Blockchain has quickly become one of the most talked-about new technologies for 2023. While it is most commonly associated with cryptocurrencies, blockchain also has plenty of different applications for businesses.
Below, we’ll discuss blockchain technology and how businesses can leverage it to improve efficiency and security in 2023.
Blockchain technology is a distributed ledger that’s accessible by those who have permission. It’s helpful to think of it like a Google Document. Every change made to the ledger must get approval from the many computers - known as nodes - that comprise the chain.
The technology aims to create genuine peer-to-peer transactions without the need for intermediaries to secure the data and keep records. In other words, blockchain removes third parties like banks.
Both transacting parties can trust that information added to the blockchain cannot be changed, meaning large companies can interact with each other directly. For example, they can write contracts without requiring third parties.
Another benefit is blockchain technology helps participants settle transactions quickly, so multi-day processes channeled through intermediaries reduce to minutes.
All this means blockchain technology has the benefit of being accessible from across the globe while offering a level of security that traditional ledgers do not. Simply put, blockchain builds trust.
The downside to blockchain technology is that it's not infinitely scalable, meaning specific processes, such as logging processing Mastercard's daily transactions, still need to be ready for blockchain adoption.
Although originating from Bitcoin, blockchain applications go far beyond cryptocurrencies. Blockchain technology impacts various sectors by creating transparency while saving businesses time and money. As a result, global blockchain spending is forecast to reach around $17.9 billion in 2024.
Below we’ll explore some of these blockchain business applications.
Public blockchains, also known as permissionless blockchains, are open to anyone.
For example, Bitcoin and Ethereum are built on public blockchains that anyone can see, and all participants are anonymous. Anyone can download these public blockchains, read all the historical transactions, validate new transactions, and add new transactions to the network without disclosing their identity.
However, public blockchains are largely irrelevant for businesses because business applications tend to have a finite cast of participants, meaning permissioned blockchains are more appropriate than public ones.
Unlike public blockchains, permissioned blockchains are open to a limited number of participants whose identities are all known.
There are two types of permissioned blockchains: private and semi-private. Private blockchains operate within an organization, while semi-private blockchains operate between organizations.
While private and semi-private structures can be helpful for businesses, semi-private blockchains are more practical as most companies transact with multiple companies.
Although originating from Bitcoin, blockchain technology is no longer just for cryptocurrencies.
Here are some of the more common business applications for blockchain.
Applying blockchain technology to international payments creates a tamper-proof log of sensitive information. The blockchain structure also means every block with information links to the previous block.
On top of this, the database is distributed, and every participant owns a copy of the transactions.
If a business needs funds quickly, the real-time international payments that blockchain affords are game-changing. Payments happen instantly, and transactions can happen directly between senders and receivers. There are zero delays, unnecessary fees, or remittances involved.
For this reason, banks are starting to use blockchain technology for international payments. For example, in April 2018, Santander launched the world’s first money transfer service, letting customers make same-day international payments. This automated process has reduced the number of intermediaries involved in transactions, making payments cheaper and more efficient.
Sources indicate that businesses spend between $200 billion to $400 billion each year on regulatory compliance. And with new rules continually being added each day, companies are looking for solutions that can save them time and money.
Again, blockchain can be applied. For example, using blockchain for compliance and auditing reduces the risk of human error due to automation, and because it's secure, the technology helps ensure the integrity of the record.
Blockchain can also contain various information, such as legal contracts and product inventories, making it flexible for business needs.
Moreover, once the account records are locked using blockchain technology, nobody can change them - not even the business owners.
As a result, entries are secure, traceable, and verifiable, providing a vigorous audit trail. These traits mean the technology builds trust ahead of any due diligence process.
One blockchain business application with huge potential is smart contracts in insurance.
Smart contracts are just like regular contracts, except the contract rules are enforced in real-time on a blockchain. In addition, these contracts are recorded on the blockchain. In the case of insurance, claims are validated by the network.
This validation helps eliminate incorrect claims since the blockchain would reject claims on the same accident.
This real-time enforcement eliminates the need for intermediaries and adds transparency and accountability for all parties in a way that traditional agreements cannot. It also saves businesses time and money while ensuring compliance from all parties involved.
It's more than just insurance where smart contracts are applied. They're becoming increasingly popular in sectors across the board, including government, health, and real estate.
For example, European countries like Poland and Sweden are using blockchain technology to reform the land registration process. According to one of the Swedish government’s project partners, using blockchain technology for the government’s land registry process could save the government $106 million a year. This is because the technology will eliminate paperwork, reduce fraud, and speed up transactions.
Such reforms have already taken place in some European countries. For example, in 2016, Georgia created a blockchain land registry system that lets members of the public verify the ownership of property deeds.
With globalization, the production of goods has become an international affair, and keeping a close eye on supply chains has become increasingly challenging.
Most supply chain systems are made up of independent databases, and records are kept separately. This separation can make verifying shipment information and processes nearly impossible for the person in charge of supply chain management.
Many industry supply chains need more communication and transparency, including shipping. According to a study by Accenture and DHL, there are over 500,000 shipping companies in the US alone, and this causes data siloing and transparency issues.
Once again, however, blockchain technology could solve many of these transparency issues. For example, blockchain's immutable ledger means it's well-equipped to track goods through supply chains in real-time, and consolidating data sources onto a blockchain can build greater trust within the industry.
Automating parts of the logistics process through blockchain technology could save supply chains billions of dollars a year.
Hospitals could use private blockchains to store high-level data, such as patient ages, genders, and basic medical history.
On its own, information like this wouldn't be enough to identify individual patients, meaning hospitals could store it on a blockchain without undue privacy concerns. Also, storing information on a central system can link data that may become siloed.
Some blockchain solutions have shown promise, improving access to information and streamlining business processes. In addition, these private blockchains can help reduce healthcare costs.
Blockchain technology allows consumers to claim sole ownership of the world's most desirable digital assets.
Instead of just exchanging like-for-like value, as you would with cryptocurrencies, blockchain has brought non-fungibility to the digital space through NFTs. NFTs are digital items sold on a blockchain, such as music, art, and videos.
Blockchain's immutability, transparency, and decentralization have created opportunities for the trading and exchanging of digital assets.
Although NFTs can be minted on any blockchain that supports smart contracts, the ERC-721 standard on the Ethereum blockchain is the most common industry standard.
Many problems in media center around data privacy, royalty payments, and intellectual property piracy. According to Deloitte, media digitization has led to sharing content that infringes on copyrights, and blockchain can alleviate these issues.
Blockchain technology’s strength in media is its ability to prevent a digital asset, like an MP3 file, from existing in multiple places. It can be shared and distributed while protecting ownership, making piracy difficult through a transparent ledger system like blockchain.
The technology can also maintain data integrity, helping advertising agencies to target customers and artists receive royalties for original works.
Many media companies have adopted blockchain technology to eliminate fraud, reduce costs, and protect IP rights. As a result, MarketWatch estimates that the global market for blockchain in media and entertainment will be $1.54 billion by 2024.
Eluvio is one company that’s leveraging blockchain for media. Since launching in 2019, Eluvio has used blockchain technology to help content producers manage and distribute premium videos to consumers and business partners without content delivery networks.
The applications above are just a handful of exciting new ways that blockchain technology can improve businesses in 2023.
While the technology is still in its infancy, forward thinking businesses are incorporating aspects of it into their workflows today to have an edge over competitors tomorrow.
So if you’re looking for more ways to improve operational efficiency, consider implementing some of the blockchain applications outlined above.