Hello everyone, as promised I’m going to talk about top 5 revolutionary blockchain applications. As I have mentioned in previous articles, blockchain technology is the real diamond found in the process of introducing digital currency. The unique features of blockchain technology have uncovered many amazing possibilities in many industries. I hope you have read my previous article on blockchain and if not I strongly suggest you do so.
Supply Chain Management
Supply chain management is the whole process of transactions, all the way from raw material through product manufacturing to sale of products. This is one of the most complex and inefficient processes as there are so many intermediaries involved. There are so many tracking to be done in the process to make sure that the transactions are properly recorded and documented. Those who are involved in this part of the business would know how complex it can be.
How blockchain can improve the process? Well I hope you remember about provenance and immutability as the unique features of blockchain technology. It is the ability to track down the origin of something and being able to track everything that happened to it there onward.
Let me give an example. Just imagine you only eat organic fruits. But how do you know what is in the supermarket with the label organic is really organic? You just trust the label. Am I right? Now imagine if there is a ledger which is impossible to change and it keeps records of everything took place to those fruits from planting the tree to the display in supermarket. If that record says the fruits were produced organically you have proof to believe it.
Blockchain technology enables all the parties involved in the supply chain to track the products from the origin. That means the buyer, bankers, insurers, logistic companies etc. will have real time information about a certain shipment. This eliminates the time spent on verification and any kind of delays could take place on documentation. This allows the participants in the supply chain to be prepared and budget for their part in advance. Can you imagine how much money and time can be saved with this technology?
There is a growing demand for transparency from the customers of many products. Customers demand the goods they consume to be manufactured in an organic, environmentally friendly approach while adhering to ethical standards and fair labor laws. With blockchain technology, the consumers have the ability to verify this information. Some may say blockchain works as a watchdog for certain manufacturers, however the businesses who maintain high standards will be able to monetize their best practices and earn customer trust and loyalty.
Artworks and Documents
I hope you all know about the famous painting Mona Lisa by Leonardo da Vinci. The original painting would easily worth around $800 million. Also there are millions of replications of this painting which has zero value. Provenance gives the value. It is very important to have a proof of history. A break in the history of documentation can damage the value of an artwork. In the World War II Nazis confiscated lots of artwork and there were many which was unable to be recovered after the war. This is where blockchain does its magic. If allows anyone to track down the history of something all the way to its origin. This works with any kind of documents, books and letters which has a historic value.
Same technology applies for digital artwork as well. In digital space there was always a gap where you cannot own your creations. You know it is impossible to have ownership of digital artwork after you release it. Anyone can copy and paste. However if you use blockchain technology you can always claim and prove it is yours. It allows you to monetize your creative talents.
Digital identity is another main area where blockchain is making tremendous changes. Whenever you go to a bank and try to open an account or a deposit, you have to fill a KYC (Know Your Customer) form. This is a regulatory requirement and your bank has no other choice. You will give all your personal information to the bank or financial institution by filling this form and the bank/financial institution will in return store this information in their data bases. There are two problems with this process.
- The centralized data base maintained by each bank/financial institution becomes a vulnerable target for identity theft and data breaches.
- Once you provide your personal information to the bank/financial institution you no longer have control over your information.
Blockchain solves both these issues. It works as a decentralized ledger and therefore it is secured from data theft. Also each individual has the control over their personal information. Individuals will store their personal information in an encrypted digital hub. They can choose to give access to third parties in need basis and also revoke access once the requirement is fulfilled. In this way the banks/financial institutions can verify details without storing the information.
Verifying identity is a non-value adding exercise for banks and financial institutions. This technology allows them to avoid duplication among various institutions. Identity verification for a particular individual has to be done only once and then it is accessible and available in blockchain. This also gives the opportunity for banks/financial institutions to monetize on that initial verification. Other institutions just have to share the verification details.
Distributed Cloud Storage and Retrieval
Centralized cloud storage systems where information and documents are saved can be vulnerable for cyber attacks due to its centralized nature. With the blockchain technology this can be decentralized. The concept is similar to ripping apart a document in to 1000 different pieces and save in 1000 different places around the world. As the owner of the document you will have a password to bring all the pieces together when you want.
Similarly your documents will be encrypted and saved in the blockchain and you can retrieve them with your private key. Due to its distributed nature it is safe from cyber attacks.
Legal and Law
Smart contracts powered by blockchain have the potential to revolutionize the practice of law. Etherium is specialized in this. Smart contracts work similar to crypto currency transactions. Bitcoin transaction would be validated only when the required conditions are met. Similarly smart contract will be executed only when all the required conditions of the contract are met. The legal contract between two or multiple parties would be converted in to computer codes and it is self executable.
Deed documents of lands are highly disputable in many countries. If you are familiar with real estate business, you would have experienced the difficulty of finding a property with a clear deed. This is mainly due to gaps and breaks in documentation of the ownership. Blockchain can solve this issue with its immutable chain of records which can be tracked down to its origin.
The legal documents in a blockchain cannot be changed without the personal key of the current owner.
Blockchain has been tested and implemented in many industries around the world and we are still in the early stage of implementations. There is so much of potential. As a finance professional I was curious about how this technology will change the finance and accounting industry. I’m going to talk about how blockchain make changes for accountants and finance professionals in my next article. Until then stay tuned.
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