Since it was cryptocurrencies that first introduced blockchain to the world, it’s unsurprising to find that most blockchain enterprises are focused in the financial sector, as most big banks want to get to grips with the technology so they can incorporate it. This is one of the most common applications of blockchain.
The purpose of this article is to show applications of blockchain and where and how blockchain technology can be applied to solve real-world problems. Given the number of new blockchain enterprises currently entering the market, we should witness more practical solutions soon.
Blockchain is a Record-keeping system
Blockchain is most often conceptualised as an innovative way to store, maintain and distribute data. Since it can record dynamic as well as static data, these applications of blockchain technology can be employed in three distinct areas:
1. Data management
The most obvious applications of blockchain technology is its effective and secure management of all aspects of a database. Regardless of whether they are private or public, successful organisations are heavily dependent on their ability to interpret information.
A shared, distributed ledger which is secure, immutable and can handle ever-changing data may seem like a technically narrow innovation at first sight. However, when you consider how much governments and businesses rely on different databases and software programmes, blockchain emerges as a unifying cost-effective and time-saving solution.
Digital information is kept on a blockchain in the form of a token which can be associated with a physical item for authentication purposes.
When some short-sighted regulators look at Bitcoin and its underlying technology as a vehicle for fraud and crime, they miss the obvious benefits blockchain is set to bring to fraud and crime prevention, intellectual property protection, and effective supply chain management.
One of the technical features that contribute to the security of information stored on a blockchain is its reliance on public and private cryptographic keys. When combined, a user’s public and private keys form that user’s identity, at least in the context of that blockchain.
When one takes this concept and applies it to the real world, it’s easy to see how your keys can effectively become your digital identity in a world broken down into several networks of peer-to-peer transactions.
As mentioned earlier, since blockchain technology came to prominence with the rise of cryptocurrencies, a lot of its applications have been in the banking industry.
But it didn’t take people long to understand that, although a blockchain had only been used to record and maintain information on transactions in a given currency, it could also be employed as a platform to record exchanges of any other valuable items between different parties.
A blockchain can be a platform for:
- Markets and trading
- Governance and compliance
If a blockchain can be used to record exchanges of either currency or other items of value, it can also be used to record exchanges of money for products and services.
In that case, we can describe that blockchain as a platform for smart contracts. We cover this term extensively in another piece, but for the sake of this discussion, you only need to understand smart contracts as the blockchain manifestation of business operations.
Smart contract platforms allow for businesses and individuals to exchange products or services for money, following the terms of the contract they both agreed on, as expressed in the blockchain where that agreement is registered.
2. Markets and trading
The idea of public and private keys combined to form a digital identity can be extrapolated and combined with blockchain platforms to understand that anything of value can be recorded on a distributed ledger, from currency to stocks, bonds, and other assets.
The inherent security, accuracy, and speed of transaction make blockchain platforms a prime candidate for trading.
3. Regulatory compliance
Blockchain technology can also deliver undeniable value to the field of regulatory compliance, where laws and regulations can be incorporated into a regulatory platform as code with which associated businesses must comply.
This regulatory blockchain will then ensure that transactions in that network obey the desired set of principles.
Blockchain is still new
Blockchain technology is not even a decade old, and its most innovative applications lie ahead. Some are comparing it to the internet while others think it goes beyond that, signifying a new leap in human progress.
At this point there are too many unknown variables about the development and implementation of this technology to risk a prediction. However, as new blockchain-based solutions keep finding investment in record numbers, the future looks bright.
Check out our other Blockchain guideshere.