Top 5 Blockchain Use Cases
The main features of blockchains such as:
i) distributed ledger technology
ii) cryptographically secured
iii) the ability to have smart contract logic encoded into it
This means blockchain can allow multiple mutually untrusting users to transact transparently on a ledger ( smart contracts self execute transactions ) without the need for a trusted intermediary.
The top 5 most compelling blockchain use cases which we believe will greatly reduce inefficiencies and unlock value are in areas of existing industry where trusted intermediaries are required to record, validate and reconcile transactions without really adding additional value to the original transaction.
One of the most exciting uses cases is in the application of financial services and in particular asset tokenization in financial and real assets. Using blockchain technology, previously illiquid assets can now be converted into their tokenized form and cheaply and efficiently fractionalized, traded, and settled on-chain.
This can unlock liquidity for small business owners, entrepreneurs, residential real estate owners, and alternative investments such as previously illiquid venture capital and private equity, commercial real estate, and art.
This means that access to investments that were previously only accessible by institutional investors can be accessible to retail investors. Tokenization of assets removes the frictions for an asset to be freely traded on a global marketplace and allows investors to diversify their investment across a larger opportunity set, enhances liquidity and market depth of assets that otherwise would not be actively traded, and allows asset owners to capture a liquidity premium.
AlphaPoint has estimated that the total value of illiquid assets, including gold, real estate, and more, is $11 trillion. Alphapoint, Polymath, SmartVarlor, and Harbor are working on platforms for asset tokenization.
Supply Chain Management
The second most compelling use case of blockchain is in the area of supply chain management. The issue of transparency is one of the biggest problems that organizations face when managing their supply chain.
Blockchains allow multiple parties to access a database to act as a single source of truth. Recorded transactions are immutable and thus cannot be changed, are append-only, and provided with a time stamp audit trail.
Also, read – The 5 Biggest Blockchain Issues
Blockchains allow a product to be documented in real time as it moves from its original provenance and all its touchpoints. Blockchain helps to increase the level of transparency into an opaque network that helps to stop counterfeits and thefts, improves regulatory compliance, reduces paperwork and the cost significantly.
From a consumer’s point of view, blockchain can empower end consumers to find out precisely if products are what they claim to be.
Examples of projects working on this include Vechain and Origin Trail.
The decentralized nature of blockchain means that there is no centralized point of weakness for hackers to target, which may lend itself as a good use case for digital identity management.
A self-sovereign ID can be used to verify identity without needing an individual to produce numerous documents and paperwork each time they need their identity verified.
This can be achieved by using a single key that can be matched against an immutable ledger. The digital ID can also collect other online information about a user’s identity like social security information, medical records, and social media credentials and have that stored securely on the blockchain.
This can allow users more control of their private data to transact more securely online but more importantly, takes away the power from companies to monetize this data and puts control back to the users.
For those billions of people who are unbanked, allowing them to have a digital identity is the first step to help these people gain access to financial services in order for them to participate in the global economy.
Examples of projects include Civic and Uport.
Another compelling use case of blockchain technology is the role it can play to decentralize the energy market, which is typically controlled by big organisations in every market.
Blockchain technology enables the smart metering of electricity generated through an individual’s solar panels to be recorded, traded and settled on a ledger.
If electricity can be traded like any other commodity, energy prices instead of being a fixed regulated price will respond to forces of supply and demand in a fully functioning distributed electricity market.
This allows individuals to be both producers and consumers of energy, which can reduce costs and improve efficiency by not having to rely on a centralized grid.
Examples of peer-to-peer energy trading include Power Ledger and Gridplus.
In the current state of healthcare, patient data is held across different institutions in legacy silos in various different formats and standards, making data sharing difficult for the modern user’s expectation of instant access.
Blockchain technology can be used to record patient information on a distributed ledger and this can allow different stakeholders conditional access to a single source of truth where each interaction with a patient’s health data can be recorded on a ledger as a transaction with a time-stamp audit trail.
This makes access to a patient’s health information more secure (patient data is encrypted), can take out the inefficiencies with current data management practices and offers patients more control over their own health data (including monetizing their own health data for research purposes ).
Examples of healthcare data exchange platforms include Medicalchain.