Blockchain has become immensely popular in recent years. Many know it as the underlying technology behind cryptocurrencies such as Bitcoin and Ethereum. However, the potential of blockchain goes far beyond digital currencies.
Enterprises across industries recognize the immense value this distributed ledger system can bring their businesses. Many companies have started integrating blockchain technologies from supply chain management to healthcare, banking, to voting systems to improve efficiency, reduce costs, and enhance security.
This article will explore some innovative ways enterprises leverage blockchain technology beyond cryptocurrencies and how it is transforming their business. But first, let's understand how blockchain technology works.
Blockchain works on a distributed ledger technology that provides transparent and secure record-keeping. The distributed ledger meaning refers to a database spread across a network of computers or nodes. It means no central authority controls the data, and all participants have a shared data view.
What distinguishes blockchain is its use of cryptographic algorithms to store data on the distributed ledger securely. Nodes on the blockchain network verify each transaction on the blockchain before it is added to the ledger as a block. The new block is linked to the previous block to create a chain of unbroken data.
Once you record a transaction on the blockchain, it cannot be altered or deleted. Hence, blockchain transactions enjoy a high degree of immutability and transparency. It makes the technology ideal for applications where secure and transparent record-keeping is essential.
Distributed ledger technology is often compared to traditional ledger systems, where a single centralized entity maintains and controls the database. In such systems, there is always the risk of fraud or data manipulation.
So when it comes to data transparency and security, distributed ledger wins the distributed ledger vs. traditional ledger battle.
Although blockchain and distributed ledger technology(DLT) are often used interchangeably, they are different. Blockchain is a specific type of DLT that uses cryptography to create an unbreakable data chain. However, distributed ledger technology extends beyond blockchain and includes other distributed databases that enable secure and transparent record-keeping.
So you can use distributed ledger without blockchain as well. Several applications of DLT do not use blockchain technology. One example is the Hedera Hashgraph platform. Unlike blockchain, Hashgraph distributed ledgers use a directed acyclic graph (DAG) to record transactions instead of a linear chain of blocks. This allows for faster transaction processing and higher throughput.
Nevertheless, both these technologies offer various applications to enterprises, as discussed below.
Below are a few examples of where enterprises across industries can apply blockchain and distributed ledger systems beyond cryptocurrency:
Blockchain technology has much to offer in the banking, insurance, and finance industries. Blockchain and DLT are already being tested for banking applications such as improving the KYC process, enhancing fraud prevention, etc. The technology is also being tested to streamline cross-border payments and reduce costs by eliminating intermediaries.
With the rapid evolution in blockchain and DLT, it won't be long before decentralized finance platforms facilitate public peer-to-peer lending.
Insurance sectors can leverage blockchain technology to automate claim processing with smart contracts and improve risk assessment. The financial sector can become efficient, cost-effective, and secure using distributed ledgers and increase transparency and accountability in financial reporting.
In fact, financial institutions can save an estimated $12 billion a year by leveraging blockchain technology.
The supply chain management and logistics businesses thrive on transparency and efficiency, and blockchain can provide this by recording and tracking every transaction on the decentralized ledger.
Distributed ledger technology companies can gain real-time visibility into their supply chain and quickly identify and solve issues. The transparency and immutability provided by the technology help reduce the risk of fraud and counterfeiting.
Further, blockchain can streamline this industry by automating several processes with smart contracts, such as shipping, delivery, tracking, and payments.
Industries that create digital content, such as music, film, and publishing industries, rely on Digital Rights Management (DRM) to protect their content from being stolen and shared illegally. However, the current DRM solutions have limitations and loopholes that impact their effectiveness.
Blockchain technology can strengthen the system's effectiveness by offering a decentralized and transparent platform for digital rights management. All stakeholders, including the creators, publishers, and consumers, can track and verify the ownership and usage of digital content.
Further, since the blockchain is tamper-proof, registering their work in blocks lessens the risk of misattribution for artists.
In the energy sector, blockchain could be the best path toward sustainability. It can allow real-time energy production and usage tracking, making energy management more efficient.
It can also enable instant peer-to-peer trading of excess energy without an intermediary or cumbersome reconciliation process. Regulators can also use blockchain to create and trade carbon credits and emission certificates to incentivize companies to reduce carbon emissions.
How the healthcare system currently stores, and shares patient data is inefficient. Many entities are involved, such as health record vendors, research organizations, insurance companies, doctors, and patients. The result is communication silos and piecemeal data sharing. In addition, data is not stored securely enough to avoid all kinds of data breaches.
Blockchain has the potential to revolutionize the way the system functions currently. For instance, health data can be stored and preserved more securely in the blockchain network than individual organizations' servers.
Patients can have all their data stored in one place and easily and quickly share them with different parties, reducing the concern of slow data exchange.
With all these benefits blockchains offer to this sector, the global blockchain technology in healthcare is estimated to grow 68.40% from 2023 to 2030.
The primary goal of the Internet of Things (IoT) is to connect people, places, and products and offer new opportunities for value creation. However, security and scalability is a significant concern associated with the technology.
Blockchain can alleviate these concerns by offering a tamper-proof distributed ledger, enabling trust between various parties involved. The robust level of encryption available in blockchain also makes it a safe haven to store IoT data.
Billions of connected devices can coordinate and process transactions through the blockchain network, reducing processing overheads related to IoT gateways.
There is a big misconception that blockchain is only intended for big enterprises. However, SMEs and startups can benefit from the technology as much as large corporations.
Blockchain has the potential to help new businesses overcome the challenges related to scale, transparency, and lack of business history by reducing information asymmetries and transaction costs. It facilitates trade for SMEs and increases their access to finance.
SMEs and startups can benefit from increased efficiency and quality of products and services and better supply chain management. Besides, blockchain innovations such as peer-to-peer marketplace, smart contracts, and decentralized finance can provide new business growth opportunities for SMEs.
Blockchains can be used in other areas where transaction security and transparency are paramount. This includes their use for cybersecurity or in the public sector and government, including the voting process.
Other industries that can benefit from blockchain are the media industry, digital health, the legal sector, etc.
While blockchain has many use cases across industries, enterprises face several challenges when adopting the technology. Here are a few significant ones:
Since blockchain is still new and evolving, the regulations governing this technology are not very detailed and clear. It can be difficult for businesses to meet compliance requirements and legalities related to blockchain adoption.
With the rising popularity of blockchain, many organizations are developing their blockchain system with varying characteristics.
These separate systems do not always communicate well with each together, and currently, there is no universal communication standard for different networks.
Many existing blockchain applications are struggling to handle mass integration. Transaction processing in Ethereum and Bitcoin networks can sometimes take days.
This can limit the potential use cases for blockchain technology and make it less practical for certain industries and applications.
While blockchain transactions are encrypted and immutable, the system is still vulnerable to certain attacks and threats, such as the 51% attack. Security also depends on how careful users are while handling private and public keys.
Despite the many challenges, Spydra's solutions can help enterprises adopt blockchain smoothly and efficiently. Spydra's API-driven plug-and-play solutions enable businesses to leverage the full potential of blockchain and decentralized web structure.
With features such as dynamic smart contracts, immutable databases, GraphQL API, listeners, high security, and one-click deployment, Spydra supports extensive use cases across industries., from supply chain and financial services to easy web3 transition and NFT launch.
Blockchain technologies hold much potential for business applications beyond cryptocurrency, as seen in the distributed ledger technology examples above. Adopting blockchain in finance, supply chain management, healthcare, real estate, and other industries can lead to significant innovations and improvements from traditional business practices. However, the technology is still in its nascent phase, and its adoption has certain challenges. As the technology evolves, many more innovations and use cases will likely emerge to improve business productivity and profitability.
