Blockchain technology promises to revolutionize many aspects of how we do business and, if you believe the blockchain hype (of which there is plenty), may even be as disruptive as the internet was before it.
Despite this, practical, real-world examples of blockchain technology can be a little thin on the ground – and that makes it harder for businesses to envision how they might implement the technology in the future. In this article, I look at three industries that are realizing tangible benefits from blockchains, potentially leading the way for other industries to follow.
A (Very) Brief Overview Of Blockchains
Blockchain technology promises a practical solution to the challenges of storing, managing, and protecting data. It provides a useful and highly secure way of authenticating information, identities, transactions, and more – creating a super-secure record that can be updated in real-time.
A blockchain, therefore, is basically a way of storing data. To put it in more technical terms, it’s a form of open, distributed ledger (like a database), where the data is distributed (duplicated) across many computers. The ledger may be decentralized (i.e., with no one central administrator), and information may be authenticated via a peer-to-peer system.
Cryptocurrencies like Bitcoin are perhaps the best-known examples of blockchain technology in action. But pretty much anything can be stored on a blockchain, from financial transactions and contracts to supply chain information and medical data. In theory, any process of recording, overseeing, and verifying information could be enhanced by blockchain technology.
Blockchain In Action
It may seem like there’s been a lot of hype about blockchain for several years without the technology really getting off the ground. But that’s a little unfair. It’s important to remember this technology is still in its infancy – like the early days of the internet – and we don’t yet know the true scale of transformation that blockchain may bring.
These industries, however, are investing heavily in blockchain technology and showing how blockchain could be put to very practical use across a wide range of sectors. Let’s take a look.
Blockchain And Insurance
We already know from Bitcoin that blockchain is great at facilitating transactions, but it can also be used to formalize commercial relationships through smart contracts. This promises to revolutionize the insurance industry by helping to automate processes, facilitate smooth claims, and cut insurance fraud.
For example, Insurwave is a blockchain-based marine hull insurance platform. The result of a collaboration between companies like A.P. Moller-Maersk Group, ACORD, and Microsoft, the platform was projected to facilitate 500,000 automated transactions and handle risk for more than 1,000 commercial vessels in its first 12 months. Insurwave provides vital real-time information to insurers and insurees, including ship location, condition, and safety hazards. So if a ship enters a high-risk area, the system detects this and factors it into insurance calculations.
In another example, Nationwide insurance company is trialing a proof-of-insurance blockchain solution called RiskBlock that would allow law enforcement and other insurers to verify insurance coverage in real-time.
Blockchain And Banking
With blockchain’s reputation for making secure transactions easy, it makes sense that the banking industry is exploring many blockchain uses. In particular, blockchain is being rolled out as a way to validate identities and detect fraud, in line with Know Your Customer (KYC) rules.
Blockchain-based startup Bluzelle worked with KMPG and a consortium of banks in Singapore, including HSBC, to develop a KYC platform. The project showed that not only could blockchain cut the risk of ID fraud, it could also cut costs by 25 to 50 percent, by reducing duplication and providing a clear audit trail.
Elsewhere, Barclays has launched a number of blockchain initiatives for tracking financial transactions, compliance, and fraud. The company is so convinced of the merits of blockchain; it’s described the technology as a “new operating system for the planet.”
Blockchain And Travel
The travel industry might seem a surprising companion to insurance and banking. But, if you think about it, blockchain’s way of facilitating peer-to-peer transactions could prove a major disruptor for the travel industry. The popularity of Airbnb shows how consumers are more than happy to cut out the middleman and go straight to hosts for accommodation. With blockchain, you don’t even need an intermediary platform like Airbnb to facilitate the transaction – the blockchain would handle it all. So, if I were in the travel business, I’d be watching blockchain very closely.
Perhaps that’s why hotel aggregator GOeureka is using blockchain to increase transparency and cut costs – by giving users access to 400,000 hotel rooms with no middleman commission costs. TUI Group is also investing in blockchain technology, with an eye on eventually eliminating the need for intermediaries like Expedia.
Elsewhere, blockchain is being used to reduce some of the common bugbears around traveling, like waiting in line at passport control and customs. Consulting firm Accenture has collaborated with the World Economic Forum to develop the Known Traveler Digital Identity System. The blockchain-based system collects and stores identifying information from frequent travelers, which helps improve the flow of data between travelers and customs officials, while reducing lines at the airport.
Although it may take years for blockchains to become commonplace, these examples show how blockchain can be used to automate business processes, provide better value for customers, improve data security, and more. Watch this space as other industries follow suit.