Blockchain can be described as a distributed database that stores information across all nodes on the network. The database is distributed among all network nodes, ensuring that the data is accurate and securely stored.
Blockchains, as the name suggests, store data in blocks which are added to the network over time. The information in each block builds upon the information from previous blocks. This means that blockchains can be trusted to create a data timeline.
When it comes to cryptocurrencies, the blockchain ensures trust and solves what’s known as the Byzantine generals problem, which describes the difficulties dispersed parties have in reaching consensus. Since Bitcoin uses blockchain technology, one can accurately verify that funds aren’t spent twice, that its supply is limited, and the history of transactions on the network.
However, the technology is not limited to these specific use cases. Many companies and organizations have already adopted blockchain technology without cryptocurrency.
Blockchain technology is often associated with cryptocurrency, with the Bitcoin Network being the number one use case. A blockchain is, at its core, a distributed ledger shared between a network of nodes. Its use cases extend well beyond cryptocurrency.
Blockchain is not a cryptocurrency
Although cryptocurrencies dominate blockchain news, their popularity is growing. IBM and Abu Dhabi National Oil Company have partnered to pilot a blockchain supply chain for oil production.
Da Beers Group, which tracks high-valued diamonds in its supply chain using blockchain technology, and JPMorgan that uses the technology for loan collateral calculations are just two examples.
Speaking to Cointelegraph, Johnny Lyu, CEO of cryptocurrency exchange KuCoin, noted that the use of blockchain is “commonplace among government agencies and businesses,” and pointed to the Global Shipping Business Network (GSBN), a consortium that counts on the participation of major institutions including the Bank of China, DBS Bank and HSBC, as an example.
The GSBN has been testing its own blockchain platform integration to track and digitize container shipments. Lyu also noted the Indian state of Maharashtra has started issuing verifiable caste certificates on the Polygon network, while the Romanian Financial Supervisory Authority implemented blockchain technology to “speed up workflows and reduce the time for manual processing of large arrays of data.”
The examples keep on going, Lyu said, noting that it would “take a long time to list all of the latest blockchain initiatives launched in 2022,” adding:
“There is no doubt that we are seeing massive and widespread adoption of blockchain technologies and the number of companies doing it will grow by the day. Blockchain is becoming a necessity, just as websites and business accounts in social networks once became such.”
Ben Livshits, CEO of blockchain platform Zilliqa, told Cointelegraph about yet another use: The United Nations World Food Programme has deployed blockchain technology in its Building Blocks project, allowing organizations involved to “collaborate, transact, and securely share information in real-time on a neutral network without hierarchy.”
The program, Livshits noted, has “already processed over 15 million transactions and supported over 1 million people.” Several other companies, including Ford, FedEx, Walmart and Maersk, have either piloted or actively used blockchain technology.
There are many benefits to blockchain technology and it has attracted significant investment.
Blockchain technology has many advantages
Taking a food and beverage business as an example, Livshits noted that blockchains can provide “the required transparency that consumers today demand and expect” as the “average consumer today no longer just cares about what they eat and how it should be cooked,” but consider where ingredients are sourced and how they’re handled.
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Livshits added that the adoption of blockchain technology could become mainstream and “even help with quicker payments.” He said:
“The benefits are clear: Reduced human error, better access to information, increased safety, traceability and transparency that can ultimately help adequately reward all those through the supply chain.”
Blockchain technology, like other technology before it, should “be about creating value and utility for users,” Livshits stated.
Sankar Krishnan, executive vice-president and industry head of banking and capital markets at Capgemini Financial Services, told Cointelegraph that blockchain technology is “very ESG friendly,” referring to environmental, social and governance standards to which investors have increasingly been paying attention.
Krishnan added that most don’t realize “how many parties there are in a supply chain transaction.” The large amount of parties involved means a lot of data needs to be tracked, including data related to importers, exporters, the transaction itself, the product, shippers, marketplaces, logistics companies, insurance firms and other intermediaries.
Krishnan stated that each of these parties prints out or exchanges information via email multiple time, thereby consuming resources. Krishnan explained that this waste would disappear if transactions were done on a Blockchain.
Krishnan said that blockchains provide more transparency and better traceability for raw materials. They also make data available to all involved parties simultaneously, significantly reducing fraud risks. He also said:
“What actually happens is that all the manual workflows are replaced by smart contracts and there is agreement between all the parties involved on how these workflows move around the blockchain.”
Per the analyst: “Industry is set to benefit from using blockchain and smart contracts,” with very specific use cases having developed for financial services, healthcare and retail. Krishnan also mentioned loyalty program management and royalties payments as well as applications for the public sector.
Despite all of these use cases and possibilities, there’s a reason not every company in the world is diving into the blockchain world and the technology isn’t being adopted en masse.
The blockchain’s problems
Although blockchain technology has seen a steady increase in popularity over the past few years, not all companies are ready to adopt it despite its many benefits. The issue with this technology is the investment required to make it work.
That’s according to Arry Yu, Cascadia Blockchain Council chair at the Washington Technology Industry Association. Speaking to Cointelegraph, Yu said that implementing enterprise-level software technology requires a “significant investment,” and added that changing management may also be necessary as some stakeholders may not want the provided transparency.
Yu added that training stakeholders on new processes and building out the right types of reports that give each stakeholder meaningful key performance indicators also add to the costs, as does the “enormous amount” of upfront investment “related to process redesign, documentation, training, support and more.
Kieren James-Lubin, president and CEO of blockchain solutions provider BlockApps, told Cointelegraph that while this type of technology “ensures data is not altered or deleted,” it does not ensure accuracy, as “this is reliant on whoever is inputting the information — manual data entry can be prone to error.”
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A solution to these errors, the CEO added, would be the use of accurate Internet of Things sensors to “pull data directly.”
Blockchain’s use cases are regularly growing, and implementors are still finding out exactly what can be done with this type of technology and how far it can go. At the time Bitcoin (BTC), smart contract-based apps like those seen today on Ethereum were rare.
The technology can nevertheless help revolutionize several industries, even though it’s little over a decade old. It remains to be seen whether, to the wider world, Satoshi Nakamoto’s best invention was Bitcoin or its underlying blockchain.