This is where blockchain comes in. It can not only streamline trade finance but also simplify cross-border transactions.
Automated Compliance
Blockchain is quite secure which makes it useful for auditing purposes as it reduces the possibility of human error. Further, the data records on a blockchain network are immutable and cannot be altered by anyone. This ensures the integrity of the recorded data. In this way, blockchain makes the reporting process faster and more accurate.
Uses of Blockchain in Business
Blockchain can be useful in improving various aspects of business including supply chain management.
Increased Transparency
Supply chains traditionally are limited by one-up/one-down visibility. Blockchain which is a type of distributed ledger gives participants greater visibility across the supply chain by providing a single and shared record of activities. It is a dynamic tool for organizing tracking data and putting it to use.
Better Supply Chain Resilience
Blockchain can reduce the possibility of supply chain disruptions due to unexpected events. This is done with the help of smart contracts that are automatically executed once certain pre-defined conditions are met. It enables businesses to take fast actions due to near real-time visibility into operations.
Streamlining Supplier Onboarding
Generally, supplier onboarding is a manual task and time-consuming for both buyers and sellers. Blockchain solutions can speed up this process by developing an immutable and trustworthy record of new vendor details.
Uses of Blockchain in Healthcare
Healthcare and its related pharmaceutical industry can greatly benefit from using blockchain-based solutions for storing information. It can also open the doors for better collaboration with more trust.
Ensures Data Integrity
Medical information is highly sensitive data and every healthcare organization seeks a way to securely store such information. Thus, blockchain networks can be used to ensure data integrity and security. They keep an immutable record and data access can be restricted to certain participants in the network.
Traceability
The whole supply chain journey of pharmaceutical products can be recorded on a blockchain. This helps in achieving full transparency in the process as any item can be easily traced back to its origin. In this way, manufacturers can easily locate their products and also reduce the possibility of counterfeiting.
Improve Efficiency
Smart contracts can be used to automate a variety of processes and increase speed and efficiency in the organization. Such processes can include moving medical images through review and resolving disputes.
Use of Blockchain Technology in Different Sectors
Turns out, blockchain can be used for something other than cryptocurrency. It is a technology that has practical applications in several sectors.
Insurance
Blockchain promises to bring agility to the insurance industry, optimize workflows, and increase overall operational speed. Further, it can be used to ensure accountability and minimize disputes. Blockchain solutions also come in handy to manage claims in a transparent and secure manner. They can be used to automate reconciliation tasks and increase brand trust.
Real Estate
The real estate industry can certainly benefit from a wider adoption of blockchain technology in its operations. It can not only expedite the sale process but also ensure more transparency through the purchase and sale journey. It is a secure technology that helps in reducing the possibility of fraud in the sector.
Government
The government records and stores extensive information about citizens. Blockchain helps keep such information secure and reduces the time and cost of managing it. Regulatory compliance and identity management, thus, become easier with the adoption of blockchain. Additionally, it can be useful for securing and making the voting process more accessible for everyone.
Charity
A lot of non-profit organizations have been dealing with anti-trust sentiment due to non-transparency in their funding and operations. Blockchain could help solve this problem by proving to donors that their money is being used properly. It can also help NGOs manage their resources better, keep a more efficient record of donations, and receive donations in a secure and cost-effective manner.
Cybersecurity
Blockchain networks have long been advertised as a secure method of storing information due to their transparency and immutability. It is decentralized and data recorded in a block cannot be easily altered. This is because there is no centralized database that can be hacked to steal information.
Still, blockchain is not fool-proof and hackers have exploited smart contract vulnerabilities in the past to steal data and funds.
Blockchain for the Future
In the modern age where data is the new oil, blockchain technology has revolutionized the way information is stored and processed. It takes the control out of the hands of centralized authorities and enables a democratization of information.
Cryptocurrency is the most visible and prominent example of practical use of blockchain, this technology has a number of use cases in a variety of industries. Businesses, banking, healthcare, and government all can benefit from a greater adoption of blockchain solutions. It is a technology of the future that promises to increase speed, efficiency, and transparency in operations.