The Bitcoin blockchain is a peer-to-peer payment system that records transactions on an immutable decentralized ledger. The creation of cryptocurrencies, such as bitcoin, represent only one particular use case for Blockchain Technology. The daily fluctuations of bitcoin and other cryptocurrency prices attract quite a bit of media attention. However, there are many uses for blockchain technology outside of cryptocurrencies.
Blockchain technology is versatile because implementation and usage are possible across various industries, including financial services, real estate, healthcare, entertainment, and agriculture. Blockchain technology can also reduce costs and improve the efficiency of transactions by eliminating third-party intermediaries across a range of industries.
Blockchain technology can improve trade financing. For example, some large, international banks, such as UBS and Bank of Montreal, are part of a consortium that is testing the use of a private blockchain developed by IBM to verify transactions and automatically release payments as goods ship from a warehouse to a mode of transportation to their destination. The project, called Batavia, is reportedly in the final stages of testing.
There are several other groups testing the use of blockchain for trade finance. HSBC and ING recently completed a live trade finance transaction on a blockchain overseen by the consortium R3. In particular, HSBC issued a letter of credit to ING on a blockchain to facilitate a transaction by agricultural giant Cargill.
Financial Instrument Record-keeping
Depository Trust & Clearing Corporation Depository Trust & Clearing Corporation (DTCC) is testing the use of blockchain technology to help manage credit derivatives records. Credit derivatives, such as credit default swaps, are used to hedge the credit risk in loans and bonds.
The blockchain should reduce the costs and complexity of managing these financial instruments. DTCC’s platform will keep track of a credit derivative over the life of the instrument it is hedging and then share relevant information electronically to all interested parties.
Stock brokerage firms are paid commissions to facilitate the buying and selling of stocks and other investments. A public blockchain can potentially eliminate the need for a centralized broker by keeping track of who owns which investment security while also facilitating trades among investors.
This would reduce trading costs for investors. In addition, several established stock exchanges, such as NASDAQ, are exploring how to use blockchain technology to facilitate and record transactions privately.
Real Estate Transactions
The real estate industry is yet another area that is ripe for transformation by dApp development. The process of buying and selling homes is very complicated, with intermediaries like real estate agents, house inspectors, title companies, banks, and attorneys that complicate things. The use of blockchain in real estate can potentially reduce paperwork, the need for attorneys and other third parties, reduce fraud, speed transactions, lower costs, and help democratize real estate.
Healthcare Records Management
The sharing of medical information among relevant parties could be more easily accomplished through the blockchain and possibly lead to better medical care for patients. For example, a patient’s medical records could be shared among patients, doctors, specialists, hospitals, clinics, labs, insurance companies and other relevant parties.
The fact that records cannot be lost or changed in error is another big plus to having patient records on the blockchain.
Creative Content Management
It is often difficult to locate the owners or copyright holders of creative content. This is problematic for producers who wish to license content and for royalty payments to the rightful owner. Blockchain can be used to keep tabs on who created specific content, who has used the content in new creations, and who is owed royalties. The blockchain could reduce the need for various centralized organizations that currently monitor the owners and/or writers of creative content.
Bitcoin was the first widely-recognized use of blockchain technology. However, there are many uses for blockchain that do not involve bitcoin or other cryptocurrencies. Blockchain technology is useful in various industries, including financial services, real estate, healthcare, entertainment, and agriculture.