I understand that learning about blockchain is hard since there are many sources of information regarding this technology. In this article, I will be explaining blockchain and its 5 application in simple terms. This will give you an idea of how the technologies supported by blockchain operate.
What is a blockchain?
Blockchain technology was first developed by Satoshi and introduced in 2008. It was introduced as a technology that supports a digital currency called Bitcoin. But blockchain is not limited to digital currency, it can be used in other various industries. The role of blockchain is merely to store records of transactions. It is distributed and validated by a network of computers all over the world. It has a decentralized network and therefore operates from peer to peer. This decentralized system makes the blockchain temper resistant. For a hacker to be able to break through the blockchain system, they’ll have to hack every single computer around the globe, which is impossible.
Application of Blockchain Technology
1. Finance
Since the traditional banking sector is centralized and has high fees associated with operational costs. The banks were the first industry that recognized blockchain as a threat. The thought of a financial system that handled money at zero costs didn’t sit well with the banks. But later this industry adopted blockchain and learned to use it to solve problems associated with banking. Firstly, blockchain solved the difficulties associated with lending. It was very hard for banks to trace a person’s financial record and credit score. As a result, many people were deprived of getting loans from the banks.
Blockchain allows secure sharing of credit scores that temper proof and reliable. The credit score is made up of a collection of data from multiple organizations. These organizations contribute reliable data that can be used to assess the financial standing of an individual. This decentralized approach prevents credit records from being tempered with. The blockchain technology behind this approach ensures that the banks are confident that the credit scores are reliable without having them verified by a trusted authority.
2. Land registry
The traditional way of land registration is long, and most people find it boring. Many countries have land registries that record ownership details in written form. This can lead to a lot of challenges. Since the land registry documents are in physical form, they can get lost, and anyone can temper with them. Some countries have solved the above challenges by moving the land registration process online. Moving this process digitally can solve challenges like land registries being lost but these registries are still not tempered proof. The records can still be altered and are still prone to human error. Other problems associated with land registration include the long verification process.
For example, a person can have an official title deed stating they own a building on a certain land. However, tomorrow a Property Institute may issue claims that a different person owns the property. This person still needs to prove they are the owner of the property through proper claims. This process is long and can cause unnecessary delays. As a result, a judge handling the case can end up signing an eviction order to the person who has the official title deed. By the time this person gathers evidence to prove that they are the rightful owner of the property, the property may have already been transferred to someone else.
Blockchain technology can be the solution to all the challenges associated with land registration. Land registries can never be lost or tempered with when using blockchain. In the above example, if this person’s title deed was recorded with blockchain, it would have been impossible for someone else to claim ownership of their property. This is because the database in the blockchain is permanent and temper proof. Also, all transactions can be easily traced. This helps them in creating unbreakable land ownership records and limit cases of fraud in the process. Blockchain technology is the safest way to keep records of land ownership. It can provide the most reliable and legit land registries.
3. Healthcare
There is an increase in the number of people who need medical attention. As a result, it is becoming harder for healthcare providers to provide full medical care. This has led to the integration of Internet of Things devices into healthcare. These devices collect information and store it in the cloud. This information is then analyzed in the cloud and directed back to the device. The device then takes action according to the results of the analyzed data. The Internet of Things devices help doctors monitor patients remotely without them having to come to the healthcare facility. These devices can track information like glucose levels, breathing rates, blood pressure, etc.
The challenges associated with the Internet of Things in healthcare are the lack of data confidentiality and authentication. Trust and privacy are compromised since there is no control over who can access data from these devices. These challenges are due to the vulnerable program designs of these devices. On top of that, the Internet of Things systems are centralized, which makes them prone to attacks. Also, the centralized system makes it hard to share data with other healthcare providers. Therefore, solely using the Internet of Things in healthcare can lead to compromised patient data. Data can be leaked or tempered with during its processing.
Therefore, that’s how people in healthcare saw a need to incorporate blockchain into their Internet of Things system. The main goal is to improve security. Blockchain achieves this by eliminating all the problems caused by centralization. This is because blockchain has a decentralized system with no intermediaries. Also, blockchain technology is temper-proof and not easily hacked. This makes this technology desirable to the healthcare industry as they want to improve the security of their data. Blockchain can also help manage medical records of patients, keep track record of dangerous drugs, and many other things.
4. Music
In the traditional music industry, we have the artists, the record companies, the online streaming service providers, the publishers, and the PROs. The artist does all the hard work but often gets the smallest piece of the pie. The money from the person who buys the music goes to the retailer. From there it is distributed to everyone in the music supply chain. The artist is located at the bottom of the supply chain, meaning that the money reaches them after everyone else has taken their share. Then it happens that the people located at the upper part of the supply chain decide to take a huge percentage of the earnings. This then leads to the artist at the bottom being left with breadcrumbs. Which is totally unfair since they are the ones that put in a lot of work.
By adopting blockchain technology, everyone in the supply chain will be aware of how their share is calculated. For example, four contributors to the song can directly receive payments from the listener. These four contributors are songwriters, artists, composers, and producers. This can be done by using smart contracts as a link between the contributors and the person who plays the music without intermediaries. The smart contract facilitates the direct and immediate payments made from listening to the music.
Any individual song has a digital wallet attached to it. This means that payments made by any person who listens to the song go directly to the digital wallet using cryptocurrency. Song listeners can be charged per play. The price of the individual song is predetermined before the artist uploads their song. The money each song generates is then distributed to each of the four contributors according to their agreed percentage. This prevents earnings from being lost in the intermediaries and external parties.
5. Insurance
The target market for micro insurers are people with low income, farmers, etc. Contracts in the traditional micro-insurance model have high handling costs. This makes it hard for companies in this industry to serve their target audience. The blockchain technology allows these companies to use smart contracts instead of the traditional ones. The smart contracts significantly lower the costs of the insurance as there are intermediaries.
Smart contracts also make it easy to implement index-based insurance. In index-based insurance, insurance payouts are made based on an index (weather event). This is highly useful in agricultural insurance. This allows insurers to make automated payouts to insured farm owners when a certain weather event occurs. This also significantly reduces the costs associated with service delivery.
Blockchain technology also allows for a smooth lending process using micro-insurance. For example, if a person has a property that was digitally registered, that person can lend their property through an insurance company. The insurance company then sends the proposal to the borrower. If the borrower is happy, they accept the proposal and then purchase the insurance. The agreement of lending is signed digitally by both parties and a licensed public officer onto the blockchain. This makes the agreement of lending temper-proof. Then the property is given to the borrower. Both the lender and the borrower receive special security tokens to keep as proof of identity of their agreement.
The main objective of insurance companies in adopting blockchain technology is to prevent false claims from their clients. Blockchain is used to process payments and claims in order to prevent fraud claims. This technology enhances the security of different operations in the insurance industry. Smart contracts lower costs by eliminating the need for human resources. Smart contracts therefore lower the premiums paid by clients. Also, Internet of Things devices increase security thus reducing risks of fraud in this industry.
Blockchain can be used in many other industries that are not mentioned in this article. It can be used to store property rights, it can be used to validate and ensure citizenship and nationality, it can also be used to defend the participation of an individual in the economy, etc. Blockchain has proven to be a game changer in many industries.
