Top 10 Use Cases for Blockchain
Blockchain technology has been with us for many years, since the first cryptocurrency Bitcoin was launched in 2009 by the enigmatic Satoshi Nakamoto.
The technology has powered the launch of many other cryptocurrencies – like Ethereum – and led to variants in digitally traded assets including stablecoins and dogecoins.
These alternative currencies are so because of the blockchain on which they are mined. As the technology has become better understood, today its use cases are far-ranging, and many other possible applications are yet to be explored.
What is blockchain?
Put simply, blockchain is a shared, open and immutable ledger facilitating the process of recording transactions and tracking assets in a business network.
At its core, blockchain technology champions transparency, immutability, automation and decentralisation.
For many organisations across many industries, that last point – decentralisation – really equates to trust in the technology, as all transactions are open to every player on the same chain.
As trust has been nurtured and the technology greater understood, blockchain’s use has thrived.
Here, we look at the Top 10 use cases of blockchain technology today.
Capital Markets
Blockchain technology is being explored throughout capital markets in several key ways. It unlocks easier, cheaper and faster access to capital if employed correctly. In trade settlement and clearing, blockchain technology can facilitate near real-time settlement while reducing the need for intermediaries. Its immutable ledger lowers settlement risk too.
Smart contracts on the blockchain can also automate derivate contract execution based on pre-defined rules while automating dividend payments. Perhaps most notable, is its ability to tokenise traditional assets such as stocks and bonds into digital securities – paving the way for fractional ownership.
CBDCs
Blockchain can also power CBDCs – a digital form of central bank money that offers unique advantages for central banks at retail and wholesale levels, from enhanced financial access for individuals to greater infrastructural efficiency for intermediate settlements.
With distributed ledger transactions (DLT), CBDCs can be issued, recorded and validated in a decentralised way. An immutable ledger provides transparency to track the issuance and transfer of CBDC transactions. Blockchain-based CBDCs also allow central banks to control currency supplies without compromising user security and privacy. It is also programmable, meaning rules like wallet limits or third-party access can be hard-coded into the protocol.
Financial services
Traditional financial services are encumbered by outdated operational processes, security issues and slow payment settlements. With blockchain technology leveraged as the underlying infrastructure, financial services providers can streamline payments and money transfers to facilitate faster, cheaper, and more secure payments, both domestically and across borders. Finserv providers need not rely on intermediaries, like banks, either, when leveraging blockchain for faster money movement.
Financial instruments are enhanced by using blockchain technology, increasing liquidity while lowering the cost of capital and reducing counterparty risk.
DeFi
Decentralised Finance (DeFi) is the term used to define the shift from traditional centralised financial systems to peer-to-peer finance enabled by decentralised technologies built on Ethereum. DeFi is one of the most popular use cases of blockchain-powered technology today, with millions participating in this new financial system which offers increased financial access and support.
Leading DeFi examples include decentralised exchanges, which use blockchain smart contracts to facilitate peer-to-peer trading of cryptocurrencies and tokens, and lending and borrowing platforms which enable users to lend or borrow cryptocurrencies without going through traditional financial institutions.
Digital Identity
Blockchain technology is becoming vital in the cybersecurity space too. When it comes to digital identities, blockchain enables the concept of self-sovereign identity (SSI), where individuals have complete control and ownership over their digital identities and personal data. Rather than relying on centralised authorities like companies or governments to issue and manage identities, blockchain enables users to create and manage their own. SSI use is expected to expand in 2024.
Blockchain also enables decentralised identifiers (DIDs) – unique identifiers that are globally resolvable and associated with a decentralised identity record stored on the blockchain. DIDs allow individuals to prove control over their digital identity without relying on centralised registries.
Insurance
In the insurance claims process fraud is rife, and claim assessments can extend over long periods of time. By leveraging the blockchain, insurers can streamline data verification, disbursements and claims processing – reducing the time it takes to process claims and associated costs. Insurers can also create an immutable and trustworthy record of products' provenance, ownership history and warranty claims for high-value insured items when leveraging the blockchain. This enables transparency and can further mitigate claims fraud.
KYC and AML processes can also be improved, as blockchain helps insurers reduce duplication of effort and improve compliance oversight.
Global Trade & Commerce
Today, blockchain is being explored to digitise trade documents and streamline typically strenuous processes like letters of credit, while providing a tamper-proof environment for secure trade finance transactions. Issuing letters of credit can now be done using smart contracts based on pre-determined conditions being fulfilled, all thanks to the power of blockchain.
When it comes to supply chains, blockchain technology can transparently produce a record of a product’s origin, ownership history and its movement across the supply chain. Examples include IBM’s Food Trust and Walmart’s blockchain solution allows for produce to be immutably tracked from farm to store – ensuring ethical sourcing and food safety standards are met.
Sustainability
When it comes to sustainability, blockchain technology is helping organisations take huge leaps in this space, particularly in the energy sector. It enables peer-to-peer trading of renewable energy, enabling both individuals and businesses to buy and sell energy without utilities intermediaries or grid operators, resulting in a more efficient, cost-effective energy market that better utilises renewable sources of energy. Projects like Brooklyn Microgrid can help enable distributed energy resources to meet up to 45% of global electricity demand by 2050.
Elsewhere, smart grid management can be managed safely and securely via the power of blockchain, facilitating transparent monitoring of energy demand, supply and data flows in smart grids. Carbon tracking features are also made possible by those organisations leveraging blockchain technology.
Healthcare
The blockchain's reach has spread rapidly, and today it supports healthcare providers who can leverage decentralised electronic health records (EHRs). By creating a permanent audit trail, blockchain technology ensures data integrity to all changes made to a patient’s medical history.
For healthcare providers, blockchain can also store and credentials, certifications and licences on a distributed ledger, supporting verification processes and mitigating any potential forgeries.
Government & Public Sector
Of course, it is not just private sectors where blockchain has extended its reach, it is also being explored in the public sector and within central governments. Identity management and citizen records powered by blockchain are helping to prevent fraud, data tampering and unauthorised access. In the US, examples include the Illinois Blockchain Initiative and Delaware’s initiative for archiving public records.
Elsewhere, blockchain is helping serve land and property registration, supporting voting and elections and helping with public service delivery.
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