Blockchain Applications: What Is Blockchain Used For?

This Tutorial Explains Various Blockchain Applications, Use Cases & Examples. It also Includes Steps for Integrating Blockchain in Organizational Settings:

This previous introductory Blockchain Tutorial covered the basics of blockchain technology. Now, we will go beyond the basics by looking at how the technology is being utilized today in the organizational and individual settings including in healthcare, banking, cryptocurrencies, and Decentralized Autonomous Organizations.

We will look at Ethereum and Bitcoin as popular examples of blockchain. We will also see how the technology can be implemented within an organization and what limitations such organizations expect in adopting it.

Blockchain Technology and Its Application

Blockchain Applications

Blockchain technology is being used in many different industries. The annual blockchain spending will reach $16B by 2023 according to recent research by CBInsights and the rate of adoption of the technology is increasing. The technology is actually helping many adopters to stay ahead of the curve than competitors. It is clear that many more companies will adopt the technology for the benefits it carries for the companies operations.

In addition to making possible instant transactions over the peer-to-peer network and reducing the cost of middle-men, the technology uses authentication to secure data and make it harder to break than any legacy systems.

The biggest use case of blockchain technology so far is cryptocurrencies. However, blockchain does not end there – banks and financial institutions are finding blockchain helpful because it helps them process transactions more quickly and at a lesser cost.

Different types of cryptocurrencies include:

Different types of cryptocurrencies
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Cryptocurrencies based on the blockchain can be sent to and from any user in any country instantly within seconds. This eliminates the need for middlemen institutions and thus lowers the transaction costs.

Cryptocurrencies are also being used for paying goods and services like legacy currencies. They may eventually replace USD, EURO, and other fiat currencies. Crypto is also employed for speculation trading. This happens in cryptocurrency exchanges which work the same way as Forex trading, and people can earn profits by trading them.

Organizations are now using block chain to secure their data, reduce inefficiencies in the supply chain and logistics network, and in intellectual property management. Blockchain is also used in food safety, healthcare data management, fundraising and investment with security token offering, and in the notary.

Please see the blockchain applications explained in the below video.

Examples Of Blockchain

Bitcoin and Ethereum are popular examples of blockchains. Everyone is allowed to connect to the blockchain and transact on them.

Here is the video for your reference:

Anyone can download a copy of Bitcoin, Ethereum, and other blockchains for free and run a node on your computer. In that case, you can participate as a block verifier – also called a miner – and earn some income by verifying transactions sent through in the network by other users.

You will only need a computer, special mining software to connect to the blockchain, internet connection, and a connection to a mining pool where you will combine your computer power with other miners to increase the chances of verifying a block.

How Bitcoin Works
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Each of these blockchains has a set of time assigned within which a block is to be added to the chain. For instance, the Bitcoin blockchain takes 10 minutes to verify a block and chain it with the previously verified blocks. This equals the transaction delay time. Ethereum and most of the modern blockchains have improved this and thus they take only seconds to verify a block and transactions in it.

Further, each blockchain will have a pre-set number cryptocurrencies rewarded to verifiers, which reduces over time.

For instance, Bitcoin started in 2009 and was rewarding users 50 BTC for verifying a single block in 10 minutes. This has reduced over the years to the current 6.75 BTC. The reduction is because many people are joining the network and more cryptocurrency is in circulation to reduce the original set supply. This means it will take more time to release the rest of the fewer cryptocurrencies.

Each blockchain has a limited supply or the number of coins that will be released to the public eventually, but this release happens in a timed manner over time.

For instance, the supply of Bitcoin is set to be 21 million, and over 80% is now in circulation. More are being released through the mining process. The amount to be released at any time is dependent on the difficulty of production, the number of people joining the network, and the pre-set age of halving. Bitcoin halves every 4 years when the reward to verifiers, also called miners, is cut into half.

Blockchain Wallets

Blockchain wallets
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As the name suggests, blockchain digital wallets are used by a blockchain user to store their assets on a given blockchain. If you mine Bitcoins, for instance, your proceeds are sent to your wallets- the one you have configured to have them sent.

If you buy Bitcoins from a peer or from a cryptocurrency exchange, you have them sent to a wallet.  The software can be installed on desktop computers, iPads, mobile phones, and other devices.

Wallets are separate software build on the blockchain, and which can be downloaded apart from the blockchain or used as browser extensions, plugins or hardware. Some wallets allow you to store different types of cryptocurrencies while others allow storing only the asset for a particular blockchain.

Examples of wallets include Bitcoin.com for Bitcoin, MyEtherWallet for Ethereums. You simply download these wallets, then sign up and get a wallet address to which you will send and store your digital assets. Hardware wallets such as Ledger allow the signing of transactions offline.

Blockchain Cryptocurrencies

Cryptocurrency is a digital asset and money secured by cryptography and which allows users in the blockchain network to own, store, trade, and exchange value securely.

In contrast to government-printed dollars, Euros and Yuan, Bitcoin, Ethereum and more than 5000 other crypto tokens and currencies cannot be controlled by a central authority.

Blockchain DAO

Decentralized Autonomous Organization is the most advanced form of smart contract. It is an organization that runs on the blockchain distributed network and whose rules and transaction records are computer programmed. The rules and certainly the organization are controlled by shareholders and not influenced by the central government.

Members of the organization can exchange value easily and freely and can create rules and agree on the rules. It can be complex to include devices communicating with people, people communicating with people, and devices communicating with devices.

Use Cases Of Blockchain Technology

#1) Reducing The Cost Of Data Breaches

Blockchain transform cyber security
Blockchain secures information in decentralized networks
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Organizations can reduce the costs of data breaches by using blockchain. They can also avoid litigation, losses, compromised customer data, and interruption or downtime costs related to the breaches.

Consider that data and information security is costing organizations more than 20% of their IT budgets. Part of these is malware costs which are in the tune of $2.4 million per year on average. Further, it takes months to fix the affected systems. The annual cost of data breaches now stands at $3.2 million, up by 12 percent in five years according to a recent report by IBM.

#2) Reducing Cost Of Cross-border Transactions And Remittances

How crypto can ease cross-border transactions
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Banks and other organizations experience the high cost of cross-border transactions. For instance, most of these transactions take a model 3 days or longer to complete. Organizations such as Ripple – whose network is now available in over 40 countries and six continents, are now using blockchain and cryptocurrencies to overcome these barriers. Blockchain helps achieve near-instant cross-border transactions at a fraction of cost.

#3) Removing Supply Chain Inefficiencies And Lowering Costs

How blockchain will transform supply chain management
How blockchain will transform supply chain management

In supply chain and trade finance, verification of documents takes several days for transactions to complete. This is due to manual documentations. There are high inefficiencies, fraud, and the process is also rated for the high cost.

Different blockchain platforms are being applied to solve this problem. They include IBM’s Batavia, R3’s Marco Polo, Digital Trade Chain operated by various banks, and the Hong Kong Trade Finance Platform. For instance, they make it possible to complete these transactions in a few minutes at a fraction of cost.

#4) Blockchain In Healthcare: Tracking Drugs Throughout Supply Chains And Securing Data

Blockchain in Healthcare
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Blockchain is being applied in the tracking and tracing of prescription drugs throughout supply chains. This has been demonstrated in the Drug Supply Chain Security Act Interoperability Pilot program in the United States. Using this program, it is possible to prevent and control the distribution of counterfeit drugs and to recall ineffective and harmful drugs very easily and quickly.

Securing customer data is a top priority in healthcare as is the sharing and distribution of this data that helps to facilitate the better provision of healthcare services across hospitals, governments, and research institutions. Good examples of startups using blockchain to secure data sharing in this area include Amchart, ARNA Panacea, BlockRx, and many others.

#5) Governments Using Blockchain To Secure National Identity Data

Further, blockchain is being used by governments for digital identity management. A good example is Estonia, which is using blockchain-based for digital identity to digitize national identity records, secure citizen data to reduce identity fraud, and reduce inefficiencies of legacy digital ID management platforms such as high costs.

#6) Application In Copyright Protection

Blockchain can secure copyrights
Blockchain can secure copyrights
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There are countless startups using blockchain to allow their customers to secure IP rights. Once artwork is registered on the platform, customers can protect their work from being used illegally without their permission. The owners can also pursue legal injunction in case of violations using the certificate provided on the platforms.

For instance, Blockai and Copyrobo use blockchain and artificial intelligence to help artists to protect their art on the internet in seconds. They can create a timestamp or fingerprints on the blockchain and they, in turn, will get a copyright certificate to prove the copyrights. These platforms discourage infringement of copyrights and encourage licensing.

Bernstein Technologies GmbH and other companies also use blockchain to support companies through the innovation lifecycle. Companies can register inventions, designs, and proof of use in the platform. This, hence, creates a trail of records on Bitcoin blockchain. This way, companies can secure their trade secrets and other notarized information using blockchain.

#7) Notary Services

Blockchain can ease Notary Application and Processing
Blockchain can ease notary application and processing
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With blockchain-based online notary services, users can upload their digital certificates and documents and have them verified within minutes. These services can be used by those licensed by governments to authenticate the signing of documents, for instance when applying for VISAs.

Proof of Existence, for instance, is a service that uses blockchain this way. It also allows the transfer of virtual currency from computer to computer and users get the privacy and anonymity they need, all without the need for a middleman. The documents are secured and cannot be modified by hackers or government representatives illegally.

#8) Blockchain And Voting

Blockchain in Voting
Blockchain can ensure transparency and security in voting

The alleged interference of US elections and voting process by Russia is nothing new and it has generated a lot of controversy in the world over. Still, the most important issue remains, how we can secure digital voting?

Blockchain has emerged as an important topic in the secure voting discussions. Although electronic voting addresses most of the problems of traditional manual voting, lack of voter privacy, voter fraud, high cost of legacy digital voting platforms, lack of transparency still remain as major concerns.

Using smart contracts and encryption, blockchain can make the voting process more secure from fraud, more transparent, and ensure voter privacy. In this regard, GenVote leverages blockchain to achieve these and also allows customization of the voting process using different types of ballots and allowing logic based voting. It is being applied in University-scaled elections.

Limitations Of Blockchain Technology

Limitations are as follows:

  • Poor adoption
  • Impossible to make revisions when needed, for instance, in case there is a need to make an amendment to change payment.
  • Loss of private key due to poor management, which means loss of data or money in case of cryptocurrencies.
  • Delays in development, sharp differences and back-forth communications that are required to attain a consensus can consume a lot of time leading to delay in upgrades and development.
  • Double-spending problem

Blockchain Integration

How smart contracts work
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Integrating blockchain means offering your current operations on the blockchain or porting them over to blockchain.

Three things you will need to think about when implementing blockchain is scalability – the extent to which the blockchain network can accommodate as many users and features as possible without losing speed and security; decentralization; the speed of transactions; and security.

In most cases, you may find the need to balance security, decentralization, and scalability.

Never assume blockchain will do some magic. It may take time to give results and maybe it will improve only some aspects and not all of it. Make sure to use tried and tested software, never rush to an idea, and explore the possibility of partnerships with your suppliers and other companies in implementing blockchain.

Why Are You Integrating Blockchain?

The reasons are as follows:

  • Cost benefits: For most organizations, integrating blockchain will cut operational and transaction costs by more than half although you would need to have digitized your operations because blockchain is not merely for automation.
  • Making operations transparent and transactions traceable: Blockchains transactions transparent and this helps to prevent fraud against your organization from within and outside. Because transactions are immutable and permanent it prevents people from cooking the books.
  • Automation-only adoption: If automation is the only motive then blockchain will certainly be more costly than any other automation technology, hence not very advisable.
  • Smart contracts: Further, you could consider smart contracts or dApps to automate transactions and ensure all parties adhere to agreements in the transactions.

How Should You Integrate?

How to realize true benefits of smart contracts
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Integration may start either by you coming up with a custom blockchain from scratch. The other option is to customize an existing blockchain and the third option is to develop a custom dApp. Other companies interlink platforms through APIs and other third-party applications such as wallets.

Because blockchain technology isn’t fully exploited currently, you can start porting one application and service at a time once you are sure you can get the optimal benefits of porting services to the blockchain.

You will need a plan and a strategy to adopt or integrate blockchain, but you will first need to understand why you are implementing blockchain. For instance, decide on your best use case, weigh the cost and benefits, and consider the challenges of doing the integration and implementation.

Gather a lot of information and consider case studies. Do your research, and get experts to advise and structure how integration would look like for your organization. If possible, get enough resources and hire or outsource developers to structure up the integration and implement it.

Additionally, do your cost projections and award budgets. Have a long term plan and strategy because integration is a long term process and cycle that may never end.

You need to also decide or develop your own consensus mechanism or rules for your blockchain including Proof of Work (PoW), Proof of Stake (PoS), Byzantine Fault Tolerant (BFT), data privacy for ledger users, and a set of algorithms you can run.

Like with any product development phases, you would have a roadmap that you will follow in developing your product: you need a Minimum Viable Product (MVP). After this, develop it into a Fully Functional Product (FFP) description. You will need to choose a blockchain platform to implement your project and decide whether it is on a private, public, or hybrid blockchain.

Steps For Integrating Blockchain

Steps for integrating blockchain

Challenges Of Blockchain

Challenges of blockchain

Conclusion

Blockchain is being implemented in almost every area of business including cryptocurrencies, supply chain, and logistics, intellectual property management, food safety, healthcare data management, fundraising and investment with security token offering, and notary.

Companies can make use of smart contracts to automate pay-for-performance types of contracts. Digital ledgers to make transactions more transparent, avoid loss of records, avoid fraud, and to avoid cooking of books. It can automate payments while making it less costly to do cross-border transactions.

It can reduce costs of operations for instance by securing company and client data to avoid costly data breaches and making it easy to exchange value and data on a peer-to-peer manner without middlemen.

However, a company must answer critical questions of how urgent it is to adopt blockchain if it is helpful, and how costly it is to implement. Other steps follow the normal adoption procedures. Not every adoption case will make sense and some will not even be profitable, hence we need to be careful.

A company can decide to develop on the public, private, or hybrid blockchain, then they can come up with its own custom blockchain from scratch, customize an existing application, or just develop a dApp or smart contract and start porting its services one by one on the blockchain.

It can start with a minimum viable product and end up with a final end product application and repeat the cycle to optimize the blockchain.

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