5 industries that will be transformed by blockchain
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Like every new technology, blockchain creates both opportunities and challenges. Let’s forget about the challenges for a moment and focus on the opportunities and all the industries that have been —or will be— touched by this technology. In this article, Matt Davida presents the top five industries that will be transformed by blockchain.
Most people associate blockchain with cryptocurrencies like Bitcoin, but the ideas behind the technology are useful for a wide variety of other applications. The internet has spawned a trend toward decentralizing many aspects of business and life, and blockchain is taking this even further.
Why is this such a ground-breaking idea? Blockchain provides distinct advantages over traditional ledgers and databases. Since each data block validates the previous one, it creates a permanent sequential record. Therefore, it’s impossible to delete or hide transactions that have occurred, and any attempts would be immediately obvious.
There are other advantages as well. There is no need for central management, and the data is copied and distributed to computers all around the world. This provides full transparency that grants a great deal of trust. Since no management is required to mediate transactions, they occur more quickly with higher levels of trust and security.
By using smart contracts, blockchain could eliminate the need for lawyers in some contract negotiations. Smart contracts are self-executing digital contracts that can be stored, replicated and managed by a computer network. The system can also manage other contractual features such as transfer of money, products, and services.
Smart contracts are analogous to a vending machine for legal documents. You simply pay some cryptocurrency and the system adds a contract to its permanent ledger. The system not only defines the rules and penalties but also automatically enforces contractual obligations. Furthermore, it has greater security and trust than a traditional contract because the decentralized ledger encrypts and replicates it at many worldwide locations.
Blockchain could improve elections by taking the politics out of voting. A blockchain voting system would use a token-based approach that automatically ensures that each person gets only one vote and once it enters the ledger, it is permanent and unchangeable. The process would also be more secure and lead to greater participation of all legally-registered voters.
Anyone with a cell phone will be able to vote, and it will be more difficult to commit fraud. Candidates won’t be able to blame the system or delay the process with claims of foul play. This could lead to faster elections that cost less tax money and provide a truer picture of who the people want in office.
More efficient banking
Blockchain is a very attractive technology for banks. The two main reasons for this are that it’s less expensive and much faster than traditional transactions. Consequently, about 80% of banks are working on implementing their own blockchain systems.
Blockchain reduces costs in banking transactions because it streamlines the process of authenticating the parties involved while keeping personal information secure. Also, since there are little or no human administrative stages involved, the process is much faster. Transactions that take days with traditional methods, such as overseas transactions, could be done in mere seconds.
There are a lot of inefficiencies in business-to-business transactions that could be streamlined by blockchain technology. Various departments need to verify aspects of the invoices, price information, shipping status and so on. With blockchain, many of the intermediary steps would be eliminated. The built-in trust and verification features of blockchain also help eliminate manual steps and speed up business transactions.
Smart energy distribution
The current system of monitoring clean, renewable energy on the power grid is very inefficient. Governments use a system of tradable certificates to measure clean energy production, which requires multiple steps of administrative and bureaucratic paperwork. These inefficiencies drive up costs and discourage investments in renewable energy.
Many experts believe that blockchain could spark a transformation of energy grids. A cheaper and more efficient system for monitoring renewable energy on the grid would provide greater rewards for homeowners who install solar panels and boost the trend toward cleaner energy sources.