Marc Emmer is president of Optimize Inc. and an author, speaker and consultant specializing in strategy and strategic planning.
The light at the FTX crash and the giant sucking sound that followed has some investors and business leaders wondering if crypto and blockchain are really disruptive technologies or a made-up Ponzi scheme.
When the markets go out of balance, they reset. So, it seems that both extremes can be true when it comes to blockchain. While I and many others see blockchain as the future of transaction ledgers, it is also a space where legitimate merchants currently co-exist with scammers. A crypto correction may be just what the market needs.
But even with setbacks, it seems blockchain is rapidly gaining popularity. The practical applications and implications of blockchain go far beyond simple crypto trading. It is a decentralized registry where all records are permanent and accessible to users on multiple computers. IBM specified four characteristics blockchain, including consensus, security, immutability, and data validation, making it a one-stop solution for managing ledgers and business transactions.
From financial services to supply chain management, blockchain is revolutionizing many industries with its trustless record-keeping system. Here are some useful approaches businesses can take advantage of when using blockchain as a business registry.
1. Digital Identity Management
Accenture identified five key areas where blockchain-based digital identity management can make an impact.
• Fast and secure verification for international travelers.
• Storage of medical records.
• Insurance and maintenance of accurate records for proof of ownership.
• Background and training checks.
• Know Your Customer (KYC) verification for sensitive data and financial institutions.
Today, verifying a person’s identity and employment history typically requires third-party validation, which can be time-consuming and costly. blockchain identity verification, on the other hand, will ideally work through an enrollment station to enroll and store biometric information in a blockchain-based ID. Users can visit the enrollment station and get their blockchain identity in the form of a QR code. They can also obtain their public and private key for secure data sharing.
This individual blockchain identity will continue to accumulate new information as the user goes through different stages of their life; for example, it will reflect new associations with institutions such as universities or employers.
With this form of identity management, whenever your business interacts with the user, you can easily access up-to-date and credible information and improve the efficiency of your processes.
2. Smart contracts and business automation
According to the International Association for Contract and Commercial Management (IACCM), companies typically spend more than $6,900 (paywall) to draft and finalize legal contracts. Costs include consultation and documentation fees to comply with local legal authorities. A substantial part of the expenditure is used to prevent fraudulent activities and ensure effective contract management.
As blockchain ledgers enable automated validation and processing of transactions, businesses can reduce contract management costs by implementing smart contracts.
Smart contracts are computer programs that run autonomously on the blockchain network, which means you can run them without interference from third parties. The implementation of smart contracts means that a company will no longer need to employ a mediator for contract validation, thereby ensuring that every transaction is secure.
According to Future Market Outlookmanaging smart contracts was a $183.1 million industry in 2022, accounting for 10.2% of the entire blockchain industry, so there’s definitely room for growth.
3. Supply chain management
Blockchain technology can also be used to monitor and track the movement of goods through a supply chain. This way, companies can track the entire journey from manufacturing, shipping, receiving, and delivering products more accurately than with traditional methods.
The harvard business review identified how blockchain ledgers could revolutionize supply chain management and help with things like accuracy.
Once your business has implemented blockchain ledger management, individual blocks will add to a product’s blockchain identity as it goes through various stages, ensuring that all parties involved can trace it accurately at any time, as is often used to ensure food safety.
4. Requests for financial services
Businesses can also benefit from the enhanced transaction security of blockchain and the management of individual trusted identities in the following areas.
• Management of sales, trading and custody in the capital markets.
• Administration of asset management funds.
• Issuance of letters of credit and financial transactions.
• Insurance management.
• Settlement of cross-border payments.
In all of these processes, blockchain has the potential to help reduce transaction costs and provide better security.
5. Data exchange and interoperability
With the help of distributed ledger technology, companies can easily share information with other parties in a secure way. It allows them to access each other’s databases without manual intervention from the respective organizations.
For example, Microsoft has developed the Coco frame, which allows users to create private networks on top of Ethereum or Quorum. As a growing number of businesses turn to software and subscription-based cloud hosting; these blockchain frameworks can help businesses customize different levels of privacy while storing critical data securely on the blockchain network.
6. Audit and compliance
Many companies use blockchain to ensure transparency and compliance in their operations, as it allows them to keep a permanent record of all transactions through a secure and immutable system.
Crypto trading and speculation does not define the entire blockchain industry. It has the potential to be much more than that, and many companies are already using it to revolutionize their business. As can be seen, practical applications of blockchain technology for businesses include streamlining processes, building trust with customers, improving data security and much more.