Prepare for blockchain technology to play a significant role in business, society, and almost everything. While 45% of CIOs said their organizations had yet to invest in blockchain between 2016 to 2021, that will change as information exchange becomes decentralized and demonstrated use cases show blockchain’s success.
Blockchain spans various industries, from real estate, insurance, health care, and education to data management. Even localities like Utah and South Korea plan on exploring blockchain technology for voting. Known for its cybersecurity benefits and cryptocurrency, blockchain promises operational efficiency and time-saving.
Anyone who has moved across the country (or to another country) understands inefficiency and slowness. For example, moving from the east to the west coast of the United States requires setting up a forwarding address, opening bank accounts, setting up electricity, finding a new doctor, acquiring a driver’s license from your new state, and much more.
These tasks mean filling out an endless string of forms to verify your identity and set up services needed after the move. What if all this repetitive data entry and verification could be cut to a bare minimum because blockchain technology could authenticate an identity quickly?
For this kind of scenario to become a reality, businesses need to find the right tactics in using blockchain, according to Ravi Sarathy, a Northeastern University professor. He targets 2030 as the year companies will see large enterprise blockchain applications as commonplace.
What Is Blockchain Technology?
A blockchain (or distributed ledger) underlies a mechanism for adding trust in an untrusted environment. This increased trust comes from blockchain’s unique cryptography and distributed ledger capabilities.
“At a high level, blockchain technology allows a network of computers to agree at regular intervals on the true state of a distributed ledger,” said MIT Sloan assistant professor Christian Catalini. This standardization allows participants to share control over what information they see and the actions they can take.
Consequently, some call blockchain a “trustless ecosystem” because most members will reject the blockchain if something or someone corrupts the ledger. This functionality underlies blockchain’s attraction as a Web3 structure, allowing people to bypass a centralized authority to do business.
In sum, characteristics of blockchain technologies include the following:
- Shared consensus: Using blockchain to increase trust and transparency is the heart of this technology. Any record of a transaction is agreed upon through a shared consensus. Both parties can access any record because it is distributed across the interested businesses, and nobody has singular control.
- Reduced need for a third party or a central authority: In a business transaction context, a blockchain could be used to build a reputation score for a party, which could then be verified as trustworthy or solvent without opening its books for a full audit. As a result, blockchain can enable people to create, transfer, and store value directly in a decentralized environment.
- Security when used along with a Data Governance strategy: Blockchain implements data platforms that ensure privacy, security, availability, and other essential business requirements. As an added benefit, blockchain technology discloses only relevant information, reducing the likelihood of a data breach. Although blockchain is not a silver bullet, it frequently delivers data-governed solutions in product offerings.
- A permanent data lineage: Blockchain’s transaction records are distributed and simultaneously updated for the supplier and the customer. Shared ledgers update only after all relevant participants validate the transactions.
How Does Blockchain Technology Work?
According to DAMA International DMBoK 2, “Blockchain databases have two types of structures: individual records and blocks. […] Each transaction has a record.” Since blockchain is a distributed database, storage devices for the database are not all connected to a common processor.
The growing list of ordered records, also known as “blocks,” has a timestamp and a link to a previous block. Cryptography ensures that users can only edit the parts of the blockchain they “own” by possessing the private keys necessary to write to the file. It also ensures everyone’s copy of the distributed blockchain is kept in sync. Only by giving a private key you own to someone else can you effectively transfer the Data stored in that blockchain section.
Each transaction in the chain contains metadata about when and how the transaction was made. Also, the DMBoK 2 states that hash algorithms are used to create “this kind of metadata […] to store in blocks while the block is the end of a chain.” The passage goes on:
“Once a new block is created, the old block hash should never change, which means that no transactions contained within the block may change. Any change to transaction or blocks (tampering) will be apparent when the hash values no longer match.”
Actual Database Use Cases
If blockchain use cases are snowflakes, businesses should prepare for a blizzard. Almost everything could be considered a possible use case for blockchain.
An article in Insider Intelligence, from January 2023, identified several use cases for blockchain across different industries, and the number is proliferating. Due to its growing success, blockchain will spur global spending to reach nearly $19 billion in 2024, growing at a five-year compound annual growth rate of 46.4%.
Find only a few use cases below to prevent this article from becoming a tome. But consider digging more to get an extensive list.
- Data Management: Malcolm Hawker is a thought leader in the fields of Master Data Management (MDM), transforming raw data into an information product, and Data Governance, a collection of components that formalize the control of data. He sees blockchain as serving Data Governance and reference and master data.
- Insurance industries have welcomed blockchain in their Data Governance for validation.
- Blockchain accelerates risk management and frequently delivers data-governed solutions in product offerings.
- MDM can utilize blockchain for data distribution and Data Governance, while blockchain can use master data to track assets or transactions among members.
- Internet of Things (IoT): According to an Omdia Report, 40% of enterprises plan on prioritizing blockchain’s role in IoT for the future. Already startups have implemented several blockchain models, including ones that track assets and shipment locations.
- Supply Chain: Companies want to see their goods from production to purchase. Blockchain will provide this visibility in 2023 and beyond. In addition, blockchain will open up real-time options, such as slotting imported goods into shipping containers.
- Education: Digital diplomas, initially adopted by MIT, have caught on at other universities. Likewise, blockchain has provided or will provide copyright protections, lower education costs, and financial aid services across higher education.
- Government: Are you having a baby in Illinois? That new child will have a self-sovereign identity through the Illinois Blockchain Initiative. Since implementing this initiative, Illinois has expanded its blockchain usage. Additionally, Delaware and New Jersey have expressed interest in the technology. In the meantime, California has legalized blockchain-based vital records and continues to explore other blockchain uses, like driver’s licenses and IDs.
- Health Care: Blockchain plays multiple roles in health care, including:
- Preserving and exchanging patient data
- Identifying serious medical mistakes
- Handling deception in clinical trials
- Real Estate: Blockchain promises to streamline real estate transactions and transfer of property ownership. Furthermore, blockchain will reduce paperwork and provide a history of property ownership. Potentially, sellers can also give more transparency around the sales process with blockchain.
Blockchain in the Future
Looking five to 10 years ahead, blockchain has internet-level disruption potential. Still, like the internet, it will likely come over a multi-decade timeline with fits and starts and occasional setbacks.
Some industries, especially finance and insurance, will see a drastic change soon. Others will take longer until organizations figure out scalability and the degree of decentralization to apply.
To access the blockchain API for your experiments, visit blockchain.info. No doubt there is much to learn before 2030.
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