Bitcoin, Ripple, Ether … Cryptocurrency is a hot topic right now. While everyone is rushing to figure out how they can invest in cryptocurrency and make money, entrepreneurs and developers are diving into the possibilities and use cases of blockchain – the technology that Bitcoin was built off of.
Blockchain is an encrypted database that serves basically as a decentralized public digital ledger. It’s used to record transactions across computers so if the record is altered, it disrupts all subsequent blocks in the network. It creates a permanent record of every transaction, so that in theory, nothing is ever lost. It’s all there in the ledger.
How Blockchain Works
At a very high level, blockchain is a chain of blocks that exist in a database. Each block in the database contains batches of transactions that are hashed and encoded. Each block also includes the cryptographic hash of the prior block in the chain, linking the two blocks and linking each block to one another, which forms a chain. This chain of encrypted blocks is what forms the integrity of the system. The chain can be traced back to the original block.
Because these blocks are all bound together by encryption, if one block is altered, it essentially alters other blocks down the chain – making it easy to detect who tampered with the information. The data within the blockchain network is also replicated on every computer that exists within the network, making it easy to verify the data that exists within each block.
With blockchain technology, we have a transparent, shared database that is protected from deletion, tampering, and revision – a database upon which contracts can be embedded. The possibilities for building on this technology are endless!
Blockchain stands to disrupt multiple industries, has the potential to alter our economic and social systems, and could essentially transform the way we do business. These use cases will show you seven ways blockchain can transform our economy and how we do business.
NOTE: When capitalized, “Blockchain” refers to a company by that name. When lowercase, “blockchain” refers to the concept or technology.
Using blockchain as a bookkeeping platform could transform politics and finance as we know it. When used as a financial ledger, the technology is both incorruptible and completely transparent. This makes it the perfect tool to end financial, political, and institutional corruption.
Through automated encryption and verification, blockchain technology can also reduce errors in accounts payable and receivable. In blockchain, with any given transaction, the participants are identified, the time and date are verified, and the associated data is secured.
Could this reduce the need for a bookkeeper or accountant? Maybe for some instances but not all. For accountants, harnessing blockchain technology and using it to automate processes is one perk. It could also give accountants the ability to monitor things in real time – making it easier for them to stay abreast of changes or issues.
One of the biggest industries that stands to change if blockchain becomes mainstream is the financial industry. Blockchain basically eliminates the need for a financial institution to stand between two parties who seek to exchange money. With blockchain technology, there’s really no need for a bank account, because the database is essentially a giant ledger. As long as you have access to a smartphone, you can access money (without the bank fees).
What if you didn’t need a fancy law degree to execute a contract? With blockchain and smart contracts, you don’t. They remove the need for a middle person to execute some contracts and automate the exchange of goods and services. Smart contracts not only hold each party accountable (because they exist in the ledger), they can automate the delivery of any payments associated with the contract. Once the deliverables have been received – and both parties have fulfilled their end of the bargain – the contract is completed.
Keep in mind, this doesn’t mean that lawyers will become obsolete. Some contracts and complex agreements may still need professional legal input to write and execute. However, for simpler agreements, blockchain could help two parties work with each other directly and simply.
Thinking through the idea of smart contracts, blockchain could be a great tool for project management. A project plan could be executed through a series of smart contracts that make up what is needed to complete the project. It would certainly be easier to manage. It could also improve executive reporting and essentially eliminate the need to calculate project management analytics, such as percentage complete and earned value management.
Voter Fraud Prevention
You know all those questions and conversations we’ve had over the years about voter fraud? Blockchain technology could eliminate all of that by providing an electronic vote-counting system that is unhackable.
Believe it or not, there is no record in existence that reports your health throughout your entire lifetime. Sure, there are health records out there about you. But they are not comprehensive, nor do they exist all in one place. But what if they did? Could you imagine how effective and powerful healthcare could be if your healthcare providers could track all your vital signs from over the years, all the medicines you’ve taken, every illness, every procedure, and every doctor’s appointment? Coordinated care would be so much easier.
The industry is already trying to implement blockchain to address many of the issues it faces, one of which is our electronic records system. With blockchain, data can be shared within a group of individuals (like, say, all physicians) in real time, no matter what electronic medical system your physicians use.
Using blockchain could reduce admin time for physicians and result in better care. It also has the potential to improve drug and treatment therapy research by creating a system for sharing results.
An End to Brokers and Intermediaries of All Kinds?
Have you noticed a common thread among these use cases? The elimination of intermediaries. Could the institutions of law, banking, investing and finance be over if transactions and records are kept and monitored within blockchain? If you’re in a similar field, it’s time to think about innovation and adaptation. Do you want to be like Blockbuster video, or do you want to be the next Netflix? Finding innovative ways to build on top of blockchain helps reduce the risk of being replaced.
Will Blockchain Become Mainstream?
Blockchain has a lot to offer, but it also has a long way to go before it becomes completely mainstream. According to Harvard Business Review’s research on the adoption of technology, there are two dimensions that affect how a foundational technology and its business use cases evolve.
- Novelty. How much effort will it require for the general public to understand its use cases and the problems it solves?
- Complexity. How many parties need to work together to bring value to the technology?
Chances are that your business will be affected by blockchain in some way.
When you’re talking about building on top of blockchain technology, you’re talking about two things we know and love: data and development. We’re excited about its potential and would love to chat about the potential for blockchain applications in your organization.
Before you dive into any technology project – whether it’s blockchain or custom software – you need to plan for success. So, if you’re considering the use cases of blockchain, download our whitepaper that covers the ins and outs of custom development.