Even though computer scientists have been studying distributed ledgers and other building blocks of Blockchain for decades, the Blockchain as we know it today is still in its infancy. Much of the work is still learning about what it is, how it works, and how it can benefit us. Based on its use so far scientists are also studying the environmental and energy impact of massive number of computers required to run Blockchain and related applications. The purpose of all this is to bring some real-life and practical understanding of the subject and identify opportunities to improve the quality of life, our planet, and our businesses. For a fundamental understanding of Blockchain and crypto-currency, start with Introduction to Blockchain. In this article I will explore categories of business applications of Blockchain and share ideas of problems and solutions within each.
As an entrepreneur, investor, manager, or a startup engineer, you must have contemplated about business applications and opportunities using Blockchain. Blockchain is a fundamental building block technology of trust or in other words it promises to solve the “trust” problem between two or more entities, devices, applications, and people. Here are 5 categories of core business applications of Blockchain. In most cases Artificial Intelligence, Machine Learning, and analytics coding and heuristics are required to build these applications.
1. Cryptoassets: Refers to transformation of assets; different kinds of assets used in business transactions. From money to media, analog to digital. It involves the ability to create, record, and trade assets using blockchain (peer to peer) without intermediary like banks or brokers or, in some cases, even escrow holders. Primary and most prominent set of applications are in the financial services space. Cryptocurrency (or virtual currency) is the most well-known type of crypto asset. Other examples of Cryptoassets include Utility Tokens, Security Tokens, Non-Fungible Tokens, Initial Coin Offerings, Digital and Physical Wallets, Crypto Asset Trading Platforms, and Cryptocurrency Funds.
2. Self-sovereign identity: Refers to secure documents, personal control of your identity and personal information and who can see it. It’s about our right to establish our own digital identity which cannot be given or taken away by a central regulatory body. It can be enforceable in person or online. We can store this information in virtual blackbox that goes with us. Apply Blockchain to it and now you have an immutable record of everything about you and your life. Imagine your own personal digital wallet tracking your credit history and score. Next time you apply for a home loan, instead of the lender pulling your credit from Equifax (which we all know has accuracy issues), you grant the lender access to your credit history and current score for say 4 weeks. Because the input into this wallet is controlled by Blockchain and public/private key by actual software systems instead of human beings, the lender can be assured of the accuracy and authenticity of the information.
3. Smart Contracts: Is a special purpose code that executes a complex set of instructions on the blockchain, its a way to codify terms of a deal using software. For business deals, for example consumers and producers or govt. and citizens social pact, it helps in ensuring contractual compliance without needing intermediary and it hold parties accountable (insurance against dishonest actors). Blockchain ensures outcome of the executing self-enforcing contracts, supporting automatic updates, and ensuring tamper-proof security and safe-keeping. For example; If a rental contract is breached when a tenant is late in paying rent for three consecutive months, an email is sent automatically to all interested parties and, if the contract included rent increase, to adjust the rent starting the following month.
4. Decentralized business models: Generally speaking, decentralization is basically a business model which involves transferring decision-making power and functions from a single central authority to operating units at different levels within an organization. Decisions primarily related to financial and everything that touches it. For the purpose of this article, we will focus on business models that can be distributed across blockchain networks, that can be fully autonomous with no humans interactions or otherwise being involved in the day to day operations, and that are utilizing pure peer-to-peer models like ride sharing without needing Uber, buying and selling things without Intermediaries, and so on. For in depth review of decentralized finances, read “Blockchain disruption and decentralized finance: The rise of decentralized business models.”
5. The ledger of things: IoT and Distributed Ledger Technology. In 2020, there were over 31 billion IoT devices in the world. They exist in simplest consumer devices like smart watches to the most complex industrial applications such as monitoring gas pipelines, sensing vibrations in heavily machinery, and gauging temperatures in warehouses storing vaccinations. Smart devices like thermostats and solar panels and devices regulating energy consumption in our homes and offices, tracking our health, and buying and selling surplus electricity between neighbors are commonplace and working behind the scenes. Add to this the notion of trust between devices using distributed ledger of each device using Blockchain technology and you have machines doing more mundane tasks for us every day. Today owners of homes with solar panels receive monthly statements showing how much money they made by selling energy back to the grid. The massive data collected by these devices allows for alerts and notifications, predictive analysis, business process automation, and disaster avoidance, in some cases.
This is just the beginning. Technology was supposed to improve and simplify our lives and Blockchain is already playing a very important role in doing that.
