Cryptocurrencies are by far the most significant use case for blockchain. And to the uninitiated, it is presently possible to use cryptocurrencies to do very low-cost money transfers or to send and receive payments at very low cost and at high speed, which is especially very useful for international money transfers.
A good example is a transaction done recently involving transfer of $99 million worth of Litecoin (LTC) which took only two and a half minutes to process and cost the sender only $0.40 in transaction fees! In comparison, the cross-border transaction via legacy banking systems would not only have taken days to complete but would also cost much more. I mean even if there would be a way to send via legacy systems so fast, it would cost several times more than would when using cryptocurrencies.
Elsewhere, cryptocurrencies or tokens on blockchain, are being applied in doing peer-to-peer payments, tokenization of property to make it more affordable and easy and quick to sell, and as an alternative store of wealth that is censorship-resistant especially in the face of dubious rule of law. They also make it possible to do private transactions, non-cash remittances such as mobile data top-ups or utility bill payments to people on a network, payment and rewarding of users with money-value crypto instead of loyalty points, and facilitating what we call the Internet Of Things and machine-machine payments.
Additionally, as at now, digital token-based fundraising and startups have created immense investment opportunities and job opportunities to many people. There is also innovation breakthrough inside of cryptocurrencies that we could also be proud of.
Without going into more details, micro-payments are also allowing users to pay for goods and services directly at low costs of transactions, and to do business directly with each other. Cryptocurrences are also being applied in revolutionizing direct customer-seller relationships, artist-fan relationships, product promotion, direct selling etc.
That’s only a few of the best words you could hear over and over regarding cryptocurrencies as just one application of blockchain; but to the initiated, there is much more to blockchain than that. Blockchain as a revolutionary tech can be used in diverse ways as reveals the following use cases.
1. Smart contracts as a new way of legal agreements
The best way of understanding smart contracts is to see them as secure digitally stored, governed and executed code that defies and manages relationships and contractual agreements between individuals or between companies.
Smart contracts were proposed back in 1994 by Nick Szabo and are being applied to digitally automate execution of agreements among or between parties. Once a party agrees on the terms of a given contractual agreement, a cryptographic code is designed to outline and enforce the transaction when the terms are met by parties without middlemen or manual intervention. They are self-executing, self-verifying, self-enforcing and immutable.
Smart contracts are very popular in business transactions of different kinds today: for instance they are facilitating transfer of digital property when the terms of agreement are met by parties in a contract.
In real world, smart contracts are being used to facilitate automatic compensations for instance when there are delays in delivery of service or products to customers and a compensation is necessary, to do refunds for failed fundraising campaigns such as in ICOs, and to automatically transfer digital property (money, property, shares, or anything of value) in a transparent and conflict-free way when agreed terms between parties are met or violated. Smart contracts can vary from simple code to very complex code such as in some decentralized apps.
2. Supply chain management
Supply chains usually involve multiple parties and several transactions in order to complete a given transaction, especially in an international scene. Therefore, the industry is always a great target for any tech that revolutionizes transparency and efficiency, improves transaction speed, lowers costs, automates transactions, removes transaction and documentation delays and which advocates for a single version of truth of records among all parties.
As would be expected, supply chains can span over hundreds of stages, multiple geographical (international) locations, a multitude of invoices and payments, have several individuals and entities involved, and extend over months of time. The complexity has made these chains much less attractive and inefficient to not only customers but also to investors as they are host to many illegal and unethical practices.
Through several projects and many expert leader organizations such as IBM, Intel, Microsoft, and Oracle, Blockchain is already helping participants in supply chains to lessen costs significantly, reduce transaction papework, improve regulatory compliance, and to remove counterfeiting and theft while goods are on transit for instance via improved and detailed tracking. Distributed ledgers hold many nodes that carry same version of truth that is accessible to all parties in a transaction as goods are on transit. This not only promotes trust but also facilitates transaction and product tracking from source to destination.
Apart from product tracking, it facilitates exchange, agreements/contracts (via smart contracts), and faster international payments/remittances. Some of the examples of companies using blockchain to manage supply chains for some products include Walmart, Unilever, Nestle, Tyson, Dole, De Beers diamond company, and mining company BHP Billiton.
3. Digital identity management
Bockchain-based digital identity management is certainly gaining more popularity and there are now many identity management systems under development both in public and private scenes. To be precise, digital management inside of legacy systems today is broken: digital information recorded from individuals not only gets stored in numerous internet databases each for every sign up or login, but much of this information is being accessed and exchanged illegally in violation of digital rights and without owner’s consent. And with databases exposing loads of personal information of users, most systems are not only vulnerable to hacking but also have major privacy concerns.
Many blockchain identity management systems are answering to these challenges simply by helping users to develop a secure digital ID, having it stored in their own systems (in distributed ledgers managed by the users) as facilitated, and therefore the user being able to fully control its usage and permissions for sharing.
A user is also able to share or permit sharing a single version of the digital ID across different platforms, which promotes uniformity of identity, eliminates duplication and counterfeiting and other fraudulent activities. Systems that use blockchain identity management may thus report more accurate results.
A verifiable user ID on blockchain can be verified by any party including banks, governments etc without the user having to create multiple IDs on different platforms. Besides, blockchain-based encrypted digital identities are being used to replace multiple usernames and passwords while facilitating secure storage of personal information. For instance, Civic’s Secure Identity Platform (SIP) uses multi-factor authentication that does not require passwords and usernames and instead relies on biometric information verified by the blockchain ledger.
Inside of education sectors, blockchain can be used to not only store but to also manage certifications (degrees etc). This helps to eliminate certification fraud and organizations or individuals will not need to spend a lot of time and resources to confirm validity of a certificate for instance when hiring or being hired. MIT’s, Media Lab The Open University UK, The University of Nicosia in Cyprus are some of the institutions issuing certification on blockchain.
Also closely related to this is blockchain-based management of digital or intellectual property rights or patents. Artists are using blockchain to not only connect directly to fans in order to minimizing exorbitant ticket prices, scalping, and fraud, but to also securely store, document IP ownership to minimize infringement, track, manage and exchange their digital property ownership rights through smart contracts.
4. Government and related operations
Some of the major target areas are voting, taxation, revenue monitoring, identity management or registry management, and in change management systems.
Some of the governments that are known to have tried blockchain-based systems in one or more of these areas include UAE, Estonia, United States and Gibraltar. Estonia, for instance, has been testing blockchain since 2008 and since 2012, blockchain has been in operational use in Estonia’s registries, such as national health, judicial, legislative, security and commercial code systems. They plan to extend its use to other spheres such as personal medicine, cyber security and data embassies.
Today, many voting structures are plagued with voter fraud and in most cases, voters are required to be physically present at the polling booth, which may lower voter turnouts. Online voting will continue to play a greater role in leadership and governance in the future and blockchain’s more secure infrastructure and immutability of records may play a greater role in improving security and eliminating or reducing fraud. The records can be maintained digitally permanently and are much more difficult to penetrate or alter digitally. Blockchain can provide clear record of votes to eliminate or reduce inconsistencies and disagreement about winners or losers.
Blockchain is also being applied in managing military records, government pension records, government healthcare records, and welfare records.
Still related to public, blockchain is being used to not only tokenize but to also digitize real estate ownership, land titles (and other property such as bonds, shares etc) and their transfers in a more efficient and transparent manner.
Blockchain is revolutionizing healthcare because it can help unify medical records, is facilitating sharing of single versions of truths as far as records are concerned (more quickly, easily and at lesser cost) which improves decision making and outcomes, is facilitating access of medical information to patients, and allows patients to fully control and manage their information and records or their sharing.
Blockchain is also helping to tag and track drugs in each and every stage of the supply chain, which helps to improve supply, assure authenticity and help remove counterfeits. It can help reduce/eliminate medical errors and improve health decision making by individual practitioners and managers.
6. Internet of Things
Internet of Things is an idea of embedding internet of computing devices in objects to interconnect them and enable them to produce, receive and exchange data that can be applied to improve systems without requiring human-to-human or human-to-computer interaction. Networking of devices not only facilitates automation but also interaction and exchange of data. In itself, IoT is a wonderful idea when it comes to building smarter cities and supporting the coming autonomous vehicle revolution.
The problem with modern IoT is that it mainly relies on centralized communication processes known as the Server/Client Paradigm where interaction between even two devices lying next to each other, has to be processed by or in a monolithic central database. That limits any IoT network when it has vasts amount of data, considering that an average person creates almost a Gigabyte of data each day: it makes IoT networks to carry unsustainably high infrastructure and maintenance costs.
And as you know the statement “if one thing can prevent the Internet of things from transforming the way we live and work, it will be a breakdown in security”; any device interconnection brings around the fear of “the” rogue device, virus, or agent taking over and disrupting homes, transportation systems, etc with dire consequences.
Blockchain will revolutionize IoT because distributed ledger technology can record and facilitate exchanging of the vast amounts of data produced and exchanged by IoT systems, all in a trust-less fashion and transparently. Mentioning projects such as IOTA, blockchain is being tried for hosting IoT devices for both private and public sector use cases and can revolutionize the way we exchange data, share devices, manage infrastructure and traffic (or other resources), and even achieve better logistics and warehousing tracking.
IOTA is already being applied or tried in machine-to-machine communication, micro-payments, and the use of connected devices to validate value transfers on the distributed ledger.