The Internet in its earliest forms worked with intangibles. People sent or received emails, chatted on forums, and read articles. Today, the internet has changed. Now you deal with your most valuable assets in digital form: namely your email and bank accounts.
These valuables can now stored in an encrypted network chain called the Blockchain, which functions as a public ledger. The transparency of this ledger lets everyone see who you send and receive money to, and prevents theft, reduces errors, and takes the need away from using an intermediary.
How Blockchain Applications Are Transforming Society Fast
The blockchain is going to change everything in your financial world. Everything from voting, renting a car, to the way you manage your assets will be disrupted with this versatile technology. It’s als going to change the way that banks, hospitals and even governments conduct business.
For the above reasons, it’s therefore important to understand what a blockchain is and how it’s going to change your life.
The Blockchain: Decentralizing Payments
The more a transaction amount is, the more you’d be interested in protecting it. Traditional financial systems employ a third party like a remittance company to ensure these transactions are protected, although this beginning to change. The citizens of a small island called Yap came up with an alternative solution. Each resident kept a mental record of who owned the assets on the island and ended up referring to this system as a distributed community record that could be referenced when disputes arose.
The blockchain is this community except on global, digital scale. It stretches across all corners of the earth, with computer users in each node verifying the integrity of transaction. The features of the blockchain are they are immutable, comprehensive, and publicly available. It’s these characteristics for why the blockchain is now favored for handling high risk transactions.
Examples Of The Blockchain In Financial Services
The legacy systems of banking and finance have a reputation of being slow and prone to user error. Additional third parties are also needed to mediate conflicts and manage processes. Obviously, this costs an inordinate amount of stress, time and money for organizations. The blockchain can help with all these issues and more, thus making transactions cheaper, more transparent, and stakeholders accountable.
It’s then no surprise that many companies in the financial services industry have begun to use the blockchain, especially the feature of smart contracts. Smart contracts can be designed so that they are self-maintained and self-execute when the right conditions are met.
Asset management involves the trade and management of real-world assets, which can be an expensive and risky venture, especially for international payments. In this process, each party (broker, custodian, and settlement manager) keeps track of their own records. With each of these stakeholders having their own set of records, this can then lead to a wide margin of error. Through using the blockchain, this can help simplify the process, whilst also eliminating the need for middlemen.
Processing claims can be both frustrating and expensive for insurance companies. The firms are required to sort through fraudulent transactions, fragmented data sources, and abandoned policies to name just a handful of complaints.
User error on behalf of employees and the customers themselves is also a significant problem. The blockchain can help create an almost perfect, risk-free system for better management and transparency for all stakeholders. The additional layer of encryption of each record can further afford insurers some peace of mind.
Mistakes are rife when it comes to the global payment sector, and is vulnerable to criminals using it to facilitate fraud and money laundering. The settlement time for transactions is also a problem, as it often takes days for money to be sent across international borders. The good news is the blockchain is already making moves in this space with companies like Abra and Align Commerce offering end-to-end remittance services using distributed technologies.
Banks have also taken note of this recent shift towards the blockchain, as in 2004, Satander became one of the first banks to merge the blockchain with its banking application, thus allowing its customers to make overnight international payments.
Examples Of Blockchain Smart Property
Intangible assets including patents, company shares, and property titles can have smart technology embedded into them. This allows for a registration on a public ledger along with the details of who they belong to. Additional “smart keys” could be used to allow access to the asset for a trusted third party. The ledger would then dispense these keys once a contract is verified.
Hard Money Lending
Just like the financial and banking industry, smart contracts could be utilized the streamline the traditional lending system for cash and assets. For example, unconventional lenders that service poor credit consumers typically charge between 2 and 10 percent of the loan amount as interest whilst claiming their customers property as a security. The issue with this market is that too many borrowers default on their loans and need to sell their homes.
Here, the blockchain can be used to let a stranger loan you money and take smart property as collateral. This would eliminate the need for credit and work history checks, with no need to go through each application document manually. The property, and who it belongs to, would be permanently stored on the blockchain for everyone to see.
Your Car and Smartphone
While the idea of a stranger lending you money seemingly out of thin air may seem far-fetched, there are some types of smart property that exist already. For example, your car keys might come with an immobilizer that can only be activated once you have input the correct code on your keys. Your smartphone’s lock screen makes it a piece of smart property, as access is only given to those who know the PIN code.
However, the issue with these rudimentary forms of smart property is the key (PIN code) is held in the physical world, which means they cannot easily be replaced if they are lost. A blockchain could help with this weakness, as it could allow miners to replicate a lost protocol and restore access to a user’s device or account.
Examples of Blockchain Internet-of-Things (IoT)
Objects that exists in reality could be described as “things”. These objects become an internet of things when it has the ability to be turned both on and off to the Internet, as well as each other. This means that even physical objects can have a presence on the internet. This idea is set to be disruptive, as the analyst firm Gartner predicts that by 2020, there will be more than 26 billion devices.
So what does the IoT mean for you? Well, your printer could order new printer cartridges from Amazon when its ink is running low. Your alarm clock could work with your coffee machine for a perfectly-timed java. These are only a few examples for consumers, but what about for governments? The IoT has the potential to create cleaner, greener environments, as well as to store and use energy more efficiently to be used in what are being called ‘smart cities’.
A smart appliance is described is any device that connects to the internet and gives you more information and control than you thought possible. For example, a code inputted to your device could send an alert out when your baking is ready or laundry has stopped. The alerts of this kind could help keep all your devices in good condition, as well as save you money in energy costs. Like everything else on the blockchain, these applications can be encrypted to protect your ownership of these devices, which also enables them to be transferred to another user.
Supply Chain Sensors
The benefit of using sensors in the supply chain is they can provide an end-to-end transparency of data as the products move from location to location. As of 2018, Deliotte and MHI reported 44% of the leading supply chain companies used sensors as part of their distribution network. Additionally, 87% of the companies not using sensors planned to roll them out by 2020.
The technology industry for sensors is anticipated to grow to 1 trillion dollars by 2020, and to 10 trillion by 2030. These sensors will make use of the blockchain to track and manage packages sent throughout the supply chain.
Smart contracts are embedded with if-this-then-that (IFTTT) logic, which is what allows the contract to self-execute. In the real world, a middleman ensures each party remains accountable and honest for transactions.
Third parties raises costs, and puts that intermediary in a position of unbalanced power. Using blockchain and its related smart contracts eliminates the need for a third person to validate transactions, and implements the contractual terms automatically once the conditions are met.
Smart contracts have all kinds of uses, like for financial derivatives, insurance fees, property transfers and crowd-sourcing agreements.
The health records of individuals could be utilized on the blockchain through using a private key, which would allow access only for specific people. The same method could be employed for research, ensuring that all studies conducted comply with HIPPA laws. Proof and receipts of surgeries could be stored in a blockchain and then transposed to insurance companies for proof of care. Among other things, the network could be leveraged for health care management, compliance, testing results, and keeping track of medical supplies.
The problems that the music industry faces involves the distribution of royalties, accountability, and keeping track of ownership rights. Another issue is that digital producers of music have put their focus on monetizing their work, whilst the rights of the original owner of the work is often overlooked.
This is where the blockchain can help. A ledger could be set up to create a decentralized database of all music rights holders. Additionally, the ledger could be used to issue artist royalties and real time distribution of each payment for the label.
Examples Of The Blockchain For Governments
In the 2016 general election, both Democrats and Republicans put the security of the electoral voting system into question. Computer scientists have said hackers can rig these voting machines to manipulate votes, and consequently an entire election. Using a blockchain, one could prevent this electoral fraud from occurring as each vote would be encrypted on the blockchain network and tied to an individual’s identity.
The blockchain can provide self-organization through offering a management platform for a variety or organizational structures, including NGOs, foundations, and government agencies. Parties can then trade information on an international scale. An example of the blockchain’s use here is Google Cloud, except its platform would be larger and far less susceptible to risk and misuse.
When implemented, smart contracts can be implemented to verify the uniqueness of each vote during an election. This means electorates can be voted by the populace and held accountable to their promises made during their campaign trail. A smart contract can help specify the expectations of the vote, and electors will be paid only once they complete what the electorate demanded.
One unnerving fact is that online companies know a lot of information about us. This information is often sold and rented to advertisers who then send offers through mail or email. The blockchain could stop the epidemic of spam through the creation of an encrypted data point. A data point would protect one’s contact details and disclose the data once relevant conditions are met.
So here are the possible application of the blockchain. As you can see, the blockchain will change the way that we do everything: from financial transactions, medical care, and even making a cup of coffee in the morning. The exciting thing is this is just the start for this technology, and who knows what we’ll see from this tech in a few years time.