Are you exploring potential uses for blockchain in your business? If so, you’ll need more than a simple primer. Before you can determine if blockchain solutions would work for you, take a look at the following guide. It provides an advanced explanation of blockchain along with potential uses, and case examples.
Two Important Definitions
Blockchain: A decentralized system of keeping records that is virtually forgery-proof.
Hash Function: A string of letters and numbers. A hash is created each time a blockchain record is changed or created.
The reason that blockchain is so secure is that each record entry is associated with a hash. That hash is also associated with the previous record in the blockchain. So, even if someone manages to hack into one record and spoof a new hash, they wouldn’t be able to recreate the hash for every record in the blockchain.
This technology was created to maintain the integrity of cryptocurrency transactions. It solved what was known as the double-spending problem. Today, blockchain technology can be used to maintain the integrity of financial transactions, healthcare records, online payments, etc.
What Are Nodes?
You likely know that blockchain is a distributed ledger system. The transaction records created are distributed across computers all over the world. These computers are referred to as nodes. When a new transaction is created, each node validates it. Only when the majority of nodes approve of a transaction is it written to a block.
Imagine someone hacking into one entry and changing it. That transaction would never be validated, because the other nodes have a copy of the original hash.
What Does Blockchain Do?
The original purpose of blockchain was to facilitate cryptocurrency transactions. The explanation provided above could be categorized as a technical description of blockchain. That’s great, for technical users. However, if you are considering using blockchain technology, you may need to understand the value of blockchain as it applies to business.
Simply put, blockchain is used to transfer something of value from one person directly to another without any intermediary. Blockchain also ensures the validity of these transactions, which can have both legal and business implications.
Because of its association with cryptocurrency, when people think of blockchain transactions, they often visualize money exchanging hands. However, blockchain can support money types of exchanges. For example, blockchain can be used to log ownership transactions for vehicles.
Are You in an Industry Poised to be Disrupted by Blockchain?
No rules are limiting the industries in which blockchain can be used. However, there are certain industries where blockchain is undeniably creating disruption. Keep reading to see if your competitors are likely to adopt blockchain sooner than later.
Banking And Financial Services
it could be said that blockchain does what banks do. Think about it. Banks are engaged in the movement of money such as transfer of assets from one entity to another and contracts such as mortgages.
A business wanting to enter a space currently occupied by the banking industry could use blockchain to do it. For example, a startup peer-to-peer lending platform could use blockchain to record and validate loan transactions.
Government Services
What happens when you buy or sell a vehicle? While the exact steps vary from one place to another, this process usually involves visiting at least one government agency. The sale must be logged, the title is transferred over from one to another, ownership must be verified, in the vehicle must be titled and licensed. Similar processes happened with real estate ownership.
With blockchain most of these procedures could be automated. Even better, because of the nature of blockchain, issues such as fraudulently issued title documents would be much less likely to occur.
Healthcare
The ability for blockchain to revolutionize the ability to create, store, access, and secure medical records is already being implemented. One useful feature here is multi-signatures. This requires a specific number of authorized signers to sign off to authorize access to all or part of a medical record. Further, blockchain can also be used to empower patients to choose who shares their data, or to share their healthcare data anonymously.
Realty
One issue of concern in the real estate industry is title fraud. In fact, in virtually every home sale, it costs several hundred dollars to conduct a title search to ensure that there is no fraud or other concerns relating to the title history. With blockchain, ownership records can be securely stored in a way that prevents tampering, and accurately records every ownership transaction, liens, and lien release that occurs from the time the home is built.
Music And Entertainment
When you watch a movie, download music, or go to a concert, there are many people who are entitled to be compensated. In the case of a song, the artist, producer, songwriter, record company, etc. all get a share. The problem is that it can be difficult to know who owns a stake particular song, how much they should get paid, and when that payment should take place. There are additional complications as well. For example, an artist may be willing to license a song for free in some cases, but expect payments in others. With smart contracts, all of these conditions can be written into automated contracts that will create the necessary transactions and payments automatically as long as certain conditions are met.
Others
These are just a small sampling of the industries where blockchain has disruptive potential. In truth, there is potential to use blockchain in any situation where transactions are a normal part of doing business, information security concerns exist, or there’s a desire to implement smart contracts.
Final Thoughts: Roadblocks to Implementing Blockchain
Now you know a bit of the technology behind blockchain, and have seen some potential use cases. Blockchain can certainly be used for many purposes, but that doesn’t mean there aren’t any potential drawbacks.
First, it requires some advanced technical knowledge to find and implement a blockchain solution. In addition to this, it’s a bleeding-edge technology, and that could cause issues with buy-in from members of your organization and your customers or associates. There is also some lack of regulation that could be a cause for concern, depending on your industry. Finally, blockchain can be a hard sell to those who struggle to understand the technology behind it.
We cannot say for sure if blockchain is a viable solution for your business. However, we are happy to meet with you to discuss your goals and needs. Then, if you determine that blockchain is a technology you wish to implement, we will assemble a team of professionals to bring that to fruition.