Most people have heard about blockchain in tandem with bitcoin’s rise as the flagship of cryptocurrencies. However, blockchain is more than just bitcoin; it’s a method of tracking transactions using technology that could prove to be revolutionary. While still in its infancy, blockchain is being adapted to a number of business uses and will likely serve a wide array of purposes in the future.
“There is no end to the list of applications blockchain can be used for. Blockchain is going to change everything we know over the next five to 10 years,” said Mike Almeida, president of Empire ATM Group. “Blockchain technology can make many aspects of our life easier on a mathematically provable platform.”
In short, blockchain is a massive, decentralized ledger of transactions maintained by many different, decentralized sources. As a result, there is no need for a single, central authority, such as a bank, to confirm whether transactions really occurred. The bottom line is transactions recorded in blockchain are secure and, generally, irreversible once confirmed.
The most popular application today is likely cryptocurrency, but experts say blockchain can be used for everything from data management to regulatory compliance. Limiting blockchain to bitcoin would be a mistake that does not harness the technology’s full potential, said Justo Paul, founder of digital currency Injii.
“Blockchain isn’t just an evolution in technology but rather a revolutionary change in how things work and a paradigm shift with regards to who is in control,” Paul said. “The disruptions we are seeing [aren’t] limited to the banking industry and commerce. It has the potential to positively impact all sectors of the economy.”
Here are a few examples of where you might see blockchain change the game in the coming years. [To learn more about how blockchain works, check out our primer.]
Blockchain offers what is essentially a permanent record of transactions, which creates an easy-to-follow paper trail for audits, both internal and governmental. It guarantees accuracies and solves the problem of pulling in records from a number of disparate sources.
“The more you store in blockchain, the more history you have in your hands to audit,” said Antonis Papatsaras, chief technology officer of SpringCM.
Blockchain also has potential when it comes to quality assurance, especially when something goes wrong. Since companies can link every facet of the supply chain, if there is the need for a recall or investigation into where something went wrong, blockchain offers a definitive, contiguous ledger to immediately identify the problem.
“Events like a salmonella scare could be traced back to the source in seconds, and every single bag from that batch would be flagged for removal whether it be freshly packed in the processing plant, in a truck being delivered or in the retail store already. This system could notify everyone involved in seconds rather than days,” Almeida said.
Securities and commodities trading
Blockchain promises quicker trading on stock exchanges, whether in securities or commodities. The distributed nature of the technology ensures that a process previously undertaken over the course of several days is affirmed and finalized in just several minutes, greatly streamlining the entire experience.
“Rather than trades being processed by a string of validators over the course of a few days, blockchain-based settlement can happen ‘automatically’ within minutes,” said Nick Spanos, CEO of Zap and founder of the Bitcoin Center NYC.
Smart contracts enable a way for organizations to handle large amounts of transactions, such as those that run across supply chains, automatically. They can be used to integrate services across different businesses without divulging sensitive or proprietary information.
“Smart contracts … allow organizations to embed logic, via code, into a blockchain network for the automatic handling of transactions across participants,” said Nelson Petracek, chief technology officer of TIBCO’s strategic enablement group.
Supply chain management
Blockchain can track goods and materials within an organization, as well, such as throughout the supply chain of a manufacturing company. As a product leaves the factory, blockchain could be used to record its arrival at a warehouse and then its shipment out to a retail store, for example.
“Using blockchain for supply chain management, a business owner has more visibility into the processes of the business,” said Igor Barinov, co-founder of Oracles Network. “Blockchain can add transparency and align [the] interests of a business with other participants of its ecosystem, given public networks are implemented, be that suppliers or customers.”
Transactions and reimbursements
Transactions and reimbursements are perhaps the most familiar application of blockchain technology today. Bitcoin – and other cryptocurrencies like ethereum – are backed by blockchain technology. Today, companies are creating initial coin offerings (ICOs) for their blockchain-backed currencies and platforms.
Recently, Bitcoin experienced a massive spike in value and is now approaching $10,000 per coin. Some claim the boom won’t last, while others say it’s because cryptocurrency is taking off as a viable alternative to fiat currencies. Even some national central banks are experimenting with their own blockchain-backed currencies, like the J-Coin in Japan.
Just like currency, votes can be moved along a blockchain in a neutral, accurate and secure way. Using blockchain as a mechanism for consensus-building in communities and even nations could radically alter modern notions of democracy and strengthen the validity of election results.
“Voting is an interesting prospect for blockchain, as immutability and transparency are both necessary for successful elections,” Spanos said.
As far as ensuring the accuracy of the vote, he added, “As long as you trust the way the blockchain works, you can trust that records in the blockchain have not been tampered with or added after the fact.”
How will blockchain adoption look?
Given all the ways blockchain can disrupt conventional methods of transaction and record keeping, how quickly will we see mass adoption? Most experts say not to hold your breath, but that adoption will be inevitable in the future.
“Adoption of blockchain technology will take some time. Even after the applications are developed, adoption cannot happen in a vacuum,” Spanos said. “Many different stakeholders in the various industries that stand to benefit from blockchain must adopt it in tandem in order to realize the full potential of blockchain’s benefits.”
“The blockchain is definitely still arcane for the general population,” he added. “Fortunately, just like you don’t need to understand how an internal combustion engine works in order to drive a car, one does not need to understand how the blockchain works in order to interact with it.”