Blockchain Technology: The Future for Industry
A recent report by Grand View research has suggested that the blockchain technology market is expected to reach $7.74 Billion by 2024, which is a far cry from the humble yet ingenious beginnings of Satoshi Nakamoto’s white paper in October 2008. In this blog we set out to explore the industry applications of blockchain technology, the public ledger once developed to keep track of cryptocurrency transactions, which is now being realised as a ground-breaking electronic transaction-processing and record keeping system.
Why is Blockchain Technology so Powerful?
Just to clarify why blockchain technology is thought to be so powerful for industry we only need to look at the key benefits of storing information on a public ledger. There are many benefits and challenges but for the sake of an easy-to-read blog we will just go through the most mind boggling. Firstly, and some would say most importantly, you can have a decentralised and trustless system of exchange where you do not have lay faith in our most worthy human nature to fulfil our promises. This in turn means that middle men can be cut out of the process which is the foundation of much of the disruption blockchain technology could bring about. Secondly, you have complete transparency and immutability as public blockchains are publicly viewable and nothing can be altered. Thirdly you have faster transactions where they are processed in a matter of minutes rather than days such as interbank transactions. And lastly you have lower transaction costs due to the elimination of third parties and the long list of overheads that come with them.
Industry Applications of Blockchain Technology
So let’s take a look at some of the major industries blockchain technology is making inroads into today:
With recent cyber-attacks on some of the largest health institutions on the planet, it’s no wonder why healthcare professionals and IT departments are looking for more robust ways of storing and sharing patient data. This is where blockchain security is ideal. By storing data in a distributed, encrypted ledger which is synchronised across a huge network you have unprecedented security benefits. The encrypted chain of blocks result in a near impossible challenge to decipher without compromising every other block in the chain, unless of course you are the one who has the key to unlock that data. There simply is no back door, and it’s a no brainer in terms of sharing encrypted data safely throughout the world. That’s why people like John Halamka, who has been responsible for health care data standards in the US for the past decade, sees blockchain technology as the future of storing patient data, and forward-thinking countries such as Estonia have already started implementing it for patient records.
Likewise with security departments increasingly conscious of their… security, organisations such as the US Department of Defence and NATO have posted requests for military-related apps built on a blockchain. They are looking at various implementations such as secure messaging systems, which similar to health data, can be encrypted from end to end, military logistics solutions, procurement solutions and finance. Taking just one of these examples, logistics, IBM has built a blockchain technology powered platform allowing people to log and monitor high value goods as they move through the supply chain. It is thought blockchain technology such as this could be utilised to move weapons throughout the world as Governments and private institutions sadly continue to profit from war.
According to a survey conducted by IBM and the Economic Intelligence Unit, government interest in Blockchain technology is astounding. They suggested 9 in 10 government organisations plan to invest in blockchain technology for use in financial transaction management, asset management, contract management and regulatory compliance by 2018. There are tons of examples to choose from but let’s just choose a few real life examples to evidence why blockchain technology is so game changing for Government:
UK – Welfare Payments
In 2016 the Department for Work and Pensions began a trial using blockchain technology to record welfare related transactions on a distributed ledger. It is thought that this could help reduce benefit fraud, up the security on personal data and help record the registration of assets among other things.
Estonia – Health Records, Voting and Identity Management
Estonia have been one of the most forward-thinking governments when it comes down to implementing blockchain technology in key areas. Now citizen ID cards are cryptographically secure via the blockchain which in turn allow them to access public services. Nasdaq also completed a trial earlier this year enabling company shareholders to vote via a blockchain. Just imagine if this was implemented in a government voting system i.e. no more dead people voting!
Georgia – Land Registry
Georgia has started to utilise blockchain technology to register land titles and validate property related transactions. No more arguments over ancient and outdated documents! This has created a secure and trustless system which increases transparency, reduces costs and prevents fraud.
The list of government applications goes on and on…
Through the use of “smart contracts” which create a powerful escrow service, blockchain technology is set out to revolutionise the legal industry on a huge scale. Imagine every legal contract was stipulated on the blockchain and backed up by code to perform actions when certain events occur. You would then be creating a trustless peer-to-peer contract which would cut down manual tasks, increase transparency and ensure no legal action was required to fulfil the contract. Some global law firms such as Clyde & Co and Norton Rose Fulbright have released white papers on the blockchain and the legal issues surrounding them, suggesting real investment into the area.
There will also be many new functions that blockchain technology will serve which will be required to be upheld by up-to-date laws and legal institutions. Just a few examples are Intellectual Property Rights which could be publicly accessible via a distributed ledger, land registry and deed management similar to that which has been implemented in Georgia, public records for voter registration and census information, and estate planning where contracts could trigger upon death.
As the legendary Elon Musk continues to disrupt the energy market with solar roof tiles and home batteries, microgeneration is increasingly becoming a big topic across the globe. That’s why some research organisations such as the Scanergy Project in Belgium are proposing systems which track electricity consumed and delivered to the grid via blockchain technology. It is also proposed an aptly named cryptocurrency called NRGcoin is earned by home electricity producers for delivering energy into the grid. It is thought this would incentivise people to participate and isn’t subject to governmental policy changes or dubious organisational pricing models.
Now we save the largest to last, an industry where 45% of financial intermediaries such as payment networks, stock exchanges and money transfer services suffer from fraud each year. The global financial system is rife with inefficiencies which ultimately adds costs and delays to the consumer, such as paper-based processes, asymmetric information and vulnerable centralised systems. While the list is pretty endless on how blockchain technology solutions can revolutionise the financial system it is perhaps naively summed up by most firms as reducing friction and cost. The European bank Santander put the potential savings at $15-20 Billion a year. After much initial backlash from banks, particularly surrounding Bitcoin, the truth is that blockchain technology has the potential to make many forms of banking and intermediate functions completely redundant through the empowerment of users and through peer-to-peer collaboration.
So What are the Challenges Ahead for Blockchain Technology?
You might say, this sounds great, why isn’t this common place today? The answer to that lies in a few challenges surrounding the adoption of blockchain technology. There are ongoing passionate online debates surrounding how to overcome certain limitations such as transaction speed, the verification process and data limits, however it is thought these are simply interesting problems to be solved by the brightest crypto brains on the planet. From another angle, taking an example of the Bitcoin Blockchain, miners are attempting 450,000 trillion solutions per second which consumes vast amounts of computing power and energy. This is not a cost to the organisation utilising blockchain technology but right now it is to the environment. However, it is thought the single most challenging obstacle which lies ahead is cultural adoption which is a tough pill to swallow for some organisations which have largely profited from asymmetric information and the requirement to put trust in third parties. Any angle you come at the temporary challenges are vastly overcome by the benefits.
What’s next in store for Blockchain technology in industry?
Believe it or not these are just a fraction of the uses Blockchain technology has in store, and with such a wide range of applications there is no surprise roughly $1 Billion was invested in blockchain start-ups throughout 2016. If you haven’t looked into how Blockchain technology can enhance your industry I would suggest you do so before you become a dinosaur, as it seems that those who are the most resistant to this inevitable change will be left behind:
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
– Charles Darwin
Since the days of CPU Bitcoin mining, to say that us folks at Zudu have been obsessed with the world of crypto would be an understatement. If you fancy learning more about the blockchain applications we have developed or just want to connect with developers in the community feel free to get in touch.