Best blockchain use cases

01.05.2018
8 min.
title

As discussed in a previous post, blockchain can be used in different domains, from fintech to healthcare, manufacturing, tourism, real estate, and government. Blockchain cuts intermediaries out of many business equations. This helps organizations optimize costs and thus gain a competitive advantage. Let’s have a look at some of the best blockchain use cases in manufacturing, retail, and finances.

Blockchain-based supply chains

In a traditional seafood supply chain, it is hard to trace illegal practices and mislabeling of products. The main reasons are too many parties involved and the absence of transparency in their actions.

Food safety and quality issues lead to the parties mistrusting each other, which adds to the industry’s economic insecurity. Sustainability is also a growing problem since more customers demand to know where their food comes from.

To solve these problems, blockchain consultants suggest implementing the combination of IoT and blockchain. The IoT part consists in tagging seafood items with sensors that gather and translate data on their location in real time. Recorded on a blockchain, this data becomes available to all members of that blockchain allowing them to track the food origin.

Thanks to blockchain, the supply chain becomes transparent and trustworthy. It also becomes faster and cheaper because of the automation of product location and current status updates.

Blockchain technology-driven solution

The same approach can be taken with other highly regulated products (such as pharmaceuticals) or high-value resources (such as gemstones and precious metals).

The diamond industry is already benefiting from blockchain. A global startup Everledger created a blockchain in which each diamond is assigned with a digital fingerprint and tracked throughout the supply chain. This system provides all stakeholders with an immutable forgery-proof record of each stone’s origin. Below is a scheme of a blockchain-based diamond supply chain:

Cobalt, used in electric car and smartphone production, is also a candidate for blockchain-based tracking. Many automotive giants are pressured to prove their car making practices are sustainable and ethical. Tech giants like Apple and Samsung support the Responsible Cobalt blockchain-based initiative aimed at tracking the main stages in the cobalt supply chain. The following visual demonstrates cobalt production industry facts:

The introduction of blockchain to the metal industry will allow businesses and consumers to track the origin of every component in an electronic device, be it an iPhone or Tesla. So how does it work? Each bag of cobalt gets a digital tag with data like the date, time, weight, etc., all entered on the blockchain. Each subsequent participant of the trade records this data on the blockchain creating an immutable journey record.

Blockchain-based supply chains will help manufacturers and retailers cut costs while ensuring their customers that the products they buy were sourced in an ethical and sustainable way.

The next blockchain use case we are going to discuss will benefit consumers and SMBs.

Distributed autonomous marketplaces

One of the main advantages of blockchain is its decentralized structure. That’s why in the future blockchain may well enable autonomous distributed marketplaces regulated by their users rather than corporations.

Let’s consider the possibilities blockchain can bring to marketplace management. In the table below, we outline marketplace aspects that a blockchain model would affect.

Marketplace Feature Traditional E-Marketplace Blockchain-based Decentralized Marketplace
Trust through contract enforcement

Contracts are validated by third parties (a bank, certifying authority, promissory note, transfer systems, or other forms of contractual mechanisms).

 

A contract often can be changed in a one-way fashion.

 

Fake reviews decrease the credibility of traditional rating systems.

Contracts are validated by the peer-to-peer network based on proof-of-work or proof-of-stake mechanisms.

 

Any change in a contract must be validated by the network.

 

The network validates reputation ratings, including reviews and feedback mechanisms.

Transaction time

From several minutes to several days depending on the payment method.

From milliseconds to seconds thanks to fast network validation.

Value
Financial institutions that process payments receive all payment processing fees. The network can reward participants for validating a transaction with tokens or by accepting third-party tokens.
Privacy and security

Identity is fully disclosed in the marketplace.

 

Transaction details are hidden.

Identity is not disclosed on the network.

 

Transaction details are public but can be hidden behind layers of encryption.

An example of a blockchain-based marketplace is Australian startup CanYa. The company tries to differentiate itself from the competition by offering more transparency and trust. CanYa’s founders guarantee that paying clients will be satisfied with the quality of provided services, while service providers will be paid in full and on time. All this is achieved thanks to blockchain.

The startup also launched iOS and Android apps processing both fiat cash and cryptocurrency peer-to-peer payments. Their own cryptocurrency—CanYaCoin—is created to be at the center of the platform. It is designed into the innovative hedged escrow contracts that combat the notorious instability of cryptocurrencies.

The emerging smart marketplaces prove that blockchain is not just a technology disruptor but will also most definitely bring socio-economic change through decentralized autonomous organizations much like the internet did.

Bonds settlement

Blockchain is already changing the way people invest in bonds. Existing and upcoming blockchain bond settlement platforms offer smart bond technology that promises attractive fees, faster settlement periods, and lower operational risks. A typical smart bond tool will allow investors to transfer bonds and track them safely. Features include tools for bond creation, purchase, sale, and settlement. Putting bonds directly on the blockchain also allows cutting out middlemen from the issuer-investor relationship.

Let’s compare a blockchain-based and classic bond settlement processes in the table below:

  “Classic” Bonds Settlement Blockchain-based Bonds Settlement
Model
Owned and regulated by a third party. Decentralized, supported by users.
Data
Data can be changed retroactively. Data is immutable.
Transparency
Centralized data management solutions have a monopoly on the services they offer. Distributed records prevent monopolization and offer enhanced trust and transparency.
Record keeping
There are different sets of rules for each institution, which complicates reconciling ledgers. Records are kept across different institutions.
Ownership data
Ownership data can be fractured and incomplete. Guarantees accurate, comprehensive, ordered, and immutable historical ownership data.

Here is what a blockchain-driven bond settlement solution looks like:

Blockchain technology-driven solution

Now let’s take a look at a few blockchain use cases already changing the fintech world. TZero is a blockchain platform for issuing equity and bonds. A subsidiary of Overstock, it has already revealed the prototype for its upcoming token trading platform. It also recently unveiled the prototype and released a video demonstration of the product’s main features.

One of the leading settlement and clearing companies in Russia issued the first blockchain-based live bond, proving the initiative to be a hit among brokers and issuers. The National Securities Depository (NSD) used open-source Hyperledger Fabric blockchain and smart contracts to reproduce a $10 million bond for shares in a large Russian telecom company. The bond is expected to mature in three months since issued, while the NSD already got 30 requests to customize the initial smart contract to launch other bonds.

In a different part of the world, the Commonwealth Bank of Australia has plans to issue a bond using a blockchain platform. The bank has been studying the best blockchain services use cases for 4+ years, creating proof-of-concepts and testing the solution. The bond will be issued next year. Users will be able to transfer and pay for the bond over a blockchain-based system. The bank is collaborating with the yet unknown world issuer and promises to make the settlement process more efficient. The bank also considers that there is huge potential in using blockchain benefits for equities, syndicated loans, and applications with complications expected in the settlement process.

These platforms are just the tip of the iceberg as different tools and solutions can be tweaked for other fintech services initiatives. Clearly, more bond settlement solutions are to come out of tools like the Hyperledger Sawtooth platform since it enables developers to customize solutions to fit different fintech use cases and unique objectives.

Customer care, entertainment, and beyond

If we fantasize a bit and extend on what the startup SimplyVital Health is doing with ConnectingCare tracking patient care post hospital leave, similar advancement can be made in the field of tracking customer care and the quality of after-services care using IoT data on a blockchain. This way you don’t have to worry about an employee forgetting about a Tweet or a message from a disgruntled client.

Similarly, music and photography publishing is moving to the blockchain, with products like Kodak and Ujomusic that allow users to protect all rights to their creations by simply publishing them, without the notorious intermediaries. It’s safe to say the same is possible for tracking all types of intellectual property and payments to creative professionals to secure their rights.

This overview of blockchain use cases, of course, doesn’t cover all the possibilities that this technology has brought. Next time we will expand the topic of blockchain and IoT and talk about blockchain as the underlying architecture of secure IoT solutions.

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