One article counts 10 areas that are deeply affected by blockchain technology

Leaving aside digital assets/encrypted currencies, the core characteristics of blockchain technology include decentralization, transparency, non-tampering, and automation. These elements can be applied to various industries to provide the industry with better choices and greater value. Below are 10 examples of how blockchain is applied in various industries around the world.

1. Capital market

For the capital market, blockchain can make it easier, cheaper, and faster to obtain capital. It lowers barriers to issuance and enables peer-to-peer transactions, faster and more transparent settlement and clearing, lower costs, lower counterparty risks, and simplify audit and compliance.

Due to regulatory, technology-led market disruption and economic transformation in core business areas, the capital market industry is undergoing profound changes in business dynamics. The digital age has completely changed the industry mentality-although many companies took nearly a decade to stabilize after the 2008 crisis, they soon faced expectations for new ways of operating due to the digital revolution. These new expectations mean changing the norms in an industry with long-standing problems, such as:

  • Long settlement cycle (the US Securities and Exchange Commission finally enforced the T+2 settlement authorization in September 2017, and leveraged loans and other tools still need several weeks to settle transactions)
  • High cost of collateral after the implementation of Dodd Frank, Basel III and other regulations
  • Due to the existence of intermediaries in payment, asset exchange, etc., transaction costs are high.
  • Inefficient processes such as reconciliation

With the advent of blockchain, capital market companies have achieved the next level of subversion in their vision. Many traditional challenges can be solved by the technology behind Bitcoin. The basic functions of the blockchain are:

a) Decentralized storage of transaction/asset data among all participants

b) The immutability of stored data due to the principle of hashing

c) Smart contracts that can execute transactions/actions according to business rules

Use case: Real-time trade settlement 

Due to the lack of a mechanism for real-time monitoring of the positions of various financial instruments, there is an inherent risk of trade default among counterparties. Currently, the clearing house acts as an intermediary and absorbs this risk of default. However, the existence of intermediaries has extended the timetable of the trade settlement cycle.

In the blockchain system, once the transaction is executed on the exchange, the transaction details are passed to the smart contract maintained on the permission network. The smart contract is synchronized with the ledger position of the tool maintained on the blockchain, and the availability of the trading tool is checked in real time (picture below). Since the rules on the smart contract and the position ledger on the blockchain cannot be tampered with, this ensures the trust and transparency of the transaction entity, so that transactions can be settled in real time. Enabling near-real-time settlement will reduce counterparty risk (credit risk, exchange rate risk, etc.) and eliminate problems related to reconciliation, communication, and settlement errors.  

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Picture: Blockchain settlement process

Use case: Three-party collateral management

Financial institutions hire tripartite agents to manage their collateral and counterparty risks. The current system only promotes an end-of-day view of collateral positions, which leads to an increase in collateral deposits. This can lead to poor use of collateral and increase financing costs.

In the blockchain-based collateral management solution, the distribution logic is encoded on the smart contract. The contract will contain rules (qualification check, risk of wrong way, haircut, concentration limit) mainly related to the regulatory mechanism. Private rules such as credit support attachment terms and conditions, due to their volatile nature, will be out of the chain on the private rules engine. The smart contract will interact with the long box and segregated account positions and complete the allocation. The allocated collateral positions are stored in real-time on the distributed ledger, which can be viewed by all parties and regulators (below). This will help release the excess collateral of account holders with tripartite agents into circulation, creating more liquidity and collateral optimization for all parties.

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Financial Services Securities and Capital Markets consultant Kurt Sandeep gave a recommendation: Institutions should use the PoC method to test use cases, because blockchain technology has limitations in scalability and integration with existing systems. Institutions can use the ecosystem to implement PoC using innovative capabilities such as laboratory as a service, blockchain as a service, and crowdsourcing. It is important to implement small-scale implementation on the blockchain in the next 1-2 years to verify tangible results and cultivate the organization’s understanding and interest in blockchain applications. It is expected that blockchain-based applications will become mainstream in the next 3-5 years, and organizations with mature capabilities to utilize internal and partner resources are expected to establish a competitive advantage over other organizations that choose to develop new paths.

2. Central Bank Digital Currency (CBDC)

CBDC is also known as digital legal tender or digital base currency. It will serve as a digital representative of a country’s legal tender and will be backed by an appropriate amount of currency reserves (such as gold or foreign exchange reserves).

Each CBDC unit will act as a secure digital tool equivalent to a paper bill, and can be used as a payment method, value store, and official account unit. Just like banknotes with unique serial numbers, each CBDC unit will also be distinguishable to prevent imitation. Since it will become part of the money supply controlled by the central bank, it will be used with other forms of regulated currencies such as coins, bills, notes and bonds.

CBDC aims to bring the best of both worlds-the convenience and security of digital forms such as encrypted currencies, as well as the traditional banking system’s regulated and reserve-backed currency circulation. The specific central bank or other competent monetary authority of the country will be solely responsible for its business.

But so far, no country has officially launched a digital currency backed by the central bank. However, many central banks have initiated pilot programs and research projects aimed at determining the feasibility and availability of CBDC.

The Bank of England (BOE) was the pioneer in launching the CBDC proposal. Later, the central banks of the People’s Bank of China, Bank of Canada, Uruguay, Thailand, Venezuela, Sweden, Singapore and other countries are studying the introduction of digital currencies issued by central banks.

Russia has been pushing for the creation of the “crypto ruble”, which was announced by Vladimir Putin in 2017. Presumably, one of the main reasons Putin is interested in blockchain is that transactions are encrypted, making it easier to send money carefully without worrying about sanctions imposed by the international community on the country. After the Financial Times reported in January 2018 that Putin’s economic adviser, Sergey Graziyev, said at a government meeting that “this tool (ie, the encrypted ruble) is very suitable for us to carry out sensitive activities on behalf of the country. The theory has gained attention.. We can settle settlements with our counterparties around the world regardless of sanctions.”

It is said that Venezuela has been committed to developing a CBDC called “petroleum” since 2017, which will be supported by physical crude oil inventories. The Venezuelan government also announced “Petroleum Gold” in 2018, which is said to be linked to the value of oil, gold and other precious metals.

3. Decentralized Finance (DeFi)

DeFi is an open global financial system built for the Internet era—an alternative to an opaque, strictly controlled system combined with decades-old infrastructure and processes. It allows you to control and understand your funds. It gives you the opportunity to access the global market and the opportunity to substitute local currency or banking. DeFi products open financial services to anyone with an Internet connection, and they are mainly owned and maintained by users. So far, cryptocurrencies worth tens of billions of dollars have flowed through DeFi applications and are growing every day.

DeFi and traditional finance

One of the best ways to understand the potential of DeFi is to understand the problems that exist today.

  • Some people do not have the right to open bank accounts or use financial services.
  • The lack of access to financial services will hinder people’s employment.
  • Financial services may prevent you from getting paid.
  • The hidden charges for financial services are your personal data.
  • The government and central agencies can close the market at will.
  • Trading hours are usually limited to business hours in a specific time zone.
  • Due to internal human processes, remittances may take several days.
  • There is a premium for financial services because intermediaries need their cuts.

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Picture: Comparison of DeFi and traditional finance, the picture comes from the official website of Ethereum

What can ordinary users do with DeFi?

Most financial services have alternatives to decentralization. But Ethereum also creates opportunities for creating new financial products. This is an ever-growing list.

  • Send money to the world
  • Flow money around the world
  • Get stable coins
  • Borrow funds with collateral
  • Unsecured loan
  • Start crypto savings
  • Trading tokens
  • Expand your investment portfolio
  • Fund your ideas
  • buy insurance
  • Manage your investment portfolio

4. Digital identity

This use case prevents theft and provides individuals with greater autonomy over their data.

A decentralized identity is a credential that a person can control when, where, and with whom it is shared. In the real world, sharing credentials is a matter of course-but in the digital world, there has long been a lack of a secure and smart way to do this.

At present, IBM Verify Credentials has developed a blockchain-based digital identity system that enables known and trusted issuing organizations to issue certificates to individuals. In turn, these individuals can hold and present their credentials to the verification organization of their choice.

For businesses, costly password resets, emerging privacy regulations, and other identity management challenges are forcing companies to divert resources from their core business strategies. IBM Verify Credentials allows companies to trustfully exchange new licensed data sets while maintaining their relationship with end users.

5. Energy and sustainability

Currently, oil and gas companies suffer from isolated infrastructure and lack of transparency, efficiency and optimization.

How to use blockchain to authenticate the source of green energy?

According to the description of crypto company Iberdrola, they have launched a pilot project based on the use of blockchain to ensure that the energy supplied and consumed is 100% renewable in real time. Using this technology, the factories that produce electricity are linked to specific consumption points, so that the source of energy can be traced. This increases transparency and ultimately encourages the use of renewable energy.

This technology is an effective way to allocate power generation assets to specific consumption points, and can even be used to establish a priority hierarchy when sources are involved. This allows the renewable energy certification process to be accelerated and automated due to a greater degree of traceability.

This aspect is essential for long-term power purchase agreements (PPA) based on renewable assets, as these agreements require proof that the energy provided comes from 100% green resources. These agreements play an important role today because they promote the growth of renewable energy by encouraging large companies to purchase this type of energy.

The blockchain also guarantees the transparency and security of transactions. The transaction will be permanently recorded on the platform, allowing all parties to review the results. The technology can also work under smart contracts that are automatically executed when the two parties fulfill the agreed terms, thereby reducing intermediaries and simplifying the process. This reduces costs and increases privacy.

6. Means of payment

Financial services struggle with outdated operating procedures, slow payment settlements, limited transparency and security vulnerabilities. Blockchain enhances the efficient digitization of financial instruments, thereby increasing liquidity, reducing capital costs, and reducing counterparty risks.

As we all know, the traditional cross-border payment field is full of fees, obstacles and delays. Individual remitters have to pay billions of dollars in personal remittance fees every year. Global companies have a choice between bearing the cost of foreign exchange or passing the cost to customers. All relevant personnel must wait days or weeks to complete the transaction.

Part of the problem is that the system is not interoperable. In order to send funds to different corners of the world without blockchain, for decades, in order to achieve a certain financial interoperability between financial institutions, correspondent banks and remittance operators in the value chain, the entire Piece it together. Connecting these different systems, especially in underserved markets, where local currencies are not traded on a global scale, will create friction, leading to long delays and high fees in each link of the chain.

Just last year, the G20 summit made strengthening cross-border payments a priority, on the grounds that faster, cheaper, and more transparent systems will bring benefits to global citizens and the economy, and more and more global policy makers recognize To the blockchain technology can solve the problem of outdated financial infrastructure.

But the solution is not out of reach—the solution is here. Today, blockchain technology is fulfilling its promise through seamless cross-border payments.

Financial scientist Daniel believes: “Blockchain technology can be used to benefit consumers without sacrificing supervision, accountability or regulation. Blockchain technology shows that we can connect financial infrastructure so that no matter where you are , Systems and value forms can be interoperable.”

7. Government and public sector

The blockchain-based healthcare solutions will achieve faster, more efficient and safer medical data management and medical supply tracking. This can significantly improve patient care, facilitate advances in medical discovery, and ensure the authenticity of drugs circulating in the global market.

Blockchain can play a unique role in preventing government corruption. Its technology provides a unique combination of permanent and tamper-proof record keeping, real-time transaction transparency and auditability, and automated smart contract functions.

Use case: public procurement

Public procurement (or government contracting) is the largest single market for government spending and the largest source of official corruption in the world. Various factors make this government process a hotbed of corruption in high-income and low-income countries. The supplier selection process is complex and opaque, involving a high degree of human judgment. These vulnerabilities not only lead to a lot of financial waste, but also distort market prices, reduce healthy competition, and often lead to substandard goods and ineffective services.

How blockchain can help: Blockchain-based processes can promote the supervision of tamper-proof transactions by third parties, and achieve higher objectivity and uniformity through automated smart contracts, thereby increasing the transparency and accountability of transactions and participants System, so as to directly solve the corruption risk factors of procurement.

Use case: land ownership registration

Governments of various countries have begun to experiment with blockchain-based land ownership registration. Some initiatives, such as those in Sweden, are motivated by the desire to increase the efficiency of transaction-intensive industries. Other countries, such as Honduras and India, intend to inculcate and expand property rights and increase transparency in the process of being vulnerable to corruption.

How blockchain can help: Blockchain-based land registration can provide a secure, decentralized, publicly verifiable and immutable record system through which individuals can clearly prove their land rights. These qualities reduce opportunities for selfish manipulation of land rights and increase the flexibility of land ownership more generally.

Use case: electronic voting

Increasing concerns about election security, voter registration integrity, vote accessibility, and voter turnout have led the government to consider blockchain-based voting platforms as a means to increase confidence and participation in the basic democratic process.

How blockchain can help: The decentralization, transparency, immutability, and encryption of blockchain may help minimize election tampering and maximize the accessibility of opinion polls.

8. Healthcare and life sciences

The blockchain-based healthcare solutions will achieve faster, more efficient and safer medical data management and medical supply tracking. This can significantly improve patient care, facilitate advances in medical discovery, and ensure the authenticity of drugs circulating in the global market.

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The country intends to devote 20% of its GDP to healthcare in the near future. If this statistic is not shocking enough, consider that the industry continues to be plagued by soaring hospital costs, inefficient practices, and ongoing data breaches. These (very expensive) problems are driving efficiency and innovation.

With its ability to eliminate the current spending bubble, protect patient data, and improve the overall experience, the use of blockchain in healthcare may help ease pain. This technology has been used in everything from securely encrypting patient data to managing outbreaks of harmful diseases. For example: protecting patient data, eradicating the abuse of prescription drugs, simplifying care and preventing costly errors.

9. Media and Entertainment

Piracy, fraud, and intellectual property theft of digital projects cause losses to the entertainment industry at an estimated US$71 billion each year. Blockchain technology can track the life cycle of any content-including protecting digital content-and facilitate the distribution of real digital collectibles or NFTs (non-fungible tokens).

The media and entertainment attach great importance to the protection and monetization of intellectual property rights. For media companies, blockchain has industry-wide applications that can change the way content is created, consumed, and protected.

Blockchain has the potential to change multiple markets in the media and entertainment sector, especially those where participants will benefit from the security and transparency provided by blockchain, such as payment distribution, funding, monetization, and contract execution.

Content micropayment

Because content creators place media behind subscription-based paywalls, they may miss out on income from consumers who are unwilling to pay for the entire subscription but are willing to pay less to read a single article or watch a season of a TV show.

Due to blockchain-driven micropayments, pay-per-use consumption may become feasible. The ability of the blockchain to retain a comprehensive record of its data can more accurately track when and how copyrighted content is consumed. The implementation of micropayment pricing models is usually inefficient, but its execution can be fully automated and cost-effective through blockchain.

Eliminate content aggregation

The decentralized structure of the blockchain enables content creators, such as musicians or writers, to directly distribute their works to consumers, bypassing traditional distribution channels, and leaving a larger share of revenue to content creation By himself. This may affect everyone from large media companies to independent bloggers, helping artists establish direct relationships with consumers.

Royalty distribution

With the growth of music streaming services, the collection and distribution of royalties in the music business have become more complicated and opaque. For example, every time a song is played online or in the background of a TV show, the distributor must compensate the copyright owner of the music—but there may be disputes over the accuracy and compensation rate of such royalties.

A smart contract built on the blockchain and attached to a given music can increase the accuracy, speed, and trust of the process by automatically executing contract terms between eligible parties. This will allow more accurate tracking of song usage, faster royalty payments, transparency of contract terms, and income distribution between artists and other stakeholders. It may also undermine or eliminate the role of copyright collection societies, which currently act as central intermediaries in charging rights holders.

Consumer-to-consumer sales

As with enhanced tracking of music use, blockchain can enable other types of content owners to better monitor their copyrighted materials. Illegal peer-to-peer file sharing of TV shows, movies, or other content is already common, but file sharing may become a legal practice that can be controlled and monetized. When consumers buy or subscribe to blockchain-hosted content and then share it with friends, content owners can track the distribution and charge a fee. This will create an additional source of income for content creators and provide better transparency in how to use and share copyright-protected assets.

10. Real estate

Some enterprise versions of Ethereum (company customization) can realize the digitization of assets and financial instruments. This enhances the decentralization of ownership, expands access to global markets, increases liquidity, and democratizes access to real estate investment opportunities.

But why is the blockchain ready to provide such important support to the real estate industry? First, by using distributed ledger technology (DLT), it increases trust by increasing transparency. In the real estate field, trust in websites, agencies, and listings is essential. Blockchain also speeds up the contract process, saving time and reducing costs.

Because the daily volume of real estate transactions is so large, a common lease and purchase database is needed more than ever. Blockchain can provide. Upgrading the traditional multiple listing service (MLS) database to a blockchain-based database will create a more transparent ledger system where brokers and agents can view the entire transaction history of the property. The inherent trust system of blockchain makes it an ideal technology for real estate. Real estate companies around the world are using blockchain’s smart contracts and ledger functions to transparently and effectively promote leasing, purchase, investment and even lending.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/one-article-counts-10-areas-that-are-deeply-affected-by-blockchain-technology/
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