The rise and rise of bitcoin has attracted a huge amount of attention, not just for the cryptocurrency itself, but for the blockchain that makes it possible. With all the noise about bitcoin, are businesses missing the message about blockchain’s bigger benefits?
Blockchains link pieces of electronic information together across a vast global network of unconnected parties. They’re distributed ledgers – shared agreements about reality – which create associations between pieces of information and a visible, distributed consensus.
In other words, they create an irrefutable, defensible record – of transactions, of ownership, of all kinds of information – witnessed by the whole chain. Cryptocurrencies like bitcoin couldn’t function without that established authenticity, but blockchain’s potential in the business world goes far beyond financial tracking.
Here at Price Bailey, we’re researching the immense scope of blockchain technology and we’ve identified several key areas ripe for real and lasting change. Some can already be explored by businesses today, others will take greater regulatory change, but all have the potential to advance the way businesses work – and work together.
1. Building better land registries
Whenever people want to sell, transfer or raise funds from their property, they need a trusted source to ratify that they own it. However, according to the World Trade Organisation, 70% of the world’s population has no access to a land registry, making this an incredibly difficult task.
The distributed consensus at the heart of blockchain technology offers a powerful new way to establish true and trusted information about property ownership. If endorsed by the rule of law, it opens up the prospect of blockchain being used to stimulate investment in real estate worldwide – providing peace of mind to both land owners and financial institutions.
In turn, this would allow individuals to generate more economic activity – freeing them to use their asset as a security because financial institutions actually believe in their ownership of the property.
2. Tracking assets worldwide
Today’s consumers are more conscious than ever of making ethical, responsible choices about the goods they buy. Blockchains can help to inform those choices, providing valuable information on everything from sustainable sourcing to lifecycle emissions.
They provide the ability to cost-effectively track and trace a whole range of assets, from diamonds to white goods. This can help consumers better understand the environmental and societal costs of procuring or manufacturing certain products, as well as limit fraudulent activity and substantiate efforts like the EITI (Extractive Industries and Transparency Initiative).
A great example is the blockchain already being used to track ‘ethical cobalt’ from mines in the Democratic Republic of Congo, creating shared trust and transparency around where and how resources are mined.
Beyond ethical choices, blockchain asset tracking also opens up opportunities to track the components that go into everyday goods, improving warranty arrangements for both customers and manufacturers.
3. Improving information efficiency
The vast array of separate databases used by today’s organisations create an inefficient system where work is constantly duplicated, and time routinely wasted.
For example, in professional services, customer due diligence often holds up delivery of products and services. Checks like KYC (Know Your Customer), AML (Anti Money Laundering) and FACTA (Foreign Account Transparency Act) all need to be performed, but at the moment every entity the customer works with makes the same checks, so they’re carried out again, and again (and again).
Blockchains could change this. Any industry that uses lots of information – such as insurance, logistics or banking – could share access to data they trust, removing the need to duplicate things like identity verification, credit checks and transaction tracking. This could significantly reduce operating costs for organisations – while delivering a faster service for customers.
4. Creating smart contracts
Taking this streamlined way of working a step further, blockchains could pave the way for smart contracts. These are ‘if-then’ contracts that are hard coded onto a trustworthy, anonymous blockchain, and that self-execute based on information held on the chain about an individual’s preferences.
These could range from simple, everyday applications such as ‘if the price of energy falls below X, then turn my smart washing machine on’, to more business-focused applications like options agreements, where triggering events like a future date or strike price can be written in.
Rather than these sorts of preferences (or data) being stored by a private entity, which could commoditise the information about you as an individual, they can be held anonymously on a variety of blockchains, all ratified by a distributed, established consensus.
Read our full report on blockchain technology, free
Blockchains really could change the way the world does business. In our report, we take a closer look into how blockchain technology can be used to improve a range of everyday business issues such as efficiency and productivity, access to finance, corporate governance and data security. We also investigate the current barriers as well as the future uses of blockchains.
To explore the potential of blockchains in more depth, download our free full report: ‘Blockchain technology – what blockchain is and how businesses can take advantage’.
Our report was produced through a combination of primary and secondary research by our experienced team of researchers. This team is led by Grant Rudgley, our head of Research and Insights – helping our clients de-risk, define and execute their growth plans. Alongside the research, two interviews and references to additional resources and learning materials are included within the report.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.