How Big Enterprises Use Blockchain
By now, you’ve probably heard about bitcoin. The world’s first decentralized digital currency, most people chuckled at it when it first popped up in 2008. Who was really going to use something like that? Now, as its value rapidly outpaces other currencies, we’re not chuckling at it anymore.
Beyond its sky-high value, the bitcoin has played a large and unexpected role in the world. You see, the creators of bitcoin designed it using something that slowly gained the attention of its competitors and other big businesses. We are talking about blockchains. Unheard of less than a decade ago, it came into being alongside the bitcoin and is now being used by some of the biggest names (think JP Morgan and Walmart) in the game. The large corporations that aren’t using it are quickly trying to come up with blockchain solutions as its value becomes increasingly obvious.
What is a blockchain? What are the benefits of what it does? How are the big businesses using it and how might blockchains apply in other areas? Stick with us, dear reader, and we’ll take you through it.
What Is Blockchain?
To understand what a blockchain is, we have to start with a fairly dry and technical definition.
Blockchain is a continuously growing list or public ledger, called blocks, that are linked and secured using cryptography. While it can be used in a variety of ways, blockchains have most traditionally been used for financial transactions.
You can think of a blockchain like a spreadsheet that has been duplicated hundreds or thousands of times across a network of computers. The network has been programmed to update this spreadsheet, across the entire network, regularly. If you can picture this, then you are on your way to understanding blockchains.
Or, as the authors of Blockchain Revolution so elegantly put it:
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
What Are The Benefits of Blockchain?
Blockchain has a number of benefits. It keeps information secure but readily accessible, and the information it handles can be accessed by multiple people at once.
Because the information contained on a blockchain exists as a shared and continually reconciled database, there are a few key advantages. By decentralizing the database, it is incredibly difficult for a hacker to break into and corrupt. Real talk: when dealing with financial transactions, who doesn’t love stymying a would-be hacker?
As the blockchain database isn’t stored in one single location, the records it keeps are kept public and verifiable. Its data, hosted by millions of computers simultaneously, is accessible to anyone on the internet. These millions of hosting computers are also the reason why a blockchain has no single point of failure.
To top it off, because blockchains were originally developed for bitcoin, it was designed so that digital information could be easily distributed but not copied. This is particularly important when the information involved is about financial transactions. If there’s one area where there’s a need for the information to be kept secure but easily accessible? This is it.
Why Are Big Businesses Using Blockchain?
According to a recent study by Juniper Research, a whopping 57% of large corporations have either implemented or are actively pursuing blockchain solutions. With the benefits that we’ve just discussed, it’s not too hard to see why.
JP Morgan has created something called the Interbank Information Network (INN). The INN has already been joined by the Australia and New Zealand Banking Group and the Royal Bank of Canada. Why? Because JP Morgan created a massive blockchain-based mobile payments system and, in doing so, removed many of the previously necessary players in the payment process.
This change allows the costs required in dealing with payment delays (not to mention the delays themselves) to decrease significantly. With the delay now shrinking from weeks or months down to mere hours, members of the INN are on track to vastly improve their client experience.
Beyond the Financial: What Blockchains Can Really Do
While JP Morgan has used blockchain solutions in a fairly traditional sense, banking applications are only the tip of the iceberg for what blockchains can do.
Earlier, when we mentioned that Walmart had gotten in on the blockchain game, you probably didn’t think we meant in the context of livestock. In 2016, Walmart used blockchain technology to track how pigs from China were moving through the supply chain and onto American tables. While Walmart is no doubt hoping to save money by avoiding food spoilage, they’re also trying to prevent disease outbreaks.
Even smaller farming outfits are beginning to follow in Walmart’s steps. A farmer’s collective in Arkansas recently began tracking poultry transactions with the use of a blockchain.
We don’t think about it a lot but every single day, a mind-blowing amount of inventory is shipped over our oceans. In fact, it’s so much cargo that companies are struggling to track it effectively. Enter blockchain.
The world’s largest shipping company, Maersk, recently tested using blockchains to track its cargo. Working together with the shipper themselves, Dutch customs, and even the United States Department of Homeland Security, they all tracked the containers remotely.
The idea is to rely on a cryptographic signature that makes it harder for anybody to misplace the goods or mess with the labels as the cargo is being moved. Additionally, streamlining the process is intended to reduce the amount of time the cargo is actually in transit. If we know where something is all the time, we can get it from point A to B without a mysterious delay over to Z.
Ah, contracts. Everyone’s favorite thing ever, right? While blockchain-solutions aren’t going to transform contract negotiations into a basket of puppies anytime soon, they can significantly streamline matters and make them at least partially more tolerable.
As blockchains are still a relatively new addition to the contract game, the current applications are fairly simple but no less impressive for that. Smart contracts can be programmed to perform basic functions. For example, if a contract says that a derivative is to be paid out when a certain financial benchmark is met, blockchain technology can enable this payout to happen automatically. This significantly reduces both the amount of manpower required to manage a contract and the risk of frustrating and costly delays.
With Uber, Lyft and AirBnB enjoying immense success, we can safely say that the sharing economy is in full swing. However, as it stands, a user who wants to use a ride-sharing service has to rely on an intermediary like Uber or Lyft.
With blockchains, peer-to-peer payments could be a new reality for the sharing economy. Cutting out the middlemen, we could finally see transaction fees start to go the way of the dinosaurs and a real decentralized sharing economy could finally emerge.
Remember that time you stored a really important work file in the cloud and it vanished? Or how your co-worker did the same thing and got your company hacked? By using blockchain and decentralizing file storage on the internet and distributing data throughout the network, you protect your files from the dreaded fates of being hacked or lost.
To top it off, with an internet that is comprised entirely of decentralized websites has the ability to speed up file transfer and streaming times. Let’s face it: faster streaming times should come in handy when that final season of Game of Thrones finally airs!
Depending on where you live, renewable energy is becoming increasingly common and blockchains have a role to play. With blockchain technology is is possible to buy and sell the renewable energy that is generated by neighborhood microgrids.
Solar panels can often produce excess energy and with the use of smart contracts (remember? we talked about those a few paragraphs back?), this excess energy can automatically be redistributed.
Land Title Registration
Because they are publicly-accessible ledgers, blockchains have the capacity to make a variety of record-keeping more efficient. For example, property titles are labor intensive and costly to administer as well as being susceptible to fraud.
With blockchain projects for land registry endeavors, states and countries can save money and a whole lot of headaches.
Yes, you read that right. Blockchain solutions can be used for diamonds.
For obvious reasons, dealers and customers alike are concerned with the authenticity of the stones they’re dealing with. Additionally, the desire to avoid conflict diamonds (also called blood diamonds) makes it even more important to know the origins of the stones.
The company Everledger has enjoyed success because it addresses these concerns. They are able to record over 40 features of a diamond including everything from cut to color, clarity to carat and then register those features on a blockchain.
From a financial point of view, this is invaluable. From an ethical point of view, this is essential.
Although a fairly new development, blockchain technology is rapidly finding a home across a wide range of practical applications. There is no limit to how blockchains can be used and just a few of those uses that we were unable to cover here include stock trading, identity management, governance, supply chain auditing, crowdfunding and more.
JP Morgan and Walmart have already put blockchains to work and coupled with blockchain’s applications to livestock, shipping, smart contracts, sharing economy, file storage, neighborhood microgrids, land title registration and even diamonds, the potential applications of blockchain are practically endless. By using blockchain solutions, all of these fields are steadily becoming more reliable, transparent, efficient and secure.
Boy, can you imagine trying to explain all that to anyone when bitcoin first rolled out the blockchain? You’d have been laughed out of the building. But now?
Blockchain is the way of the future.