Real-life examples of blockchain-based digital transformation

Real-life examples of blockchain-based digital transformation

April 17, 2018

Ivan Kot

Head of Blockchain Competency Center

Introduced in 2008 as the technology enabler for bitcoin, today blockchain development becomes the answer to the main challenges of digital economies enabling information-sharing requirements of businesses and is the key to digital transformation. In the following article we look at examples of using blockchain to push digital transformation, and how current blockchain initiatives already inspire competitors to launch their own blockchain projects.

Alibaba uses blockchain to fight food fraud

Brand: Alibaba

Blockchain implementation area: supply chain management

As China’s leading online e-commerce company Alibaba takes the enormous issue of deadly fake food seriously. According to Business Insider, fake and contaminated food causes poisoning in one in ten people as well as a staggering 420,000 deaths worldwide yearly. Blockchain has given the e-commerce giant new hope in the effort to track genuine food throughout the supply chain in real time.

The vendors on the e-commerce giant’s marketplaces, Taobao and Tmall, will verify items’ authenticity using blockchain. Even though it is unclear how exactly the system will work, in case of meat, for example, the blockchain will most probably store a cow’s DNA data with a steak package, marking the item digitally to authenticate its quality throughout the whole product lifecycle. This will give consumers a chance to scan QR codes for product safety data like quality metrics and origin information. The system is currently a pilot in Australia and New Zealand, countries where a lot of Alibaba’s food comes from that boast a successful track record as excellent exporters of food and beverages.

The pilot project may soon extend to other shipment types in an effort to minimize fake items sold by third-party vendors on the platform—a problem Alibaba has been notorious for since its inception. By improving shipment security and transparency, Alibaba hopes to offer more trustworthy traceable transactions and increase the service’s integrity.

Walmart uses blockchain to start a smart package delivery tracking system

Brand: Walmart

Blockchain implementation area: IoT and shipping services

Another giant worried about China’s food safety problem is Walmart. In December 2017 Walmart started a food safety partnership with Tsinghua University National Engineering Laboratory for E-Commerce Technologies, a reputable Chinese retailer and IBM. The aim of the alliance is to use blockchain to help food suppliers and retailers trace food and its safety with support for both online and offline consumers. This extends previous efforts of Walmart and IBM in the USA launched in August 2017.

Walmart is currently investing into Dapp development in a slightly new direction having applied to patent a ‘smart package’ featuring a device that would record information about the package contents, its environmental conditions, location and other data to a blockchain. The smart package is also intended to be used with other high-tech devices like blockchain-based drones. Walmart hopes to provide its customers with more control, transparency and security during the whole shipping process.

Rakuten uses blockchain to introduce cryptocurrency for their points-based loyalty rewards system

Brand: Rakuten

Blockchain implementation area: e-payments

Rakuten, the leader of Japanese e-commerce, launched their own Blockchain Lab partially based on the IP received with the acquisition of Bitbet. The initiative has an ambitious goal of streamlining and transforming its multinational global businesses using blockchain.

Since Rakuten’s portfolio includes businesses as varied as Ichiba and Viber, banks, golf courses, e-books, video streaming and even Barcelona FC, blockchain solutions will be created for different implementation niches.

Recently Rakuten, which had already awarded $9 billion worth of points since 2003, has announced their own cryptocurrency project as a borderless payment method that could mitigate exchange rate fees. The details are still not clear but Rakuten has already stated the intent to make Rakuten Coin available for use within all its businesses, including its global marketplace, on-demand video service and mobile messaging service. The company aims to streamline transactions across various services in different parts of the world, and many multinational giants may follow this formula.

Visa uses blockchain to launch a B2B payment service

Brand: Visa

Blockchain implementation area: payments

Visa is trying to disrupt the B2B blockchain-based payments niche by developing a platform for processing bank-to-bank transactions in the hopes this will be a more secure and predictable, as well as a faster way to process cross-border corporate payments.

The company is already beginning to process bank-to-bank test transactions with Commerce Bank (US), Shinhan Bank (South Korea), Union Bank (Philippines) and United Overseas Bank (Singapore).

Visa uses architecture based on blockchain to facilitate transactions over its own network from the origin bank to the recipient. Besides offering the benefits of blockchain, Visa is implementing system design that ensures the company’s data security standards are incorporated into every architecture layer. Interoperability and governance are also an important aspect. Besides, the company kept ease of future development in mind, allowing company partners to use Visa’s API to create their own platforms.

Lenovo uses blockchain to verify the validity of physical documents

Brand: Lenovo

Blockchain implementation area: data security

Lenovo is applying blockchain tech to offline items to provide a trustworthy way to verify the validity of physical documents. Lenovo filed a patent for a blockchain based solution for physical documents validity verification by tagging them with digital signatures. The system will use digital signatures encoded in physical documents processed by computers to verify a document’s authenticity. By encoding digital signatures into documents instead of a physically printed mark, users can be sure that the document was not changed after creation. Even if there are many fraudulent documents in existence, the system allows users to identify the genuine one. Lenovo’s solutions may truly help organizations which frequently work with sensitive paper documents.

Porsche uses blockchain to improve safety and capabilities of driverless cars

Brand: Porsche

Blockchain implementation area: IoT

Porsche is the first automotive industry player to invest into blockchain apps development together with the startup XAIN. Using the app, car owners can lock and unlock their vehicles and allow temporary access to other drivers. New business models can also be developed using encrypted data logging. Further improvements could possibly lead to bettering autonomous driving capabilities thanks to the blockchain technology. Customer-centric benefits include more trust in cases when temporary access is given to third parties.

Porsche claims that blockchain features could speed up opening and locking cars by six times. Such improvements are due to the car being on the blockchain, which makes it possible to establish a direct connection without diversion through a server. Besides faster opening times, the data is cryptographically encrypted. This way users can be confident all activities visible on the app are documented in the blockchain preventing any modification.

Blockchain also helps assign temporary authorizations for a car access securely. Using blockchain helps ensure a protected connection to vehicle data and functionalities securing communication between all participants. Third-party providers can be added with the help of smart contracts.

Blockchain-based business models Porsche is currently working on include data logging, where the data that has to be processed is encrypted locally in a distributed blockchain. Data is controlled by users deciding what actions to take with it, with all actions saved in the blockchain. Autonomous driving can be improved by using local data to acquire regional learning effects securely shared with other cars. Users can also use protected swarm data.

How blockchain projects inspire competition

Blockchain creates new markets and financial instruments, but also enhances the ones we have adopted a long time ago, transitioning them into the 21st century. So the way blockchain can be applied to business processes shows us that blockchain-driven digital transformation opens new horizons to a company of any size. The startups and pilot projects mentioned above will definitely inspire other tech leaders to come up with their own blockchain solutions to stay on top of the trend.

For example, Alibaba’s blockchain-based pilot project to fight fake food and counterfeit products is a smash, we can easily look beyond dangerous food and faux luxury items, with similar systems being used to detect fraud in the fintech software development sector. It’s clear to see that Porsche is already pushing competitors to follow blockchain-inspired digital transformation trend, with companies like ZF, the UBS bank, and IBM working on the Car eWallet, which enables secure transactions at charging stations, in car parks and at toll stations.

Not only do competitors jump on the blockchain trend, they approach blockchain in different ways. For instance, Visa is already inspiring others in its niche to benefit from blockchain innovations. UNICEF invested in a group of startups dedicated to utilize blockchain for nonprofits. IBM with a network of banks have begun using digital currency and blockchain software for cross-border money transfers in the South Pacific. Mastercard is opening up its blockchain banks and merchants as an alternative payment method. Both companies offering fintech services are sure it will help users cut costs of sending cross-border payments, usually processed by multiple foreign banks resulting in exorbitant fees. Mastercard’s blockchain also gets rid of the middlemen and connects a purchaser’s bank directly to that of the supplier.

There are some differences in the way the two companies approach blockchain: the IBM blockchain services only transmit money in the form of digital currency; Mastercard’s blockchain accepts payments in traditional local money, eliminating the issues connected with digital currencies. Mastercard also boasts a worldwide settlement network of 22,000 banks and financial institutions while IBM is including only 13 banks in its network.  

What’s next?

Itransition is excited about blockchain and what it has to offer. In the blockchain series of articles we want to look at topics like best use cases, IoT, adoption issues and roadblocks, blockchain-as-a-service, building decentralized solutions, ICO development, and integrating blockchain into existing solutions. However, we don’t want to overhype the technology and realize that it’s definitely not a silver bullet, and want to share more insights on blockchain’s pros and cons.