Blockchain Technology Overview
Since blockchain technology used by bitcoin was introduced, there has been a lot of talk about how this new technology is going to change the way transactions will be conducted, and how the information will be shared. However, there is not a lot of information about companies that are actually using it successfully, other than for Bitcoin.
Blockchain technology can be applied to many things such as social media, sharing of healthcare information, and banking transactions – just to name a few. Information can be stored and shared instantly without having a central entity in control. With blockchain technology, everyone connected stores their own complete copy of the chain of information and transactions, so if one entity should fail there are several more copies available.
Since Bitcoin was the first application of blockchain, many confuse the two as being the same thing. Those that discard Bitcoin, often acknowledge the significance of Blockchain technology and attempt to decouple the two. What many enamored with Blockchain technology do not understand is that it is not worth the cost if decentralization is not needed, or wanted. Decentralization is the cornerstone of Blockchain technology because it makes the system stronger, immune to censorship, and unable to be controlled by any single owner. Bitcoin transactions are stored and transferred on the Blockchain in a peer-to-peer network that is 100% open, public, and anonymous.
If there is no decentralization, transactions can be made without the funds to back it up, and transactions or actions can be canceled or blocked without justification – such as “chargeback” issues currently faced by most merchants. Furthermore, blockchain is not a technology businesses can implement or run on a budget. It requires the development of custom solutions, custom coded software, and blockchain expert developers, none of which are cheap. Then there is the energy consumption issue that requires a company to have enough servers properly configured for current tasks.
The reality is that blockchain is costly and does not solve everything, so using it for the sake of using it is a bad idea. Companies already using streamlined technology suited to excel revenues and grow their business do not need blockchain. If the cost of implementing, running and maintaining blockchain overshadow potential revenue, it is not needed. If a decentralized model does not fit your business, it is not only not needed, it is a bad idea. If there is no issue for blockchain to solve in your business, again – not needed.
When implemented correctly and for the right purpose, it can indeed revolutionize and transform a business. If not, it can destroy a successful, existing business and result in huge losses. The hype around blockchain due to the success of use for Bitcoin should not be the reason a business seeks to implement this technology. The idea of blockchain is to replace centralized ledgers with distributed ones in order for any fact to be proven. For example, if you want to know who owns a particular property, everyone on the blockchain could be polled because everyone would have a copy of the ledger.
Advantages of Practical Use
The advantages are clear. Time and effort required to create and maintain a secure ledger are eliminated, as is the need to have constant communication with the centralized ledger in order to get answers to questions. Most importantly, the possibility of cheating is eliminated because no one entity maintains the ledger.
This brings us to a list of businesses that might actually benefit by using Blockchain technology:
- Clinical Trials: tracking test results for drugs tested by numerous entities
- Gem Ownership: tracking ownership of emeralds, diamonds, and other rare gems
- Automobiles: tracking ownership of automobiles
- Retail Markets: supply chain management for goods, particularly International trade
- Food Distribution: tracking food for distribution and safety
- Legal Industry: “Smart contracts” that digitally facilitate, verify, or enforce the negotiation or performance of a contract
Real Estate: track and manage property titles
- Healthcare: electronic health records stored on a secure, distributed medical records system to permit the sharing of histories and payment
- Medical Field: tracking expiration and availability of supplies throughout the country for emergency distribution
- Concerts: managing ticket sales
Practical Use Case Studies
Spotify is one of the largest distributors of music on the internet that started up in late 2008. They have around 271 million active users that include 124 million paying customers. In early 2017 Spotify bought the blockchain company Mediachain Labs to develop better technology for connecting music artists and rights holders with the tracks that are held in their data base to royalties owed. They also developed a cryptocurrency that rewards creators.
IBM is a very well known worldwide company. They have developed a blockchain service for for helping companies start and accelerate their products into production by integrating new technologies for tracking everything from raw materials all the way to the sale of the finished product. IBM has also been involved in helping hospitals store and share healthcare information.
Steem is a blockchain based social media site where you can earn rewards by posting content, judge quality and upvote content for a reward of their cryptocurrency which generates interest over time.
UPS and FedEx
UPS and FedEx have joined the Blockchain in Trucking Alliance also known as BiTA. This helps them push for increased transparency with groups involved in the supply chain to easily access information that can help them better organize pick-ups and deliveries. It also helps them store information that can be easily reviewed to help remedy customer issues.
Wal-Mart is using blockchain to track their products. With a scan employees can see which farm the tomatoes were grown on and the location of the stock in the warehouse.
The ability to make election fraud impossible could be a future benefit of emerging blockchain technology. Using a digital ID that will house everything from your driver’s license to computer passwords is another possibility. Helping Homeland Security track the import and export of International goods faster and more securely is another good use for Blockchain technology.
It might be easy to imagine that in 10-20 years blockchain will be integrated into many facets of our daily lives. However, not every facet. There is a very special set of circumstances required to make blockchain the right solution, as it is for Bitcoin.