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The core elements of blockchain technology include transparency, immutablility, automation, and decentralization – elements that can be applied to a variety of industries.
From supply chains, to financial services, to pharmaceutical, to food and beverage, and more – it’s infiltrating many businesses day by day.
“Blockchain is the most effective form of copy protection and digital certification the world has ever seen, and the technology is quietly helping companies increase efficiency, transparency, and optimize costs,” says Mrinal Manohar, CEO of Casper Labs, developer of Casper, a blockchain that’s built specifically for business adoption.
In fact, Manohar says that blockchain is being so widely adopted across industries that it’s quickly becoming a “boring” technology, which he adds is a “good thing.”
Let’s take a look at five top use cases for blockchain technology:
Supply Chain Management
By far the most widely adopted use case for blockchain in the enterprise is supply chain management, says Paul Brody, EY global blockchain leader and author of “Ethereum for Business.”
“The experience of COVID-19 showed many companies that they did not understand their supply chains or have nearly as much visibility as they thought they did,” he says.
“Trying to better understand where things are coming from and their history, origin, and location has become much more important.”
Although blockchains are ideal for supply chain management for many reasons, two stand out.
For one thing, blockchains transcend the typical boundaries between companies — rather than re-entering data as things move along, companies can just move a token representing an asset from one company to another, Brody says.
“Blockchains enforce rules about creation and movement of tokens, so if company A supplies something to company B, the token representing that item must be deducted from company A’s inventory before it can be transferred to company B,” he explains.
“These two features alone vastly improve the accuracy and reliability of data in the supply chain by preventing double counting or data entry errors.”
Pharmaceuticals
Blockchain technology has significantly impacted the pharmaceutical industry by making it easier to keep track of drugs throughout their production and distribution, says Saad Alam, co-founder, owner, and CEO Hone Health, a men’s health platform.
“Stakeholders in the industry are generally very secretive about their data, but blockchain helps to address the use of counterfeit medicines and drugs that can kill many people every year,” he says.
“The digitalization of transactions has made blockchain technology an effective resource for securing the pharma transaction ecosystem.”
For instance, because data is constantly logged in, a pharmaceutical manufacturer can prove that a particular shipment was maintained under the mandatory conditions, e.g., proper temperature range, for the entire journey, Manohar explains.
“This also facilitates a more transparent view of the location of items in transit and the authenticity and origin of said products,” he adds.
Financial Services
Modern financial institutions are adopting blockchain technology so they can reduce their dependency on costly intermediaries, while also enhancing the customer experience, improving transparency, and creating greater efficiencies in their middle- and back-office processes, says Anthony Moro, acting CEO, Provenance Blockchain Foundation, which supports the development and growth of the public, open-source Provenance Blockchain.
“Blockchain replaces intermediated trust, which is how financial services works today. And that intermediation is expensive and time consuming,” Moro says.
“Blockchain enables each participant to be completely agnostic as to who their counterparty is on the other side of the transaction, eliminating counterparty and settlement risk.”
Casper Labs’ Manohar says that across the financial services industry, tokenization helps businesses safely store customer information, with blockchain’s distributed nature providing better security.
“Tokenizing assets also helps companies build greater liquidity because when assets are stored on blockchain, companies can easily trade their value on an open market,” he adds.
Additionally, blockchain technology and tokenization can bring much-needed standardization to financial contracts, according to Manohar.
“By tokenizing financial contracts into a single framework, these contracts can be transformed into digital assets that are machine-readable and deliver faster trading and settlement times, reducing confusion and promoting efficiency and cost savings,” he says.
Sharad Varshney, CEO of OvalEdge, a data governance consultancy, says that blockchain opens up so many opportunities in the finance sector.
“For example, by lowering the transaction costs and quickly establishing trust through the use of blockchain, smaller deal sizes, such as international microlending, can occur economically and without the involvement and costs associated with traditional financial institutions,” he says. “Nearly all other deal types could also benefit from the enhancements made possible by blockchain.”
Food and Beverage
Due to its decentralized tracking abilities, blockchain technology is crucial to securing the future of the food and beverage industry, says Barak Bar-Cohen, founder and CEO at Sojo Industries, an industrial automation company.
Using QR-based “digital pings” generated by scanners, mobile phones, or other applications, digital records are created for food and beverage products that provide certain information, such as codes, lot numbers, or the locations of pallets and cases, he says.
“The blockchain-based system of digital records provides a ‘single source of truth’ for all participants of the food and beverage supply chain,” says Bar-Cohen. “And it ensures that the data related to a compromised food or ingredient label is accurately mapped across the supply chain and that this data has not been tampered with or altered without record.”
Then when a compromise or recall happens, a company can pull the data from the database and trust that the data is accurate without further validation, which speeds the process of identifying and tracking the compromised ingredient, he says.
“The use of secure blockchain technology creates trust across [food and beverage] supply chain participants by providing accurate, real-time data and immediate responses to food safety alerts or uncompromised information,” Bar-Cohen adds.
Telecommunications
In recent years, the telecom industry has found blockchain technology to be a useful solution for managing mobile roaming traffic, says Andrew Davies, CEO of Syniverse, a telecommunications company. Roaming happens whenever a customer’s phone disconnects from their carrier’s network and connects to another available network.
As the travel industry continues to return to normal after the COVID-19 pandemic, roaming services have become more critical than ever to keep travelers connected.
“However, when it came time for different operators to settle roaming billing and charges amongst themselves, the process was anything but ideal,” Davies says. “The technology they were using to resolve these disputes had long since become outdated, creating inefficiencies in the settlement process and driving up costs.”
In response, the industry started to move toward a blockchain-enabled solution.
“This allows telecom companies to help operators with managing mobile roaming traffic and reaching settlements by using blockchains as a kind of ‘hub,’ where customers can contract with them and all other carriers prior to instances of roaming,” Davies says.
Now, a large number of operators have blockchain-enabled capabilities that let them securely clear and settle mobile networking traffic via a digital ledger in which transactions cannot be altered, according to Davies.
“In addition, blockchains enable them to cut down on the time spent reviewing these transactions compared to manual processes for revenue assurance, creating faster and more efficient monetization,” he says.
The Bottom Line
The essence of all these use cases is that blockchain is a secure database that integrates with other technologies to do things more efficiently and with fewer errors than in the past, but it can’t do that in a vacuum, says Andrew Lom, partner in Norton Rose Fulbright’s FinTech practice group and global head of the law firm’s private wealth practice.
“We’re seeing clients working on a number of varied use cases that rely on blockchain to support a recordkeeping function, and many of these use cases are made possible also because of the confluence of other technologies like smart contracts, IoT, big data, cloud computing, and AI,” he says.
However, there are still challenges to blockchain adoption.
For one thing, blockchain solutions face the challenge of the “blockchain trilemma” – scalability, decentralization, and security, says Lata Varghese, managing director in Protiviti’s technology consulting practice and Protiviti’s digital assets and blockchain practice leader.
“A potential solution lies in hybrid blockchains, combining private blockchain privacy with public blockchain security to pave the way for greater innovation,” she says.
Another major challenge to blockchain adoption is that regulations for many uses of the technology remain unclear. While virtually every federal regulatory agency has voiced its opinion regarding blockchain, none is taking the lead, says Braden Perry a litigation, regulatory, and government investigations attorney with Kennyhertz Perry LLC.
And until the regulatory landscape is settled, many organizations will be cautious about using the technology to innovate their business processes, he says.
