How can the technology be used in the real world to solve existing problems?
So now your up to speed with blockchain technology and have a better idea of why its being touted as the next big thing, let’s look at some real-world applications of the blockchain – those supported by large and active developer communities.
1. Banking access in remote areas: In a country like Zimbabwe and Afghanistan, where the majority of the population may not have access to banks or the banking infrastructure itself is not robust due to uncertainties, currency fluctuations and mistrust; Blockchain is useful as a stable form of currency, which would not lose its entire value overnight.
3. B2B payments: Though Cryptocurrencies (Blockchains biggest application) are garnering a lot of attention these days, an institutional level of acceptance is still missing. The system would get a major push if banks are willing to accept and hold cryptocurrencies as deposits and exchange it for fiat currencies.
2. International payments: Typically, if you want to transfer money to a person or an institution in another country, they use a bank/money exchange based wire transfer. This process of wire transfer takes two business days because it has to go through the domestic Automated Clearing House (ACH) of both nations involved in the transfer. Additionally, international wire transfers have huge minimum costs (approx €25–30) to initiate the transfer. Using Blockchain, this transaction would be done in less than 10 minutes with transaction fees of around 15–50 cents.
Currently, there are initiatives taken by banks, not just to take deposits or trade currencies but for international B2B payments as well. Through a consortium, 22 banks across the world are participating in a SWIFT based Blockchain proof of concept. The could enable banks to make fast payments and reduce transaction costs, thus eliminating the need of maintaining large cash reserves.
A Smart contract is nothing but a piece of code stored on all computers of the blockchain network. It defines a set of conditions to which all parties using the contract mutually agree upon. Once the required conditions are met, certain actions are executed and all members of the network get to the same result by executing this action. This enables smart contracts to execute contractual obligations without any human intervention. The integration of Smart contracts, a big application of blockchain, with payment gateways, would automate a major process.
There are multiple ways in which Smart contracts can be used. For instance, in case of insurance claims, all contracts(claims) can be recorded on a blockchain, thus eliminating multiple claims being registered by one user. Concurrently, the user is also not scammed out of a claim by the company stating that they have already issued a payout.
Supply Chain Tracking
Most of the companies in the world have ERP (Enterprise Resource Planning) and supply chain management software yet, there is a limited visibility and detail about the whereabouts of a product at any given moment. Blockchain can ease the tracking of items across the global supply chain.
The product can be tracked at every stage creating the record of the location, who handled it and when. It can also record details like temperature, internal pressure at each point to help retailers be assured of product safety. This could possibly solve the problem of lost or damaged products in the shipment and increase accountability at each point. Due to an accurate, specific and immutable nature, retailers can resolve issues easily.
Wal-Mart is experimenting with blockchain to address food safety by tracking the place of food items and faster identification of the source of an issue if any product is causing health problems to customers.
So there are a few examples of how blockchain technology is, and can change the way we work in the future and whilst the majority of generation-1 Blockchains like Bitcoin have now settled into just being either monetary transactions or stores of value (digital gold) innovative advances in the usage of the underlying principles of blockchain is leading us to many amazing solutions.
Take a look at what some of our residents are currently working on.