Six Ways To Use Blockchain

Marc Emmer is president of Optimize Inc. and an author, speaker and consultant specializing in strategy and strategic planning.

In light of the FTX crash and the giant sucking sound that followed, some investors and business leaders wonder if crypto and blockchain are truly disruptive technologies or some trumped-up Ponzi scheme.

When markets get out of balance, they reset. So, it appears that both extremes may be true when it comes to blockchain. While I and many others see blockchain as the future of transactional ledgers, it is also a space where legitimate traders currently coexist with con artists. A crypto correction may be exactly what the market needs.

But even with setbacks, it appears that blockchain is gaining adoption quickly. Blockchain’s practical applications and implications span far beyond just crypto trading. It is a decentralized ledger where all records are permanent and can be accessed by users across multiple computers. IBM specified four characteristics of blockchain—including consensus, security, immutability and validation of data—making it a unique solution for managing business ledgers and transactions.

From financial services to supply chain management, blockchain is revolutionizing many industries with its trustless system of record keeping. Here are some helpful approaches firms can take advantage of when using blockchain as a business ledger.

1. Digital Identity Management

Accenture identified five core areas where blockchain-based digital identity management can make an impact.

• Quick and secure verification for international travelers.

• Healthcare record storage.

• Insurance and maintenance of pinpoint records for proof of ownership.

• Background and training verification.

• Know your customer (KYC) verification for sensitive data and financial institutions.

Today, verifying someone’s identity and professional history generally requires third-party validation, which can be time-consuming and expensive. Blockchain identity verification, on the other hand, will ideally work through an enrollment station for recording and storing biometrics information in a blockchain-based identifier. Users can visit the enrollment station and get their blockchain identity as a QR code. They may also obtain their public and private key for secure data sharing.

This individual blockchain identity will continue accumulating new information as the user goes through various stages of their lives; for instance, it will reflect new associations with institutions like universities or employers.

With this form of identity management, whenever your business interacts with the user, you can easily access up-to-date, credible information and improve your process efficiency.

2. Smart Contracts And Business Automation

According to The International Association for Contract & Commercial Management (IACCM), businesses typically spend upwards of $6,900 (paywall) to draft and finalize legal contracts. The costs include consultation and documentation fees for complying with local legal authorities. A substantial portion of the spending goes to prevent fraudulent activities and ensure efficient contract management.

As blockchain ledgers allow automated transaction validation and processing, businesses can cut contract management costs by implementing smart contracts.

Smart contracts are computer programs that run autonomously on the blockchain network, meaning you can execute them without third-party interference. Implementing smart contracts means a business will no longer need to employ a mediator for contract validation, ensuring that every transaction is secure.

According to Future Market Insights, smart contracts management was a $183.1 million industry in 2022, representing 10.2% of the entire blockchain industry, so there is certainly room for growth.

3. Supply Chain Management

Blockchain technology can also be used to monitor and track the movement of goods throughout a supply chain. This way, companies can track the overall 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 implements blockchain ledger management, individual blocks will add to a product’s blockchain identity as it goes through various stages, ensuring all concerned parties can trace it accurately at any time—such as is often used to ensure food safety.

4. Financial Service Applications

Businesses can also benefit from blockchain’s improved transaction security and individual trusted identity management in the following areas.

• Sales, trading and custody management in the capital markets.

• Asset management fund administration.

• Letters of credit issuance and financial trading.

• Insurance management.

• Cross-border payment settlement.

In all 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 enables them to access each other’s databases without manual intervention from the respective organizations.

For instance, Microsoft developed the Coco Framework, which allows users to build private networks on top of Ethereum or Quorum. As an increasing number of businesses are moving to subscription-based cloud software and hosting; such blockchain frameworks can help businesses customize various levels of privacy while storing essential 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 do not define the entire blockchain industry. It has the potential to be far more than that, and many companies are already using it to revolutionize their business. As can be seen, the practical applications of blockchain technology for businesses include streamlining processes, building trust with customers, improving data security and so much more.

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