On Blockchain’s Transformative Power in Seven Industrial Sectors
More than ten years following the release of the Bitcoin paper by the mysterious Satoshi Nakamoto, the world’s interest on cryptocurrencies is booming. 2021 has been the year where the market capitalization of cryptocurrencies exceeded 1 trillion dollars. Furthermore, prominent stakeholders all around the world, from Tesla and Goldman Sachs to several governments, are showing tangible interest in the present and future of crypto. Nevertheless, beyond the growing interest on cryptocurrencies, there is also significant traction around blockchain technologies i.e., the underlying technology enabler of cryptocurrencies.
Blockchain technology is a distributed ledger infrastructure, which provides the means for conducting transactions in a secure and completely decentralized way. In essence, blockchain technologies enable transactions without a trusted third party, such as financial transactions without a bank in the case of Bitcoin. The security, validity, and trust of blockchain transactions is enforced by means of mathematics and algorithms, which are almost impossible to be hacked. As such blockchain technology provides a very compelling value proposition in cases where business actors need to perform transactions without a trusted intermediary. Likewise, blockchains come with some additional value propositions, such as:
These properties lead application builders in different industries to consider blockchain-based approaches to conducting and validating transactions. This is also the reason why many enterprises in different sectors implement blockchain-based business cases, while many start-ups are providing decentralized solutions to challenging problems. In this context, blockchain holds the promise to transform tens of different sectors, yet it is expected to have a major impact on a smaller set of industries.
Cryptocurrencies are already disrupting the digital finance landscape. Nevertheless, blockchain’s impact on the sector is not limited to digital currencies. Distributed ledger infrastructures provide the means for accelerated financial transactions like payments, investments, and transfer of assets without intermediaries like banks, financial institutions, and regulators. This gives rise to a new wave of decentralized finance services that are commonly known as DeFi. Furthermore, blockchain infrastructures provide the means for encoding programmable and trusted rules within financial transactions, which enables programmable finance. The latter leverages blockchain-based smart contracts that automatically initiate and fulfill the obligations of participants (e.g., payment of sales or commission fees, logging of regulatory compliance information, issue of earning certificates). Programmable finance is therefore set to enhance the transparency, automation, and efficiency of financial transactions.
In recent years manufacturing enterprises are accelerating their digital transformation and their transition to Industry 4.0. To this end, they collect and process digital data to drive optimizations in production processes like maintenance, quality management, logistics, and process control. Moreover, they increasingly deploy Artificial Intelligence (AI) techniques. However, AI efficiency and trust hinges on the availability of reliable and high quality data, which is not always the case in industrial environments. For example, industrial data are commonly skewed due to environmental conditions (e.g., humidity), radio interference, equipment malfunctions, as well as security attacks. Blockchain infrastructures hold the promise to increase the reliability and resilience of industrial data, through providing credible provenance in the context of a tampered proof infrastructure. By writing the properties of industrial data in a blockchain, manufacturers and providers of industrial automation solutions can flexibly detect attempts for changing or tampering datasets. Furthermore, blockchain infrastructures enable decentralized coordination of production systems towards increasing the flexibility of manufacturing workflows.
The efficiency of modern supply chains is directly associated with the ability of supply chain participants to share timely and accurate information about their business processes. However, supply chain participants do not always trust each other, which limits the quality and the amount of information they exchange. Likewise, they are not willing to rely on a trusted third party to manage the sharing of their information. Blockchain technology provides a remedy to this issue, by providing decentralized trust and enabling supply chain participants to retain full control over their data. Moreover, distributed ledger technologies are ideal for tracking, tracing, and auditing supply chain data, which is important for the implementation and optimization of many supply chain management processes.
Several insurance processes involve the exchange and validation of information across different parties. For instance, whenever a car accident occurs, there is a need for collecting and validating information from the involved parties and their insurance companies. Blockchain technologies boost the decentralized validation of the shared information while accelerating its processing. Similarly, they can boost the collection, validation, and auditing of information about underwriting processes, as well as about pensions calculation. As such they support novel insurance processes and introduce disruption in the sector. This is the reason why they have attracted the attention of insurance organizations. Last month, the European Insurance and Occupational Pensions Authority issued a discussion paper on smart contracts and blockchain, which is open for public consultation.
The digital transformation of the energy sector is gradually leading to the implementation of blockchain use cases in areas like Peer-to-Peer (P2P) energy trading, renewable energy certificates, and automatic settlement of trades. These use cases involve interactions across multiple organizations. For instance, in P2P trading, consumers become prosumers through buying and selling excess energy. Blockchain technology enables the implementation of these use cases without reliance on third parties, which provides flexibility, automation, and efficiency.
During the past year, a novel blockchain application has emerged, namely the trusted trading of assets in the form of NFT (Non-Fungible Tokens). NFTs enable the formation of marketplaces with unique assets like masterpieces of art and other collectibles. Moreover, they provide opportunities for creating and trading a whole range of new digital assets such as digital paintings and copyrighted content. While there is certainly hype around NFTs, their potential to transform art and collectibles seems currently very strong.
Nowadays, the trusted sharing of clinical data and real-world data (e.g., patients’ lifestyle and other behavioral data) across healthcare stakeholders provides the means for developing and deploying novel applications in areas like disease diagnosis, prognosis, and treatment. Blockchain infrastructures facilitate the sharing of such data without a need to centralize their collection, management, and processing. Hence, they unblock the innovation potential of trusted and decentralized data sharing for healthcare applications.
The above list of sectors is far from being exhaustive, yet it is representative of the transformative power of blockchain technologies. Enterprises must therefore keep an eye on the applications of blockchain technologies beyond cryptocurrencies and look at the ways blockchains could benefit their activities.
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