Cryptocurrencies hijack most blockchain-related headlines, but their underlying technology’s adoption has been growing rapidly.
A blockchain can be seen as a distributed database whose information is stored across every node running the network. Because the database is distributed among those running the network, it guarantees data stored within it is accurate and securely stored.
As the name implies, blockchains store their data into blocks that are added to the network as time goes by. Each subsequent block builds on the information stored in previous blocks, which means blockchains form a data timeline that can be securely trusted.
When it comes to cryptocurrencies, the blockchain ensures trust and solves what’s known as the Byzantine generals problem, which describes the difficulties dispersed parties have in reaching consensus. Since Bitcoin uses blockchain technology, one can accurately verify that funds aren’t spent twice, that its supply is limited, and the history of transactions on the network.
The technology goes beyond these use cases, however, with a number of companies and organizations having already adopted blockchain without cryptocurrencies.
Blockchain technology is usually associated with cryptocurrencies, with the Bitcoin Network being its number one use case. At its core, however, a blockchain is a distributed ledger shared among a network of nodes, meaning its use cases go well beyond cryptocurrencies.
Cryptocurrencies steal most blockchain-related headlines, but adoption has nevertheless been growing for the technology. One example could be IBM partnering with the Abu Dhabi National Oil Company to pilot a blockchain supply system for oil and gas production.
There are several other examples, including Da Beers Group tracking high-value diamonds along its supply chain with a blockchain and JPMorgan using the technology to calculate loan collaterals.
Speaking to Cointelegraph, Johnny Lyu, CEO of cryptocurrency exchange KuCoin, noted that the use of blockchain is “commonplace among government agencies and businesses,” and pointed to the Global Shipping Business Network (GSBN), a consortium that counts on the participation of major institutions including the Bank of China, DBS Bank and HSBC, as an example.
The GSBN has been testing the integration of its own blockchain platform to digitize and track container shipments. Lyu also noted the Indian state of Maharashtra has started issuing verifiable caste certificates on the Polygon network, while the Romanian Financial Supervisory Authority implemented blockchain technology to “speed up workflows and reduce the time for manual processing of large arrays of data.”
The examples keep on going, Lyu said, noting that it would “take a long time to list all of the latest blockchain initiatives launched in 2022,” adding:
“There is no doubt that we are seeing massive and widespread adoption of blockchain technologies and the number of companies doing it will grow by the day. Blockchain is becoming a necessity, just as websites and business accounts in social networks once became such.”
Ben Livshits, CEO of blockchain platform Zilliqa, told Cointelegraph about yet another use: The United Nations World Food Programme has deployed blockchain technology in its Building Blocks project, allowing organizations involved to “collaborate, transact, and securely share information in real-time on a neutral network without hierarchy.”
The program, Livshits noted, has “already processed over 15 million transactions and supported over 1 million people.” Several other companies, including Ford, FedEx, Walmart and Maersk, have either piloted or actively used blockchain technology.
The advantages of using blockchain technology are numerous and as a result, investment in the space has been significant.
Taking a food and beverage business as an example, Livshits noted that blockchains can provide “the required transparency that consumers today demand and expect” as the “average consumer today no longer just cares about what they eat and how it should be cooked,” but consider where ingredients are sourced and how they’re handled.
Livshits added that the adoption of blockchain technology could become mainstream and “even help with quicker payments.” He said:
“The benefits are clear: Reduced human error, better access to information, increased safety, traceability and transparency that can ultimately help adequately reward all those through the supply chain.”
Blockchain technology, like other technology before it, should “be about creating value and utility for users,” Livshits stated.
Sankar Krishnan, executive vice-president and industry head of banking and capital markets at Capgemini Financial Services, told Cointelegraph that blockchain technology is “very ESG friendly,” referring to environmental, social and governance standards to which investors have increasingly been paying attention.
Krishnan added that most don’t realize “how many parties there are in a supply chain transaction.” The large amount of parties involved means a lot of data needs to be tracked, including data related to importers, exporters, the transaction itself, the product, shippers, marketplaces, logistics companies, insurance firms and other intermediaries.
He added that each of these parties either prints out information or exchanges it via email multiple times, consuming resources. All of this consumption, Krishnan said, would be eliminated if transactions were processed on a blockchain.
Moreover, Krishnan added, a blockchain provides more transparency and improves tracing capabilities for raw materials while also making data available to every involved party simultaneously, significantly reducing the risk of fraud. He added:
“What actually happens is that all the manual workflows are replaced by smart contracts and there is agreement between all the parties involved on how these workflows move around the blockchain.”
Per the analyst: “Industry is set to benefit from using blockchain and smart contracts,” with very specific use cases having developed for financial services, healthcare and retail. Krishnan also pointed to loyalty program management, royalty payments and public sector applications as other use cases.
Despite all of these use cases and possibilities, there’s a reason not every company in the world is diving into the blockchain world and the technology isn’t being adopted en masse.
While the use of blockchain technology has kept on growing over the last few years, some companies have yet to start adopting it despite the numerous advantages offered. The problem with this type of technology is the required investment necessary to implement it.
That’s according to Arry Yu, Cascadia Blockchain Council chair at the Washington Technology Industry Association. Speaking to Cointelegraph, Yu said that implementing enterprise-level software technology requires a “significant investment,” and added that changing management may also be necessary as some stakeholders may not want the provided transparency.
Yu added that training stakeholders on new processes and building out the right types of reports that give each stakeholder meaningful key performance indicators also add to the costs, as does the “enormous amount” of upfront investment “related to process redesign, documentation, training, support and more.
Kieren James-Lubin, president and CEO of blockchain solutions provider BlockApps, told Cointelegraph that while this type of technology “ensures data is not altered or deleted,” it does not ensure accuracy, as “this is reliant on whoever is inputting the information — manual data entry can be prone to error.”
A solution to these errors, the CEO added, would be the use of accurate Internet of Things sensors to “pull data directly.”
Blockchain’s use cases are regularly growing, and implementors are still finding out exactly what can be done with this type of technology and how far it can go. When Bitcoin (BTC) was first launched, smart contract-based applications like those now seen on Ethereum were unheard of.
The technology can nevertheless help revolutionize several industries, even though it’s little over a decade old. It remains to be seen whether, to the wider world, Satoshi Nakamoto’s best invention was Bitcoin or its underlying blockchain.