Blockchain has developed quite rapidly since 2014. This rapid development cannot be separated from the widespread application of blockchain in various industries today. The application of blockchain technology enables safer and encrypted digital transactions without the presence of third parties. That way, the need for a central authority is no longer needed to enable the transparent sharing of information.
Unfortunately, many still view blockchain only as a crypto asset. Even though there are various potential benefits and uses that can be maximized from this digital technology, its application is now not only in the financial sector but also in other industrial sectors such as banking, business, to government.
In the following, we will outline the potential uses of blockchain in various industries. Let’s see the discussion until the end of this article.
Blockchain Applications in Banking & Finance
The application of blockchain in the banking and financial system is of course very common. The presence of blockchain technology is believed to be able to fix various problems that often envelop the banking world. Especially those related to financial records.
Thanks to its guaranteed security system, banks often use blockchain technology for the input process, data verification, and the process of transferring money. Data entered in the banking database will be processed accurately. Users can also view all transaction data directly and in real-time.
Apart from banking, some of the uses of blockchain in other financial industries include:
Transfers of money between countries often take hours to days. Luckily, blockchain offers more efficient money transfers and doesn’t cost a fortune. In just seconds, users can transfer funds from one country to another.
Investment banking activities often refer to selling and purchasing various financial instruments in the capital market. For this reason, blockchain technology is designed to facilitate the buying and selling of digital securities in the capital market through various mechanisms. Including bilateral negotiations and auctions.
Blockchain can also give rise to a variety of new digital instruments to meet investor demands. These new assets can later be programmed so that they can carry out types of business functions smoothly.
Trade finance or trade finance is the application of blockchain in the financial sector which is widely used by banks. Usually, they take advantage of the blockchain platform to create smart contracts with participants. The goal is to increase efficiency and transparency while reducing the costs involved.
Oversight and Audit of Regulations
In this case, companies will utilize the blockchain to establish anti-fraud relationships between company management and external parties such as auditors (internal and external), investors, and financial institutions. The goal is to avoid earnings management that is misleading and too extreme, thus triggering data concealment or manipulation. That way, companies can continue to grow and develop sustainably to continue to compete. Moreover, most investors prefer companies that are safe from the risk of fraud.
Money Laundering Protection
The blockchain system is present as a world economic solution to financial transactions. The absence of third parties as intermediaries is considered to provide transparency to all users. Because all transactions and movements can be seen from the general ledger in real-time every second. Various efforts to practice accounting fraud, such as manipulating financial statements and concealing data, can also be prevented.
Insurance claims are vulnerable to fraud risk. However, the proper verification of claims often takes a while. That is why several insurance companies are starting to use blockchain technology in managing insurance claim data and payments.
Blockchain can help streamline data verification, claim processing, and disbursement of funds. The system transparency of the blockchain is also useful for preventing fraud when the claim payment process takes place.
In a Peer-to-Peer (P2P) network, blockchain acts as a decentralized ledger for one or several digital assets. Where each computer stores a complete copy of the ledger and can verify its authenticity with other nodes to ensure the accuracy of the data.
The cryptocurrency also uses P2P networks to allow users to make transactions in a decentralized setting. The absence of a centralized server makes P2P blockchain network transactions withstand attacks quite well. In addition, P2P networks are also more cost-effective because they do not require a network operating system.
Blockchain Applications in Business
The implementation of blockchain in the business world is very effective and efficient. How come? Blockchain technology is often the first choice in cryptocurrency transactions such as bitcoin and other digital currencies. The reason is that blockchain is able to store transaction records securely without the help of third parties such as banks or other intermediaries.
With this decentralization principle, every incoming data will be stored in new blocks. Then the block is connected to the last block so it can be stored in chronological order. Interestingly, every transaction record that has been stored will be permanent, meaning it cannot be changed anymore. This is what then gives a sense of security to the users.
Some of the uses of blockchain in the business world includes:
Supply Chain Management
The need for global exports and imports is always increasing every year. However, monitoring the movement of the supply chain or supply chain is very complicated. It can even take hours to manage. Therefore, blockchain is here to simplify the management of the supply chain.
Blockchain provides a new and dynamic way to manage tracking data. With a decentralized blockchain ledger, tasks such as tracking goods in real-time can be done easily.
All parties in supply chain management who have a license can enter their information and data into the ledger. This increases transparency while preventing problems in the supply chain, such as lost, damaged goods, to the risk of fraud.
Blockchain technology is very suitable to be applied in the health sector. Various health data such as doctor’s education, patient profiles, drug procurement, patient medical history data, biomedical research, to health insurance can be stored on the blockchain through a digital ledger.
The digital ledger will be connected through a chain of interconnected computer server networks. To access these data, the user must have a certain password. This method will make the risk of fraud so difficult to do. In addition, blockchain can simplify the verification stage thereby helping to increase efficiency regarding insurance applications and payment processes.
As an important part of the world’s economic assets, real estate presents a large and complex scope. For this reason, blockchain is here as a practical solution to accelerate and facilitate the growth of the real estate industry.
Blockchain technology will increase retail sales by speeding up the verification of payment transactions, as well as offering transparency in every buying and selling process. In addition, encryption can also help reduce the risk of cheating and fraud.
Several media companies have started to adopt blockchain technology to prevent fraud, save costs, and protect the Intellectual Property Rights (IPR) of the content that has been created. Once a content creator registers their property on the blockchain platform, the blockchain will record every use of that content. This tracking enables a real-time, flexible, and completely transparent consumption-based pricing mechanism. In general, smart contracts can be used to make payments automatically between users and creators.
Blockchain technology offers the best solution for the distribution of renewable energy in the world. The use of a distributed ledger has the potential to increase the efficiency of utility providers in conducting energy supply transactions.
The application of blockchain is often used as a further basis for measuring, billing, and clearing processes. This includes documentation of ownership, asset management, emission allowances, and renewable energy certificates. This step will save costs, maintain environmental resilience, and increase transparency for stakeholders without sacrificing privacy.
Blockchain Applications in Government
Currently, the use of blockchain has begun to be widely used by governments and other public services because they are considered more efficient and inexpensive. Blockchain technology allows governments to share information and data through distributed ledgers that are secured using cryptography.
Blockchain is also a breakthrough for the government to interact easily and transparently with all people. Some uses of blockchain in the government sector, namely:
The government is responsible for keeping individual records of society such as dates of birth and death, marital status, and transfers of property. But managing that data can be very difficult and time-consuming. Thanks to blockchain technology, the recording process can be simplified and make data much more secure.
By recording sufficient information on the blockchain, there is no need to bother verifying many documents which are of course very time-consuming. They only need to provide minimum information (such as date of birth) to prove their identity.
Blockchain technology can make the process of voting or voting more accessible while increasing its security. Each vote will be associated with one ID that has been registered so that falsification or duplication of identity is impossible. That way, government officials can carry out vote counting more effectively and efficiently.
Information stored on the blockchain will make the tax filing process which is complicated and prone to human error, more efficient.
Non-Profit Organization Institutions
A transparent blockchain can be an anti-trust solution that charities often experience. The technology will help Non-Profit Organizations (NPOs) to show donors how to properly use grant funds. In addition, blockchain can also help NPOs distribute funds efficiently, manage resources better, and have real-time tracking capabilities.
Compliance Oversight/Regulatory Oversight
Most compliance oversight or regulatory oversight comes from record keeping. Blockchain can make updates of all those records for regulators and businesses in real-time. This will reduce the risk of frequent inconsistencies.
Blockchain Applications in Other Industries
Apart from the banking, business, and government sectors, the use of blockchain can also be applied to other industries, namely:
Financial Management and Accounting
Every company or institution certainly needs good financial and accounting management. This is where the important role of blockchain as a technology is to carry out monitoring in real-time and intensively through private servers, not centralized.
Apart from that, the blockchain also provides a distributed record of transactions that cannot be changed. The finance department can use it to keep records and bookkeeping according to applicable regulations.
The encrypted blockchain makes it perfect for records management. Because this will prevent duplicate data, fraud, manipulation, and the like.
One of the main advantages of using blockchain in cybersecurity is preventing the risk of transaction failures and fraud. Plus blockchain technology also provides encryption and privacy to increase security.
The permanent and immutable nature of blockchain makes it the best platform for storing big data. Coupled with the fact that each network computer will continue to verify the information stored in it.
Similar to the principle of big data, the use of blockchain technology allows the storage of various data to be carried out in a private network where each network will be authenticated so that it can build trust and confidentiality with each user.
IoT (Internet of Things)
Blockchain can change practices in several IoT sectors. One of them is tracking the location of the goods as they are shipped and ensuring the goods remain in the condition specified in the supply chain, likewise with asset tracking where the blockchain allows asset monitoring to record each activity and output as an alternative to the cloud.