The blockchain concepts may be, and are, used in different industries to serve a diverse set of needs. The technology is trying to democratise the creation and maintenance of accurate record of transactions. It provides clarity and transparency and can be used as valuable anti-corruption apparatus.
Blockchains can be used for public transactions, such as digital currencies, but can also be used for private business-t0-business transactions. Hence, there are both public and private blockchain platforms.
Public blockchains allow anyone to see or send transactions as long as they are part of the platform. There are also consortium blockchains, where a pre-selected number of nodes are allowed to use its ledger. For example, a group of banks may use blockchain as part of a trade settlement process where each node is associated with a particular phase in the verification process. Private blockchains, on the other hand, restrict the ability to write to a distributed ledger to one entity, such as a group of employees within a company or between several organisations, such as a group of banks that consent to network collaboration. Along the way blockchain, because of its self-policing security, removes the burden of record-keeping, which can become very difficult when multiple parties are involved in a transaction.
Due to its nature, blockchains can serve in multiple industries —Shipping, Fintech, Healthcare, Food, Energy, to name a few.
Blockchain In Shipping
In the shipping industry, an airway bill (AWB) for freight shipments has historically been paper-based, requiring multiple authorisations by inspectors before products can be shipped. Even when the system is electronic, various parties still need to sign up for freight shipments, creating a lengthy administrative process.
To try to streamline this cumbersome process Maersk, the shipping giant, announced in 2017 that it would use a blockchain-based ledger to control and monitor the paper trail of tens of millions of shipping containers by digitising the supply chain.
Maersk has teamed up with IBM on a new blockchain-based electronic shipping network. The network was announced later in 2018 supported by a partnership between A.P. Moller, Maersk, and IBM, and was given the name “TradeLens”. Just a few months after the platform launch, several large cargo organisations joined the network such as CMA CGM, MSC Mediterranean, Hapag-Lloyd, and Ocean Network Express (ONE) [11] .
Each participant in the freight supply chain can see the progress of the goods through the blockchain ledger, knowing where the container is during transit. Members of this blockchain may also see the status of customs documents or show bills of lading and other data in real-time. As explained earlier, because the architecture produces a permanent record, no one on the network can alter, remove or even add any of the blocks without the consent of all other members of the system.
TradeLens is a real example of how blockchain technology can help modernise the world’s supply chain ecosystems. Participant organisations gain a comprehensive view of their data and can interact as their freights travel around the globe, helping to create a consistent, stable and unchangeable record of transactions.
Blockchain In FinTech
In 1991, the World Wide Web went live to the world - hurray!
While most banks pushed back on that innovation as they were used to delivering services in their retail branches, or via one-on-one business relationships, they had to adapt finally. Now, most banks provide online banking, mobile banking, debit and credit cards that can be used anywhere, supported by the Internet.
The Internet gave rise to the FinTech field through which technology is being used heavily to support financial transactions. PayPal is an excellent example of a leading FinTech organisation. Right after PayPal’s start, it had around 179 million active users and a $285 billion total payments volume.
PayPal’s success has had fundamental implications: it has shown that alternative financial services companies can be viable by building bridges and ramps to traditional banks. Blockchain is now definitely following the same path as FinTech so far, turning its positions into significant footholds or fully-fledged enterprises. Some blockchain-based start-ups are already gradually addressing pain points in the financial services market, offering solutions to existing companies, while others are pursuing cooperative mechanisms to fertilise the flavours of shared networks.
Just as FinTech was a response to banks’ lack of innovation, blockchain technology is responding to FinTech’s lack of true decentralisation. Blockchain is also responding to the long settlement durations and high transaction fees of traditional banks.
For financial institutions, the future of blockchain technology will begin through two parallel pathways. On the bad news side, some of the blockchain start-ups are going after their business and customers. But the good news is that blockchain technology is ideal for streamlining a lot of banking operations.
Ripple (XRP) is an excellent example of how the blockchain can streamline banking operations. Ripple was launched with a mission to enable banks to settle cross-border transfers almost instantly, with end-to-end consistency and at lower costs. Many banks and financial organisations realised the benefits of using Ripple’s blockchain and joined the wave, including Santander, American Express, HSBC Holdings PLC, MoneyGram, PNC, and SBI Remit [12] .
Another massive banking network based on blockchain is JP Morgan’s Interbank Information Network (IIN). Launched in 2017, the IIN started with big names on board such as the Royal Bank of Canada and New Zealand Banking Group Ltd. Later in 2019, JP Morgan announced that more than 390 banks world-wide had joined the IIN [13] .
These blockchain projects and networks show that not only can blockchain streamline financial operations, but also drive disruptive changes in the way we look at financial transactions.
Blockchain In Energy
Who would ever think that you could sell your solar energy using a blockchain network?!
People of the Park Slope area of Brooklyn, NY, are now able to sell the power generated from rooftop solar panels via a Siemens microgrid using a blockchain ledger that records every transaction with a local utility. The physical microgrid, by Siemens Digital Grid Division, includes network control systems, converters, battery storage and smart electrical metres.
Brooklyn Microgrid blockchain platform is a web-based platform that uses blockchain technology to save energy data in a way that is both cost-effective and forgery-proof, the company said [14] . In case of a natural disaster, like a hurricane, users on the microgrid would continue to have power using the solar power sold to the grid earlier through the blockchain network. This project and others like it have opened the door to what is called a “peer-to-peer” energy market, where individuals can directly buy or sell their excess energy directly through decentralised markets based on blockchains.
Another good use of blockchain in the energy industry is the management of control of large, complex grids. For example, n 2018, Sun Pacific Holding Corp. announced its plans to purchase 60 acres of land to develop a solar and wind farm that will use a blockchain distributed ledger. The platform will track the new grid, control load balancing, and increase the life of electrical equipment by resolving issues in real-time [15] .
The company also wants to link its many microgrids, including the new renewable energy system, to the central national grid system and control it via a blockchain ledger. In the long run, the company announced that it could encourage customers to sell energy back to the grid, prevent blackouts through energy sharing, and move energy providers without any problems.
In a bold statement, the company CEO Nicholas Campanella said in a press release, “We believe the future of energy lives on the blockchain and are excited to use blockchain technology to make grid management more efficient.” [15]
But that’s not all! A recent study by a group of researchers from Heriot-Watt and Durham Universities in the UK reviewed 140 blockchain commercial and research initiatives in the energy sector [16] . From smart metering, customer billing and energy trading, to automation, intelligent grid controls, and identity management, the blockchain potential in the energy field is limitless. The study summarises that “blockchain or distributed ledger technologies can clearly benefit energy system operations, markets and consumers. They offer disintermediation, transparency and tamper-proof transactions, but most importantly, blockchains offer novel solutions for empowering consumers and small renewable generators to play a more active role in the energy market and monetise their assets.” [16] .
Blockchain In Healthcare
Blockchain technology has the potential to change healthcare by positioning the patients at the heart of the health care ecosystem, and improving the protection, privacy, and interoperability of health data. Blockchain could provide a new model for health information exchange by making electronic medical records more efficient and secure.
Blockchain can act as a communication network, allowing different parties to share and add information, such as an electronic patient health record, in real-time. The blockchain would serve as a verification method, ensuring that only certain authorised users, such as physicians, insurance providers or patients, can make changes to the chain of information.
MintHealth is an excellent example of how blockchain may transform the healthcare system [17] . Founded in 2017, and supported by Nucleus Health, Microsoft, and PolyMath, MintHealth announced the launch of its mobile health record system.
MintHealth operates a commercial health insurance platform to help patients with chronic illnesses, such as heart failure, diabetes, asthma, and other problems which account for more than 90% of healthcare costs today. Patients at risk but not yet suffering from chronic conditions can also benefit from having access to their medical records and monitoring their health data such as vital signs or blood sugar levels.
Blockchain-enabled data allows the real-time exchange of clinical and behavioural data between physician and patients. Using machine learning in this growing patient database can moreover help to identify disease predictors and poor health patterns.
A research study by Deloitte [18] summarises the blockchain opportunities in the healthcare field and how they may overcome common pain points in the healthcare system. Figure (7) below summarises these results.
Blockchain In Charity & Social
By now, you already know that blockchain transactions are digitally signed to verify originality and to ensure that the information contained has not been tampered with. As such, the operations reported on the blockchain are considered to have the highest level of integrity. How can this impact charity and corporate giving? Well, massively, indeed!
For charities and social organisations, blockchain offers a unique window of transparency and honesty that could help to make these organisations more trustworthy in the eyes of backers.
One of the most significant issues that non-profits face is the lack of accountability for how money is spent or invested. Donors are sometimes reluctant to give because they can’t be sure where their money is going or who they’re benefiting with their contributions.
Over time, such concerns can cause donors to become disenchanted. This makes it difficult for charitable organisations to find or maintain sponsors. However, blockchain can quickly build confidence in the system by showing the patrons where their money is going. Blockchains achieve this by making the system completely transparent and easily accessible.
Here’s how blockchain can improve transparency and trust in charities. Funds go directly from the donor to the cause. Thanks to the blockchain concepts, donations no longer need to pass through intermediaries. Instead, they fall instantly to the sufferers and the organisations that are in a position to assist them.
The elimination of intermediaries helps ensure that there is less room for corruption or financial loss in the system, and that money doesn’t fall into the wrong hands. As a result, donors feel more inspired to donate.
All transactions can be traced. Blockchain ledgers may be used to document transactions. This improved traceability makes it easier to track how the funds are spent at their final destination. Donors can see from a distance how their donations ended up supporting people whose charitable foundations claim to be helping. Blockchain makes it easier to differentiate between genuine organisations and fraudulent ones. Because donations made using cryptocurrencies can be tracked, it is easier for donors to recognise organisations that support their exact cause than those that seek to help only a few individuals. This way, they’re getting to know the best charities to partner with.
Crypto Giving Tuesday is an exemplary project in which blockchain can support charity organisations. Launched in 2018, CGT accepts donations in cryptocurrencies and can immediately transfer them to regular currencies through a payment integration system. Big names such as UNICEF and the Salvation Army have registered onto the platform to accept Bitcoin, Ethereum, and other cryptocurrencies [19] .
In the UK, two large charity organisations accept Bitcoin and other major digital currencies – Breast Cancer Support, and the Royal National Lifeboat Institution.
The Future Of Blockchains
Is blockchain just a bubble? I would strongly argue against that!
Both public and private blockchains have their positions and will continue to grow and provide value in ways that we might not even be able to envisage today. Innovation will continue to accelerate in the public cryptocurrency industry as tokens create financial incentives that attract both developers and investors.
We will continue to see the tokenisation of money, goods and services in many sectors as we saw above.
Regulations will hopefully become more transparent and will make it possible for those currently sitting and watching to participate. Whether Bitcoin, Ether, and other cryptocurrencies become less volatile or not, we’ll see cryptocurrencies with more stable prices compared to fiat currencies. In fact, there are many initiatives to create these “stable coins”.
Some stable coins are commodity-backed coins such as DGX, some are fiat-backed such as TrueUSD (TUSD) or Tether USD (USDT), and some are cryptocurrency-backed coins such as Havven and DAI.
Private blockchains are being adopted in many industries, and will likely get bigger as smaller networks come together to form more extensive blockchain networks. The digitally represented information and documents will continue to flow seamlessly, and we will learn how to use the technology to move big data across organisational boundaries.
Invoices, purchase orders, bills of material, certificates of origin, health records, excess energy, charitable donations — the list goes on. These documents are properties that can all be interpreted as tokens on distributed ledgers, with far more reliable assurances of authenticity due to the use of digital signatures.
Blockchain capabilities will increase the speed and efficiency of business within countries and across borders. These merits have a significant impact not only on the financial services sector, which is primarily concerned with the flow of money, but also on the overall economy.
Smart contracts will enable B2B automation in a guaranteed way that has not been possible before. Smart contracts can be initiated automatically based on conditions, so automated systems, such as machine learning platforms, can issue and validate contracts between multiple customers and vendors with no or little intervention.
Blockchains remove the need for intermediaries. Hence, they’re good for reducing transaction costs and restoring value to the economy. The financial services industry is full of intermediaries keeping your money. They’re the ones who keep track of who owns what but unfortunately, you bear the costs.
However, with cryptocurrencies, you can keep and manage your money, even if this has its risks. This technology will, therefore, result in fewer intermediaries. Fewer financial intermediaries means fewer businesses that drive profits out from the real economy. So, more fortune for everyone!