Real World Applications of Blockchain Technology
Perhaps the first things that come to mind about blockchain technology are cryptocurrencies and NFTs. No surprise here, as cryptocurrencies and NFTs are built on blockchain technology.
The growing popularity of crypto is perhaps what has brought blockchain technology into focus.
Blockchain, however, is said to be one of the most interesting developments in the technology space in recent times.
But what makes blockchain technology so interesting and unique?
To answer this question, it is important that we first answer these two important questions:
What is blockchain?
How does a blockchain work or operate?
What is a Blockchain and How does Blockchain technology work?
A blockchain is an electronic storehouse or database of information that is distributed across different computer systems. These computer systems are called nodes. Every node on the network has a copy of the database.
The data structures that house information on a blockchain are called blocks.
These blocks are all linked and point to one another in a continuous line, like a chain, hence the name "Blockchain".
For a new block to be added to the chain, the distribution of nodes on the network must all validate the information contained in the block through a consensus mechanism.
Each block contains something called a hash. A hash is a unique string of characters that is representative of the specific information that a block carries.
Every individual piece of information generates a unique hash; an attempt to alter the hash makes it no longer representative of that particular piece of information.
Each block has its own hash and also contains the hash of its predecessor. This predecessor also contains the hash of its own preceding block, so all blocks are linked continuously. Therefore, an attempt to alter one block would invalidate other blocks.
A hacker might attempt to cover up their tracks by also altering the hash on other blocks accordingly. But the consensus mechanism would make it practically impossible to successfully do this. It might take several years to successfully alter the information on existing blocks or create new replacement blocks.
Consider this: it takes an average of about 10 minutes to create a new block on the Bitcoin network. Therefore, altering the already existing blocks, which are in their thousands, and creating new replacement blocks would take years to accomplish.
Fascinating! right?
So the hashing process and consensus mechanism work together to ensure the immutability, transparency, and entire security of the blockchain.
These processes give the blockchain an extremely high level of security.
The incredible level of security that blockchain technology offers is definitely not something to ignore.
Players from industries other than the cryptocurrency or NFT industry are now considering the possibility of employing blockchain technology in their respective fields of endeavour. It might very well have the potential to improve efficiency in their businesses.
Now we take a look at some real-world blockchain application examples:
Blockchain Technology in Supply Chain Management
Supply chain management is defined as the activities that oversee the handling and movement of value in the form of goods and services from one location to another.
A notable challenge being faced in the supply chain is the inefficiency in tracking due to certain limitations in computer systems and software programmes and the somewhat lack of transparency in business transactions.
Blockchain technology may be employed to eliminate these problems by improving traceability, data tracking, and ensuring transparency in transactions.
Improving traceability and tracking:
A big industry player, Walmart has now partnered with IBM to create a Food traceability initiative. This initiative uses IBM's blockchain and has recorded remarkable success. The task of tracing food items that would ordinarily take days to accomplish can now be effectively done in a matter of seconds.
The blockchain, being a very secure record book of information, can be used to accurately monitor and track information. This records product data at every stage of the supply chain process.
De Beers, a diamond exploration, mining, and trading company, now uses blockchain technology for tracking, from the point of mining to when it gets to the final consumer.
This allows for transparency in the whole value and supply chain process and also eliminates concerns about purchasing diamonds from conflict regions.
Transparency and Efficiency in Transactions:
The level of security and fidelity that the blockchain offers improves transparency and efficiency in the conduct of business transactions and the receiving of payments between business partners.
Transactions are made easier when obligations are verified on the blockchain. Payments are also automated through the use of the blockchain.
A notable industry use case of blockchain-aided transactions has been done by Walmart Canada in making freight payments.
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Use of Blockchain Technology in Voting Systems:
Some unsuccessful attempts have been made at conducting digital and internet-based voting. This has been unsuccessful for obvious reasons of security breaches that are peculiar to the internet.
However, blockchain technology could very well be the solution that could make digital and internet-based voting a reality.
Key factors that are important in any kind of voting or electoral process are:
Blockchain technology is very capable of catering to these needs. Based on how the blockchain works and how it accepts and stores information, anonymity and non-duplication of information is certainly assured.
The blockchain is also completely built on the basis of decentralisation. It is not subject to any central authority and hence provides a very high level of security.
Use of Blockchain in Digital Copyright Protection
Blockchain technology may be used to prove exclusive ownership of digital content, such as literature, music, art, and so on.
The immutable record of the blockchain guarantees digital creators a reliable way to prove original ownership of their intellectual property. The blockchain may carry information, such as the date of creation, that will be important to prove the original ownership of content.
There are companies that are in the business of using blockchain technology for intellectual property protection.
The advent of NFTs (non-fungible tokens) also makes a case for how blockchain technology may be used for the protection of intellectual property.
It shows how digital copyright protection may be upheld and how digital creators may benefit from the collection of royalties.
Blockchain Applications in Healthcare
One important problem that blockchain technology might solve in healthcare will be the sharing and distribution of patient information, which is usually sensitive and confidential.
As the blockchain offers a highly secure, immutable and accessible avenue to store information, it would definitely provide a good solution to the problem of patient data sharing and distribution in the healthcare sector.
Use of Blockchain in Finance and Fintech
Blockchain technology has a wide range of uses and applications in finance and fintech.
Blockchain technology can be a good tool to use by financial regulators to monitor and check the activities of players in the finance sector.
As the blockchain offers an accessible, secure and immutable record of information, financial regulators will have easy access to information required for regulatory activities, records will be secure and free from manipulation. This will help reduce cases of fraud and the falsification of records.
Cryptocurrencies built on blockchain allow cross-border payments, remittances and money transfers to be done easily and swiftly.
Central bankers around the world are now looking to digitise money as an alternative to the regular paper fiat money. Blockchain technology makes it possible to create and issue Central Bank Issued Digital Currencies (CBDCs).
CBDCs are built with the help of distributed ledger technology. A good example of a CBDCs is the e-naira that is issued by the government of Nigeria.
Stable coins are cryptocurrencies that have their value pegged to fiat money–usually the US dollar or gold. These stable coins are a more stable alternative to cryptocurrency tokens. Examples of stable coins are USDT, USDC and BUSD.
Use of Blockchain Technology in Digital Identification Systems
The ability of the blockchain to provide a secure and unchangeable record of data makes it a suitable form of technology to be used in digital ID systems.
The governments of countries like South Korea, Estonia and Sierra Leone are working on building digital ID infrastructure using blockchain technology.
Use of Blockchain Technology in Wills
A will is a legal document that states what a person would like to be done with their properties and assets once they pass on.
As the blockchain provides a secure, tamper-proof and immutable system of recording information, it would be a useful instrument for use in writing a will.
A blockchain will provide assurance of authenticity and immutability.
Final thoughts
As the popularity of blockchain technology grows and awareness grows about it, there is absolutely no doubt that we will begin to see more future applications of blockchain across various sectors.
Blockchain can indeed be used to eliminate certain inefficiencies and improve the ease of operations in numerous fields of endeavour.