For the past few years, Blockchain has remained one of the biggest technology buzzwords. This revolutionary technology is steadily gaining recognition these days and is not fading away any time soon. The nature of blockchain technology has got imaginations running wild to determine its potential uses, beyond the currency setting. Though Bitcoin and Ethereum were the first applications of this invincible technology, its true power is yet to be unleashed.
The blockchain is believed to be game-changing technology as already many of the major Fortune 500 companies have started harnessing its power. No wonder, many of the blockchain enthusiasts call it as ‘magic beans’ because of the potential it holds.
If we look at the web, only after years of its inception, we realized the true potential and applications of the web. Just like the web was not clearly understood during its early years, same goes for the blockchain. The blockchain’s clear areas of usage are yet to be defined to determine its trajectory. The technology undoubtedly holds the potential of replacing existing businesses, or modifying them, as well as ultimately creating new businesses that didn’t exist before. However, before discussing the real-world applications and use cases of the blockchain, let’s first understand this technology.
What is Blockchain?
The word blockchain itself defines the process, where new information that’s part of a “block” gets added to a “chain.” The blockchain is the digital, distributed, and decentralized ledger underlying most virtual currencies. Don & Alex Tapscott, authors of Blockchain Revolution (2016) defines it as, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
You can understand it by thinking of a giant Excel spreadsheet that’s shared across many different computers. Similar to the spreadsheet, a blockchain is a ledger that’s distributed across a network of computers, which records all changes for users to see. As such, the technology not only protects your business dealings and prevents theft, but, also, simplifies and quickens the process, while reducing errors.
Applications and Use Cases of Blockchain
This decentralized, digital ledger has numerous applications and can potentially transform banks and other financial institutions, hospitals, companies, and governments. Here are the top 5 uses of blockchain which make it a revolutionary technology.
- Payment processing and money transfers
One of the biggest uses of this technology is the ease of money transferring. Cross-border payments typically take days in processing and are also costly and prone to errors. As such, blockchain offers a means to expedite the transfer of funds from one party to another, 24 hours a day, seven days a week. The payment is processed quickly because there’s no third-party involved for payment settlement. Many remittance companies such as Abra and Bitspark are already using this technology for fast international payments.
- Smart Contracts
Soon this technology will make our life easier because both tangible and intangible properties will have smart, ledger-based blockchain technology embedded into them. A smart contract is “a computerized transaction protocol that executes the terms of a contract” which is visible to all users. As we know, the blockchain eliminates the need for third parties, as well as ensure that all ledger participants know the contract details. The smart contracts can be used for multiple situations, such as financial derivatives, insurance premiums, property law, and crowdfunding.
In real estate, it will remove the need for the title verification industry because the property ownership will be stored on an encrypted decentralized ledger to quickly verify ownership. Similarly, in the music industry, smart contracts will solve the problems of ownership rights and distribution of royalties. Furthermore, smart contracts can revolutionize the traditional lending system.
- Digital identity
The blockchain provides an opportunity to establish a strong system for digital identity. This technology makes it possible to safely manage your identity in the digital world without sharing much of your vulnerable personal information. Microsoft is already creating digital IDs within its Authenticator app in order to provide users with a way to control their digital identities. According to fin-tech experts, in future people will be able to use the one digital ID for signing up at any registrar.
- Digital voting
Blockchain can be very useful in preventing frauds in the voting process. With the help of blockchain technology, it is possible to vote digitally. The transparency of the network enables regulators to see if something was changed on the network. The ease of voting digitally along with the immutable nature of blockchain make it the best option for voting.
- Safe and secure data backup
Soon, blockchain is going to be used as the perfect way to back up data. This is because, with increasing instances of hacks, consumers no longer trust centralized storage provider to store their sensitive data. The cloud storage systems are no longer immune to hacks and even face infrastructure problems. Thus, with Blockchain-based distributed data storage, data storage can for the first time become truly decentralized.
These are the five most immediate and most impactful applications of the blockchain. However, the uses of blockchain are unlimited and many other unique applications are the most likely to happen in the near future.