The Future of Blockchain Technology
The Future of Blockchain Technology
In many ways blockchain technology is still in its infancy in terms of what will be built with it and what it will be used for in the future.
Currently, the most well-known use of blockchain technology is cryptocurrencies like Bitcoin. However, the power and potential of blockchain far exceeds cryptocurrencies. There are a number of new applications blockchain can create across many different industries. In this blog, we do a deep dive into the potential future use cases and applications of blockchain technology.
For readers new to blockchain technology, blockchain is a distributed ledger that keeps records of digital transactions instead of using a third-party or central authority such as a bank. A blockchain network is a chain of computers that must all approve a transaction before it can be verified and recorded in the ledger. Validated blocks of transactions are added to a chain as new blocks (tethered together to the old blocks), making a chain of blocks (known as the blockchain). The public ledger shows every transaction made in the history of that blockchain.
Blockchain promises to change many aspects of our lives. Many people believe that blockchain is the most important technology to come along since the internet. Some have envisioned an entirely new version of the internet being built using blockchain technology. As the technology advances, the list of potential applications that blockchain can be used for continues to grow. The number of future blockchain applications is only limited to the imagination of developers. Here we highlight some of the most important industries that blockchain will revolutionize.
Problems with traditional financial and banking services:
Currently, most financial services run through centralized companies like a bank or credit card provider. Financial intermediaries charge high fees to conduct financial transactions.
The existing system of financial intermediaries also has inefficiencies in terms of the time it takes to make transactions. Transactions like cross border payments or transfer of funds can take hours or days to complete.
Another problem with traditional financial services companies is that they only provide services to people living in areas of the world that have developed banking infrastructure. This leads to billions of people in the world that are “unbanked,” meaning that they do not have access to a financial platform and are unable to participate in traditional business transactions and banking services.
Blockchain solutions to the problems associated with financial and banking services:
Blockchain is the technology behind the creation of cryptocurrencies. Cryptocurrencies can solve many of the problems and inefficiencies found in the global financial system.
Cryptocurrencies are a form of digital money that can be sent or received over the internet. People can buy or sell cryptocurrencies directly with each other, removing the need for a third-party or financial intermediary. This is known as a peer-to-peer electronic cash system.
Because cryptocurrencies are transferred using a peer-to-peer electronic cash system, their transaction times and fees are typically much lower compared to traditional financial instruments like credit and debit cards.
With cryptocurrencies, every computer in the network is keeping a copy of the public ledger (blockchain). Every cryptocurrency transaction is broadcast to everyone on the network, who then work together to identify and verify legitimate transactions from fraudulent transactions. This makes the blockchain very resistant to false or fake transactions. The blockchain is not very easily tampered with, making it immutable.
Cryptocurrencies give users full control over their money. Governments and banks have no jurisdiction over holdings of cryptocurrencies, and as a result, no government or bank can shut down an account. When using cryptocurrency, there are no borders, bank holidays, and no imposed limits.
You can send bitcoin (or other cryptocurrencies) from any country to anywhere in the world. This means that for the first time, nearly 2.5 billion unbanked people in the developing world will have access to a financial platform.
Supply Chain Management
Current problems associated with supply chain management:
In traditional supply chain management systems, a lack of transparency exists as a product moves to each step in the supply chain. This can make it difficult to investigate when problems develop or to isolate issues as they happen.
Over time supply chains have become more global, especially for multinational organizations. This adds an extra layer of complexity to the supply chain process and can create problems in terms of ensuring the authenticity of products introduced in the supply chain process, leading to counterfeit products ending up in the hands of consumers.
Blockchain solutions to problems associated with supply chain management:
Blockchain can help solve many of the issues in current supply management systems by digitizing the assets in the supply chain and using them in an open and transparent blockchain.
Digitizing the assets on the blockchain means that assets are more easily identified and tracked. Increased transparency gives companies greater control over the process and the ability to identify and isolate problems immediately.
Assets on a blockchain are nearly impossible to fake or counterfeit. A blockchain-based supply chain can help reduce the risk of counterfeit products ending up in the hands of consumers.
Current problems with digital identification:
- The problem with digital identity records is that the current system relies on centralized companies to protect the highly personal and sensitive information in the records.
- This can lead to problems when these centralized organizations need to communicate and share records.
- Having centralized authorities keeping records on their own ledgers makes them vulnerable to hacks and other attacks. Documents and other data can be stolen, which can lead to identity theft.
Blockchain solutions to problems associated with keeping and protecting digital identity records:
- By having control over which blockchain a user’s digital identity will be stored on, users gain control over who has access to those records. A user can grant permission or revoke consent over who can view their records.
- Since transactions on a blockchain are easily verified and are not easily forged or faked, blockchain-based personal identity records would have an additional layer of security compared to the current system of using centralized services.
- If a user’s identity has been stolen or used in a fraudulent transaction, then the personal identity data on the blockchain can help prove a user’s true identity and help them in times when their personal data has been used fraudulently or without their knowledge and consent.
Current problems with elections and voting systems:
- The main problem current voting systems have is that they are vulnerable to tampering and the fraudulent mismanagement of votes. This happens most commonly when people, parties and governments try to stay in power and have some measure of control over the election process.
- Voters are currently required to vote in-person to reduce the problem of misuse or manipulation. In many cases, a digital voting system would be much more efficient then paper ballot systems but are rarely used because of the threat of results being tampered with.
Solutions blockchain provides for future elections and voting systems:
- Voting in democratic elections could be revolutionized using blockchain technology. A user on the system could submit their voter ID, a private passcode as well as who they are voting for into a public ledger. They could be checked and verified by thousands of other people on the network. The blockchain could verify who is eligible to vote, confirming who the voters are and record the voter’s choice without publicly identifying who they voted for.
- An electronic vote-counting system could be used to verify that only legitimate votes are counted and that no votes are changed or removed. This could bring a higher degree of democracy in countries where the electoral process is likely to be controlled or manipulated by people in power and would add an extra layer of security for elections in fully developed democracies.
- The immutable nature of blockchain technology would mitigate concerns regarding voter fraud and manipulation. This could potentially lead to an increased number of future votes that can be conducted securely on a digital platform, ultimately leading to higher voter turnout.
Problems with the current healthcare model:
- Currently, most medical records are centralized on a patient’s healthcare platform. This can lead to their records being stored in many different places and databases.
- It can often be difficult for medical practitioners to have complete and total access to their patients’ medical records. Patients do not have the authority to keep, maintain, or share these documents themselves. This problem can be particularly tricky when a patient requires services in a different country than where their medical records are stored.
Solutions blockchain can solve with the current healthcare model:
- By taking advantage of blockchain technology, transparent and untampered medical records can be stored to help allow doctors to view and share a patient’s medical history, spot dangerous drug interactions, and to make sure that prescriptions are written and filled automatically.
- Blockchain can allow hospitals to safely and securely store patient information that can be shared with doctors and specialists from anywhere in the world.
- In addition to added security, blockchain technology could also help improve the accuracy and speed of making diagnoses and administering treatment.
Problems associated with the current notary process:
- Most ownership records are in paper form. Due to the nature of paper-based forms, these records have the potential to be manipulated or lost. Access to the records is limited to those who have been granted access.
- It can be difficult to verify when a person is fully authorized to perform legal affairs. This is especially troublesome because the form that a notarial profession can take on is dependent on the location where those services take place.
How blockchain can help solve the problems associated with the current notary process:
- Blockchain technology can bring added security to the notarization process. The current notary process requires trust. Blockchain technology can decentralize the information so that trust is built-in to the process.
- A blockchain can be used to verify that a person is fully authorized to act as a notary and by making records such as property ownership public and transparent.
- The immutable, transparent, and independently verifiable nature of blockchain can prove that a document has not been changed or altered from its original form. Any changes to a document could be immediately and publicly known to everyone involved with the transaction directly from the blockchain.
Intellectual Property (IP)
Problems in the intellectual property industry:
- The current intellectual property system is based on a subjective understanding of what a patent is and which patent came first.
- The process of filing or receiving a patent is dependent on examiners. The process can take years to determine if an invention is original or the same as something already patented.
- Each country has a patent system, and each nation’s patent system has different classifications and categorizations. Patents written in different countries are also written in different languages, adding a layer of complexity to the process of applying for a patent.
How blockchain can solve the problems in the intellectual property industry:
- A blockchain can serve as a decentralized, transparent, and immutable platform where precise and accurate ownership of intellectual property assets can be recorded and updated.
- Any disagreements over the origin of an invention or idea can be resolved by referring to a blockchain. A timestamp on the blockchain could provide undisputed evidence of when an invention or idea originated.
- Using a blockchain for intellectual property can also create a market where patented inventions and ideas can be bought, sold, or traded as if they were a commodity.
Problems associated with the sharing economy:
- The most important problem facing the “Sharing Economy” is that the revenues generated by the centralized companies that manage the services (like Uber and Airbnb) are not truly shared.
- On average, an Uber driver makes less than the minimum wage. If the depreciation cost of their cars is taken into consideration, the average Uber driver takes a net loss for providing their services over long periods of time.
- The drivers produce value every time they provide the service, in terms of speed of service and convenience to the passengers. However, the companies that own the right to the services do not fairly compensate drivers for the value they create.
Blockchain-based solutions to the problems facing the sharing economy:
- A blockchain using a peer-to-peer network removes the need for centralized companies like Uber and Airbnb.
- Blockchain allows service providers to be paid directly from their customers. This allows the service providers to be fairly compensated for the value that they create without a middleman taking the majority of the earnings.
- Being paid directly from users and not having to give up a significant portion of revenues to a third-party could also lead to a drop in the prices for customers in the future.
Music and other Creative Content
Problems associated with the current business models for music and other creative content:
- In the past musicians have had to rely on third-parties such as record labels, distributors, and promoters to help them in the recording, distribution, and promotion of their music.
- Many artists choose to sign with record labels to help their music reach a national or international audience. Often having to sacrifice a significant portion of the money they would earn from the sale of their songs or live performances in return. Up until recently, only major labels, distributors, and promoters have had the resources and infrastructure to release music on a mass scale to a worldwide audience.
- The internet changed the way people find new music and gain access to new artists. While the transition from physical media to digital files and the increasing popularity of music streaming services has made more music accessible to more people, the industry is still as centralized as ever.
- Currently, fans have to rely on highly centralized platforms like iTunes or Spotify for their music needs. As the industry moves away from the sale of songs to streaming platforms, artists can often find themselves in a situation where they get little compensation from people who listen to their music and from the streaming platforms that distribute their music.
How blockchain can help solve the problems facing the music industry and other creative content:
- Artists and content creators can use blockchain to ensure that they are paid for their work. Using blockchain, artists can be compensated directly from fans without needing a third-party like a record label. Giving artists a much higher percentage of the revenue generated by their content.
- The rights to a song can be embedded in a smart contract. Using a number of fields to create the smart contract, verification of the transaction would only be valid after the artist and their fans agree to terms. Recording artist Imogen Heap is one of the first musicians to release new music in this way.
- Every play (or share) of a song can be permanently stored in the blockchain using a digital service provider. All relevant information and data collected in this process could be automatically stored on the blockchain. All information would be directly and transparently provided to all rights holders.
- Blockchain-based cryptocurrencies such as Bitcoin and Ethereum support micropayments which could be used to purchase music in the future. Cryptocurrency altcoins like Doge are now being used to tip content creators on platforms such as Twitter, Reddit, and YouTube. Giving users a new way to pay content creators directly.
Current problems associated with charities and charitable giving:
- The transaction costs for multinational charities and non-governmental organizations (NGOs) can be high due to the fees for cross-border payments and currency exchange transactions.
- Many charities and NGOs operate in countries where corruption is high, and the level of public infrastructure is low. Making it hard for charities and donors to know that the resources deployed during an emergency are being used efficiently and effectively.
- When operating in remote areas of the world, it can be challenging to maximize the benefits of relief care because the people affected in an emergency often do not have any formal identification or medical records that relief workers can rely on.
- People and organizations that make donations have no way of knowing how their money is being spent or if it is truly making a difference. This is a common problem for many charities, donors, and philanthropists.
How blockchain can help solve the problems of facing charities and charitable giving:
- Blockchain can provide a transparent and public record for donations to help prevent fraudulent activity.
- The decentralized and distributed nature of blockchain can lead to improved corporate governance of charities by making them more transparent and accountable.
- For NGOs operating in challenging and remote locations where infrastructure is low and corruption is high, blockchain and cryptocurrencies can provide a means of getting money where it is needed faster and more securely.
- Blockchain could be used to create a database of emergency IDs and humanitarian passports. Volunteers could record their skills and relevant experience on the blockchain, making it fast and easy for charities and NGOs to reach out to the right people in times of emergency.
- Blockchain could create a platform for basic emergency identification when the individuals or groups affected in emergencies have no formal documentation.
- Blockchain can be used to create a digital identity for staff. In the past, this was difficult because different countries have different requirements. Blockchains are decentralized, so assets are not tied to any particular geography.
- Smart contracts can be used for philanthropy. Terms over fundraising and charitable donations can be specified in a smart contract so that potential donors know exactly what is expected of them and what is expected of the charity.
- Charities can use blockchain to show donors exactly where their money is being spent. Smart contracts could be written so that if a charity has achieved progress or reached a specific goal, then new donations could be automatically triggered on the blockchain.
- Blockchain could also be used in supply chain tracking, management, and fulfillment. This would be particularly useful for charities and NGOs that operate across borders.
Problems associated with insurance:
- Centralized insurance companies rely on a business model that spreads risk over a large group of people. Within a population, grouping enough people with similar risk profiles (the process that makes insurance plans profitable) can be difficult for insurance companies.
- The insurance industry is known to suffer from a problem called adverse selection. More specifically, the more likely a person is to make an insurance claim (to be paid out by insurance, making the customer unprofitable to an insurance company) the more likely they are to buy insurance. Customers with a low risk of making a claim (and therefore are profitable customers to insurance companies) are less likely to purchase insurance.
- Insurance is an industry that has been known to be rife with fraud. Insured customers can manipulate insurance companies by filing false claims, providing exaggerated or fake losses and duplicating damage claims.
- Insurance companies can have a reputation for being slow, providing poor customer service, and for not being transparent in the claims process.
How blockchain can help solve insurance-related problems:
- Blockchain can help improve the insurance industry by managing claims in a responsive, transparent, and irrefutable manner.
- Blockchain can provide real-time verification over the accuracy of insurance coverage. It would also allow law enforcement to verify proof of insurance without relying on paper forms.
- Blockchain can also help reduce fraud in the insurance industry by ensuring that only valid claims are paid and by eliminating suspicious or duplicate transactions.
- Blockchain-based smart contracts can produce a more transparent and secure arrangement between insurance companies and customers. Blockchain also makes risk assessment more efficient and accurate.
- The process of spreading risk amongst a similar group of people within a population is made easier through the disintermediation done by blockchain. Using smart contracts, different participants in different geographical markets can be defined by the rules set out in the contract. This can lead to the creation of new insurance markets where an individual can create custom insurance products and policies for themselves.
- The ability to insure newly defined pools of people that are not tied together geographically results in the creation of new insurance markets. The ability to create new insurance markets lowers the risk and the costs to both the insurer and the insured.
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