The blockchain technology, the foundation of Bitcoin, is a relatively new approach in the field of information technologies. Blockchain provides an immutable ledger which allows transactions to store in a decentralized logic. Blockchain based technologies are blooming rapidly, adapting numerous fields including financial and banking services, legal industries, supply chain, Internet of Things, real estate and so on. However, currently there are a lot of challenges for blockchain technology such as scalability and security problems waiting to be overcome. This study will cover overview of blockchain uses in different industries with a variety of purposes. We will cover examples and implementations of blockchain technologies in variety of sectors and adaption to our life.
Bitcoin and blockchain technology bring new shape and define new aspects in computer science and information technology. Satoshi Nakamoto, anonym person or a group, created a fully distributed digital currency system using Blockchain technology in 2008,. For many years, this system stayed undiscovered by the society, but thanks to hype with Bitcoin, many developers and scientists became interested in other usability of this technology.
Nowadays, a huge amount of people believe that blockchain could be as revolutionary as the internet was. They see many possibilities of implementations and adoption of this technology. We start to see new implementations of blockchain in various cases and also blockchain is transforming various business applications because of its promising features like immutability, decentralization, enhanced security.
In simple terms, blockchain is a distributed ledger network in which nodes communicate with one another for securing the data and transferring transactions. Main features of blockchain are immutability, decentralized, and transparency.
_ Immutability: _
Immutability means something that can't be changed or altered. In a system with multiple nodes, it is very important to keep data consistent and unalterable without permission. Blockchain provides nodes to validate the data is valid, ensure previous transactions haven't been changed. Each node on the system has a copy of the transaction history. To be able to add new transaction, every node needs to check its validity. İf consensus happens, then transaction add to the ledger.
_ Decentralized: _
In a traditional way, transaction systems controlled by a central authority. This authority is capable of controlling transactions and getting transaction fees. This system can be dangerous if central authority hack or lose control of the system. But thanks to blockchain, there is no need for centralized unit because transactions can be managed by consensus algorithms which maintain data reliability and security.
_ Transparency: _
Current traditional system, accessing the information and clarity is very restricted. In most of the implementations of blockchain, the network is open to anyone on the network and it can be watched and followed by other vendors.
Blockchain is a combination of many technologies such as cryptography, algorithms, peer to peer networks and distributed consensus algorithms to solve synchronization problems. Blockchain has potential to take central banking platforms place and other use cases including supply chain, business process improvement, trades, land ownership, health information sharing, voting and so on. Use cases are expanding as the distributed ledger technology is being further improved and refined. Blockchain technology has changed a lot from the first Satoshi Nakamoto's implementation. There were many problems along with the first implementation such as transaction capability and transaction speed. With the latest implementations, these problems are fixed and also new features added to blockchain. There are 3 main versions of blockchain that this article will mention.
This study investigates the current state of use of blockchain technology in various fields. It will address current problems, challenges with blockchain as well as implementations and solutions. This article will show how industries benefited from blockchain technologies with example use cases. It will present example projects and companies along with these use cases and their adaption.
Blockchain is a flexible technology that can be used in multiple areas. Currently it is well known and widely used with the cryptocurrencies. Blockchain technology provides immutable ledger to store transactions securely. These transactions can track easily but almost impossible to alter. This provides a platform that doesn't need to trust any third party. However blockchain technology mainly make impact with proof of concept. Proof of concept is started to use in some sectors at late 2016 however it was not successful. Blockchain technology make big impact by combining different technologies like proof of concept, proof of concept, cryptographic keys and etc.
As we discussed before, blockchain is used in many sectors. As we see on figure 2, blockchain technology by far used in financial services. However this technology is started to use in other sectors as well and it is increasing day by day.
Let's take some uses of blockchain technology.
In current payment world and fiat currencies there is always a third party or provider who take control over. For example on fiat money, governments are responsible to produce and provide the paper money. However, this can be used against to the communities. Governments have no limitation to produce fiat money. They can produce how much they want and this will lead inflation. Bitcoin, the first cryptocurrency, has been started to implement in 2009 after big economic crisis in the world. In 2008, world has been shaken by American mortgage crisis. After these crisis, some governments print huge amount of money to avoid collision of economy. This leads increase of annual inflation to 5.4 percent which is highest in close history. After this crises, new system for money has been started. This crises was one of the biggest motivation to implement technology for payment systems that no one can change or effect the production. One year later of this crises bitcoin is started to implement and at released at 2009.
There are more than 4000 cryptocurrencies in existence as of 2021. Most of these cryptocurrencies has very limited trading volume but some of them has immersive trading volume. As of today, Cryptocurrencies are worth of almost 1.5 trillion dollar.
Smart contract is a self-executing contract written in a block of code containing the agreement between buyer and seller. This code works on a distributed and decentralized blockchain network. The code controls the execution when certain conditions meet. Transactions are trackable and irreversible thanks to distributed ledger. The goal of the smart contracts are the decrease need in trusted 3rd parties, fraud losses, reduce arbitration and enforcement costs and reduction of malicious and accidental exceptions.
Similar to cryptocurrencies, deployment of a smart contract on a blockchain start by sending a transaction from a wallet for the blockchain network. This transaction includes the compiled code for the smart contract as well as a special receiver address. This transaction add into a block on a blockchain network and in a point the smart contracts code will execute to the desired way. Smart contracts are secured with the Byzantine fault-tolerant that guarantee all the nodes on network is updated. Once a smart contract is deployed, it cannot be altered.
Use of smart contracts is spreading and getting popular over time. Ethereum is one of the most popular platform for smart contracts. Ethereum is first founded in 2015 as a open-source decentralized blockchain platform that supports smart contracts.
Ethereum is an open-ended decentralized blockchain based public software platform that facilitates peer to peer contracts known as smart contracts as well as decentralized applications known as DAPPs. Smart contracts are stored and run on every node of the network. Ethereum is the most well-known and widely using platform for smart contracts. Supports Solidity, LLL and Serpent as a programming language for smart contracts.
NEM is a decentralized peer to peer platform with its own blockchain network. It has both private and public network. This platform allows business to build applications such as cryptocurrencies, crowdfunding tokens. NEM offers ease of deployment, performance, deep customization and complete security. NEM uses proof of importance as a consensus mechanism.
Hyperledger is an open-source global platform that helps to create and develop enterprise distributed ledger frameworks to support business transactions. It is hosted and supported by the Linux Foundation. Hyperledger is mostly known for modularity and versatility that satisfies a broad range of commercial use cases.
Quorum is enterprise focused soft-fork of Ethereum that developed by JP-Morgan. Quorum is designed for applications which require high speed and high processing of private transactions within an accepted group of participants. This platform actively developed and supported by JPMorgan chase and number of banks. Quorum differs from other smart contract platforms by providing high performance and simplicity of consensus mechanism.
RootStock(RSK) was developed to work with Ethereum applications but using bitcoin as the fuel cryptocurrency. It is similar as other smart contract platforms but focus more on security. This platform provides scalability along with fast payment and a low latency network.
Blockchain technology first seem as a disruptive technology and big risk for banking sectors for future. Today banks, financial services and stock exchanges are eager to explore blockchain technology's potential. As reported by the World Economic Forum report, more than 24 countries are continiously investing in blockchain. More than 90 company are part of an blockchain consortia and more than 2500 blockchain patents have been taken in last 3 years. In addition to that, more than 90 central banks across the world are engaged blockchain technology implementation. Blockchain investment in the financial services has been passed 1.4 billion dollar in last 3 years.
In December of 2018, a company called Bitwala launched Europe's first regulated blockchain banking solution that allow users to use and manage both their bitcoin and euro currency in one application. This was a big step for accepting bitcoin as an asset in banking.
In last years, over 300 technology startups started officially to work and provide consultancy services in financial services space. Currently there are some vendors and communities that play critic role on implementation blockchain technology into financial services.
R3 is one of the most popular community that supported via major banks including UBS, JPMorgan, Barclays , Royal Bank of Scotland, etc.… This startup is helping set up a private blockchain named Corda network, a distributed ledger platform for financial services. Corda has similarities with blockchain technology but it is not blockchain. Key difference is not all data replicated among all participants in the network. Only verified transactions shared. |
Depository Trust and Clearing Corporation is a major post trade services selected IBM to build its trade information basement using distributed ledger framework. This corporation aims to automatize life cycle events, record storing and payment management for over 11 trillion dollar of mutual and cleared credit derivatives. |
UBS crypto pathfinder program aims to develop and promote open standards for the blockchain technology in financial services industries. |
Barclays and Wave became first companies to accomplish global trade transactions using the blockchain technology. With this solution, these banks was able to reduce the time from 10 days to below four hours. |
Blockchain is one of the key innovative technology that taking digital supply chain management one step further. As supply chain system get more complex with diverse stakeholder and intermediaries, blockchain emerged as a strong trust and communication system in supply chain ecosystem. There are numerous industry organizations working to adapt blockchain into their system. Blockchain can be used in different type of supply chains.
Food supply Blockchain technology is being used in food supply to track food products moving from producer to consumer. It ensures the food is safely arrived to consumer on the way with unchangeable and easy to track of history on product. For example milk should be stored in certain temperature and with blockchain it makes easy and secure to track temperature history of this milk on the way. Walmart and IBM are running a trial to use a blockchain-backed system for supply chain monitory for lettuce and spinach. Another example would be Fogo de chao, Brazilian themed restaurant chain enable beef tracking system for their customers to track history of the meat they eat. |
Shipping
In a shipping industry, it may get very complicated between intermediaries. Just one shipment may generate attack of about 200 communications documents. Cost of these document processing can take 20% of the total cost of shipping. Blockchain can help to decrease cost and increase efficiency on paper processes. In 2017 IBM and Maersk finished end to end digitized supply chain using blockchain. With this platform, they are aiming to save up to $40 billion every year. Another use case would be Walmart uses a blockchain based system that allows the retailer to track shipments and deliveries handled by many trucking companies.
Mining
Blockchain allows retailers, dealers and customers to track the origin of gemstones and other precious goods. This feature secure and increase trust between seller and buyer. Everledger had partnership with IBM's blockchain based tracking system to trace origin of diamonds from mining to accessing user.
Blockchain technology can be also implemented in some video games to create asset for gamers. For example in 2017 CryptoKitties game built on Ethereum network, players can create virtual pet and trade it on market. Some cat characters in game sold more that $100.000. CryptoKitties help Ethereum to test their scalability. The game created significant pressure on network by increasing 30 percent of traffic. This was the first popular game that showed how blockchain can be used on catalog game assets.
Blockchain technology has a wide range of applications and use cases in healthcare. This technology help to secure transfer of patient medical records, manage medicine supply chain and identity verification to access health information. Blockchain technology has been started to use for COVID-19 pandemic to help employers, governments, airlines and others to keep record of people who had antibody tests and could have immune to the virus. It is very good use case to see how blockchain can be helpful in urgent situation with fast implementation.
China also started to use blockchain to speed up their health insurance payments to be paid healthcare providers and patients.
Securing Patient Data Blockchain technology provide security with the ability of keeping immutable and transparent log of patient data. | BurstIQFactomMedicalChainGuardTime |
Medical records can utilize care and prevent costly mistakes. Blockchain technology help to create one environment of patient record that can be quickly and efficiently accessible by doctors, hospitals, pharmacist and patient. | SimplyVital HealthCoral Health Research & DiscoveryRobomedPatientory
Medical supply chainDrug Traceability/ Safety Blockchain can increase the transparency of medicines on shipping process from production to customer. ChronicledBlockpharmaTierion
Blockchain provides full control on assets for owners. Until blockchain technology, domain names were controlling by third parties. Blockchain domain names are completely an asset of domain holder and can be only controlled by the holder. Blockchain domains can decrease to restrictions and enable freedom of speech without no authorities or third parties that control and change domain names.
Currently there are 3 main platform that provides blockchain domain names. These are Namecoin, Unstoppable Domains, and Ethereum Name Services.
This paper has tried to demonstrate uses of blockchain and adaption to the current world problems. Blockchain is still a new technology and have a long way to become complete. While analyzing the uses of blockchain, this paper also presented example projects and ideas.
Like every new technology, it disrupts the many industries but over time blockchain will integrate will many industries and help to extend their capabilities. Many companies and governments has been started to use blockchain technology in many area. Blockchain technology already adapted into many sectors and will continue go further.
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