5 Industries That Will Be Using Blockchain Sooner Rather Than Later
The peer-to-peer ledger technology blockchain is poised to revolutionize business as we know it.
When you read or hear about blockchain technology, the first things that probably come to mind are cryptocurrencies like bitcoin and Ethereum, as well as mining operations that require big amounts of cryptographic processing power in exchange for rewards for proof of work.
However, cryptocurrencies and tokens are not the only digital assets and technologies powered by blockchain tech – it goes farther and deeper than currencies, with the technology having the potential to significantly innovate across industries, particularly where trust and speed of transactions are essential.
Lauded as the next level of distributed internet, blockchain technology enables unprecedented transparency, efficiency and flexibility in terms of facilitating transactions without a centralized control or administration. The distributed ledger technology has powered cryptocurrencies like bitcoin and Ethereum, but it is not only in fintech where it shines. Any industry that involves peer-to-peer transactions will also benefit from its distributed and peer-authenticating features.
By taking away the middleman or central authority in establishing trust, and by ensuring that transactions can be audited by any and all parties involved, the blockchain provides a perfect way to protect against potentially fraudulent transactions. That's not to say that the tech is immune from external security threats (such as malicious individuals gaining access to digital tokens through unwarranted means), but the system in itself provides trust intrinsically.
Here are some examples of industries that will greatly benefit from the blockchain:
Contractual Agreements and Real Property
Real estate sales, rentals and listings are some of the activities that stand to gain significant improvements from blockchain technology. Currently, real property transactions undergo some of the most friction, in terms of stringent documentation, which requires a central authority to manage the transfers, not to mention the need to transact the exchange of money through banks, as well as commissions and fees to be paid to different parties involved.
These can include brokerages, brokers, agents, conveyance law firms and even government titling offices.
In addition, real property transactions involve a lot of information asymmetry, which can prove to be disadvantageous to both buyers and sellers of property, as well as potential lessors and lessees.
To address this, startups like Ubitquity offer solutions to manage real property exchange through blockchain-powered smart contracts. In partnership with property offices, realty companies and government agencies, the company provides a simplified platform for securely recording and tracking property ownership. The company intends to run in parallel with legacy property-tracking systems, but it offers the advantage of providing verification through the bitcoin blockchain as a strong, trusted and immutable public ledger. The solution is also platform agnostic, as it is also compatible with Ethereum and other blockchains.
The aim to reduce dependence on fossil fuels and reduce carbon footprints has led individual homeowners and businesses to become more forward-thinking in their energy consumption. With renewable energy sources like solar panels, households and office buildings are now generating their own power. However, the ability of solar to provide adequate supply is not always net zero – sometimes it is in excess, and sometimes it is not enough, depending on the demand for power.
This has brought about the smart grid, wherein individual households and buildings with solar capability can sell back their electricity to the grid; the same buildings can also buy power from the grid when they cannot produce enough from their solar cells. (For more on green computing see 5 Tips for Optimizing Energy Consumption Through IoT and Connected Devices.)
These transactions can be difficult to monitor, verify and audit, but energy providers, like Austria's Wien Energie, are already using blockchain technology to manage these transactions. Even communities are deploying the blockchain to manage their community-driven smart grids, such as the Brooklyn microgrid in New York, which is a peer-to-peer renewable energy market driven by the blockchain. These technologies combine blockchain and internet of things in order to better monitor utility, as well as manage the financial transactions that take place therein.
Money Transfer and Microfinance
Every payday, millions of migrant workers – especially from developing economies in Asia and Africa – send money to their families back home. This is often a tedious, time-consuming and very expensive activity, with remittance services charging hefty transfer fees and also making big profits from the foreign exchange spread. Banks also offer international wire transfer services, but these can be expensive, not to mention that the users need to have accounts of their own.
According to the World Bank, two billion people – or about a quarter of the world’s population – are either unbanked or underbanked. This means limited access to formal banking or financial services. By having no access to facilities like micro-credit or loans, many of these underbanked individuals often turn to the informal lending sector, which is rife with excessive interest and loan sharking activities.
Blockchain-based platforms aim to address this large audience with services ranging from electronic wallets to payments to international transfers. Such blockchain and cryptocurrency-backed services like Everex (which currently started its ICO, raising $6 million worth of Ether in a few hours) offer an array of services like peer-to-peer payments, borderless money transfer and bill payment. What sets it apart is the ability for users to secure micro-credit, which can be a particularly effective way to secure an audience among underbanked sectors.
While most jurisdictions will still require users to accomplish the usual KYC – know your client – steps when accessing financial services, this solution is empowering individuals with a cheaper, faster and more reliable mechanism for their financial dealings.
While traditional money transfer services would rely on a central authority to dictate the exchange rates, verify identities and facilitate the actual transfer, a blockchain-powered approach streamlines all these into a peer-to-peer model that is verifiable and auditable without the time-consuming and expensive checks and balances undertaken in traditional financial systems.
Gaming and Entertainment
Online games are no stranger to digital currencies. In fact, online gaming communities are among the biggest user of in-game currencies, wherein some third-party marketplaces already exist to exchange real-world fiat currencies with in-game items or money.
The disadvantage, of course, with in-game currency is that these are essentially proprietary, and there is no intrinsic value to these currencies outside of the game platform. Blockchain-based solution Neverdie seeks to address this limitation by launching a cross-platform cryptocurrency that can be used across different games through API. By powering its currency through the blockchain, the solution ensures that in-game assets do not get stuck within that particular game only, but can also be used for real-world transactions and secondary market cryptocurrency investments.
Apart from using the currency within the game ecosystem, the platform lets users mine tokens, trade these in the cryptocurrency market, and even earn additional virtual currency by participating in gamified activities such as jobs within worlds, virtual reality and mobile apps.
Governments and Smart Cities
Governments and communities are becoming smarter, with the use of connected systems in managing physical, social and business infrastructures within its jurisdiction, with the aim of providing better services to constituents. While it is not always that easy to redesign a city system from the ground up, cities like Dubai have already started establishing blockchain-based systems for managing its information infrastructure. (To learn more about smart cities, see How Big Data is Helping Build Smart Cities.)
In 2016, its Global Blockchain Council identified seven essential areas where blockchain needs to be incorporated: health records, diamond certificates, titles on illiquid assets, ID verification, smart wills and contracts, loyalty points for travelers and fintech. In a city-wide pilot, Dubai's strategy is to partner with startups and companies in order to reduce bureaucracy and focus on getting the platforms up and running. In fact, the bigger plan is for the city to incorporate blockchain as a service, in order to more easily onboard companies and startups that wish to be included in its blockchain-powered initiatives.
There is no shortage of possible applications for blockchain technologies across different industries. The common denominator, of course, is that deploying the blockchain entails increased efficiency, security, and extensibility of transactions. It's a matter of finding the right applications and users, as well as incumbent business models to disrupt.