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How Blockchain Technology Can Benefit Many Industries Beyond Finance

Last Updated March 4, 2021 4:47 PM
Lester Coleman
Last Updated March 4, 2021 4:47 PM

Blockchain technology is largely associated with the financial sector, but distributed ledger applications have much to offer other industries as well.

Deloitte University Press recently released a report  titled, “Beyond bitcoin, blockchain is coming to disrupt your industry,” examining blockchain’s application in different industries. Industries besides the financial sector include: media, consumer products, industrial products, automobiles, travel, hospitality, retail, life sciences, healthcare, government, and energy.

The report, authored by David Schatsky and Craig Muraskin, reviews the history and workings of blockchain technology. It noted that $1 billion venture capital has been invested in more than 120 block-chain related startups, half of which has occurred in a recent 12-month period.

Financial Sector Leads

Most investment has focused on the financial sector, the reported noted; 30 of the world’s biggest banks have joined a consortium to build blockchain solutions, and Nasdaq is working on a blockchain-powered private market exchange.

But beyond the financial sector, the report noted blockchain investments are emerging in every major industry, and Microsoft has deployed a cloud-based blockchain-as-a-service.

Businesses that deal with slow, costly, or unreliable transactions, or that serve markets with underdeveloped payments systems or a lot of unbanked customers, have good reason to consider distributed ledger technology. Blockchain benefits are reliability, availability, transparency, immutability and irrevocability.

Focusing first on the financial sector, the report referenced another report by Santander InnoVentures, a division of Banco Santander, which noted that distributed ledgers eliminate the need for central authorities to certify ownership and clear transactions. The Santander report identified 20 to 25 blockchain use cases, including securities trading.

Media And Telecom Uses

Beyond the financial sector, the media and telecommunication industries offer use cases. Media sector applications include supporting low-cost micro-transactions that can be processed without the fees that existing payment networks require. A newspaper website, for example, can charge readers per page or per article rather than per month.

The blockchain can secure intellectual property and creative digital products like music and images. A blockchain ledger can be a reliable and secure way to prove a work’s provenance and attribution. The digital block’s programmability makes it possible to enforce usage rights.

IBM and Samsung have offered a proof-of-concept built partly using Ethereum, a blockchain-base framework, to demonstrate how blockchain can support Internet of Things (IoT) applications by supporting transaction processing devices. The distributed nature of the ledger can foster coordination among multiple devices.

In addition, the cryptographic security that blockchains rely on can reduce the security challenges that IoT deployments face.
Verizon Ventures, a division of Verizon Communications, has invested in a startup that has raised $5 million is exploring blockchain-enabled IoT applications. Orange, a telecom, has also invested in a blockchain startup.

Alternative retail payment platforms is the most obvious application in the consumer and industrial products arenas.

Other applications are more futuristic. DocuSign, which provides digital transaction management and electronic signature technology, developed an app for Visa’s “connected car” proof of concept. The app integrates with the bitcoin blockchain and records contracts. The application is designed to simplify auto purchasing and leasing.

Travel And Hospitality Uses

For travel and hospitality, a shared distributed ledger can simplify the settlement process. Blockchain technology can support loyalty points programs that include a more advantageous accounting of liabilities created by the accrual of points, real-time updating of points balances, and improved points management across franchised operations.

In healthcare and life sciences, blockchain technology can secure digital assets. Factom, a blockchain-based record-keeping service, has partnered with medical procedure billing and ordering services. The partnerships will use blockchain to store health care records. The cryptographic security can enhance records security while the irrevocable and immutable nature of transactions can make claims processing more efficient.

Blockchain-secured health records could make it easier for patients to share records with numerous providers while keeping control of the records. Philips Healthcare is exploring applications for blockchain technology, but it has not disclosed the applications it is evaluating.

Public Sector Uses

The blockchain can improve record keeping in the public sector. Factom has reportedly partnered with the Honduras government on a blockchain program to record land ownership. The program’s goal is to reduce fraud and corruption associated with a government-controlled centralized registry by substituting that system with a transparent, distributed ledger.

Other public sector uses include vehicle registries, digital identities for individuals, voting records and benefits disbursements.

In the energy sector, a South African company integrated bitcoin payments into smart utility meter reading to enable customers to prepay utility bills digitally. This system is especially helpful for unbanked customers, and it is easier to administer.

Horizontal blockchain applications apply to numerous industries. Such applications include automated audits, smart contracts and enhanced cyber security.

Smart contracts – agreements that can automatically activate actions based on specific conditions – could reduce administrative costs by “self-enforcing,” such as requiring a driver to be current on lease payments in order to start a leased car.

Blockchain technology can change the role of corporate audits by allowing a third party to verify a distributed network to ensure the transactions are accurate, complete and unalterable.

Cryptographic signing using blockchain can enable immediate detection of data manipulation and verifying IT system integrity, giving blockchain a role in cyber security. Guardtime, a company based in Estonia, has explored such a solution.

Also read: HYPR Corp./BitGo partnership marries block chain with biometric security 

Top Three Blockchain Ecosystem Segments

The report divides the blockchain vendor ecosystem into three categories.

  1. Applications and solutions providers include bitcoin wallet operators and payment providers.
  2. Middleware and services include software platforms that allow enterprises to build blockchain applications. Such companies include Factom, BlockCypher, Colu and Chain Inc.
  3. Infrastructure and protocols players seek to use blockchain technology to create cryptographically-secure, distributed consensus mechanisms. Examples include Ethereum, an open source, crowdfunded project that has become a bitcoin blockchain alternative. Ripple has also developed its own distributed ledger technology. The infrastructure and protocols segment has secured just under $300 million in venture funding, two-thirds of which occurred in 2015.

Investment is shifting toward the middleware and infrastructure providers versus bitcoin, the report noted.

It may be a year or more before significant commercial applications of the technology emerge, but it is increasingly likely that over time many industries will experience its impact.

Featured image from Shutterstock.