Blockchain technology has seen tremendous advances in its brief history and, as a result, many prominent blockchain use cases have emerged. Blockchain is now overcoming challenges in a wide range of industries and has even fostered the rise of entirely new industries, such as DeFi (decentralized finance).
Moreover, adopting blockchain technology is quickly becoming more practical for individuals, startups, and large enterprises. Gartner’s 2019 CIO Survey revealed that only 3% of surveyed CIOs had deployed blockchains, but 60% expect their organizations to deploy blockchains within the next three years. Gartner also estimates blockchain will generate $3.1 trillion in new business value by 2030. Let’s take a look at some of the major blockchain use cases driving this anticipated level of adoption and growth.
Top 7 Blockchain Use Cases
For each blockchain use case, we’ll examine the challenges existing industries face and discuss how blockchain technology provides solutions. We’ll also take a look at specific examples of businesses developing technologies for each of these blockchain use cases.
Security Tokens
According to US law, securities are “any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness” or other certificate of deposit that carries wealth. Tokens, in the context of blockchain technology, are digital assets with a fixed supply. Thus, the term “security tokens” refers to tokens created to represent real-world assets— that is, digital tokens that signify ownership of traditional securities. This is rapidly becoming one of the most significant blockchain use cases.
In the traditional finance world, modern asset exchanges are highly complex systems, often leading to inefficiencies. Even in the era of digital trading platforms, the process of completing a trade isn’t instantaneous. While some platforms enable users to see trades occur in real-time, it actually takes two business days to clear for the most advanced exchanges.
Stock exchanges are especially fragmented. In general, it’s quite difficult for someone who is a resident of one country to participate in a stock market based in another country. Companies must also spend a great deal of funds, time, and resources on regulatory compliance. The capabilities of most trading platforms are also pretty limited. Other than company shares, they generally aren’t able to support the issuance or trading of other assets.
Security tokens provide a potential solution to the above-mentioned challenges. Security tokens utilize blockchains to securely verify transactions in minutes, or even seconds. This efficiency can help solve liquidity challenges for both companies and investors. In many cases, security token platforms are available to users living in multiple nations or jurisdictions around the world.
Imagine that a traditional company wants to go public and offer 100 Million shares of their stock in the IPO. They could easily create 100 Million tokens on a blockchain and let each token represent ownership of one share of the company’s stock. This is an example of a security token. Investors could buy, sell, and trade the security tokens in a secure, peer-to-peer way, with very low fees and almost no wait time. And, anyone with an internet connection can participate.
Greater accessibility means that markets using security tokens are able to better reflect the globalized nature of the modern economy. Additionally, compliance rules for security token investing can be automated through smart contracts. A high degree of automation ensures that only qualifying investors are able to participate. This potentially provides markets with a vastly more efficient way to meet complex international laws related to Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT).
Finally, security tokens can be used to represent ownership of various real-world assets besides company shares. Real estate, renewable energy, agriculture products, and much more can all be tokenized and traded digitally. Tokenization is shaping up to transform the global economy and move blockchain value storage far beyond digital currencies. According to a report from the World Economic Forum, 10% of global GDP— around $10 trillion— is expected to be stored via blockchain technology by 2027.
Popular examples of security token platforms include Harbor, Polymath, Securitize, and Swarm. These projects are working to develop this blockchain use case for regulatory-compliant security token issuance and/or helping existing securities tokenize their assets on blockchains.
Supply Chain Management
The goal of any supply chain management system is to increase operational efficiency, thus cutting shipment costs and/or reducing the time it takes for products to move from Point A to Point B. Unfortunately, electronic recordkeeping via email and traditional databases aren’t optimized for efficiency of global shipments.
Blockchain technology provides a number of blockchain supply chain solutions. According to a 2013 report from the World Economic Forum, reducing supply chain inefficiencies could lead to increases in global GDP by up to 5 percent and boost global trade volume by as much as 15 percent. Blockchain solutions are already being tested and implemented in supply chains for several business verticals: food/agricultural products, pharmaceutical supplies, designer clothing/apparel, and more.
A number of enterprise-level blockchain supply chain management solutions are attracting major corporations. One example is Trust Your Supplier, a partnership between IBM and Chainyard that was first announced in August 2019. In addition to IBM, founding participants include Anheuser-Busch InBev, Cisco, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric, and Vodafone.
This system serves as a “digital passport” for parties involved in supply chain routes. Trust Your Supplier enables third-party verifiers and auditors to directly participate on the network, which can help optimize quality assurance practices. Several public blockchain projects are also working on supply chain management solutions for a wide range of industries. Popular examples of this blockchain use case include VeChain, IOTA, and HempCoin.
Privacy
It wasn’t so long ago that the fight for privacy rights was considered a fringe movement driven by slightly paranoid tech gurus and computer nerds. Now, the fight has gone mainstream. The New York Times launched the Privacy Project and has been publishing op-eds with titles like “You Should Be Freaking Out About Privacy” and “Be Paranoid About Privacy.” Even Microsoft CEO Brad Smith admits that “there is a privacy crisis.”
Web technologies have led to many benefits for society but user data is continuously exploited by corporations for financial gain. Until the decentralized internet is fully developed, data privacy will remain a major concern. It’s no secret that almost all tech companies collect and sell user data such as social media activity, search history, and even transaction information. While laws like GDPR have been established to protect citizens in some countries, the majority of the world’s web users aren’t covered.
What’s even more concerning is that big tech and financial institutions are increasingly linked to one another. For example, in August 2019, Apple launched Apple Card together with Goldman Sachs. In August 2020, Google onboarded six new banking partnerships to a project it internally refers to as “Project Cache”, which will offer checking accounts by partnering with banks and credit unions that handle all financial and compliance activities. Many fear that such practices will lead to further erosion of data privacy in the coming years.
Blockchain technology offers potential solutions to many data privacy issues. Indeed, protecting privacy is one of the most widely-recognized blockchain use cases. In general, distributed ledger technology offers more privacy than today’s financial systems. Although some Bitcoin addresses have been linked to individuals and even blacklisted, several blockchains enable private transactions. Popular blockchain privacy technologies include zk-SNARKs, zk-STARKs, stealth addresses, and Ring Confidential Transactions.
Several digital currencies, known as privacy coins, exist specifically as a means of increasing data privacy. Monero (XMR), Zcash (ZEC), Grin (GRIN), and PirateChain (ARRR) are all popular currencies that enable users to obfuscate transaction amounts and wallet addresses. Some blockchains like Monero set private transactions as the default standard. Others like Zcash give users the option to toggle between transparent transactions and private transactions.
Decentralized Identity
Traditionally, digital identity has been either fragmented or centralized. For example, if you want to sign up for an account on a specific website, you usually have to either create a new password that corresponds to your email address or grant permission to the website to access an existing third-party account as the login (e.g. Facebook or Google). The former solution requires multiple steps but is a better option for data privacy. The latter solution is convenient but potentially dangerous because the responsibility of data protection and password security for multiple accounts relies upon the security measures of a single company.
Similarly, physical forms of identification (e.g. a driver’s license or passport) have significant limitations, depending on the country or jurisdiction where a person lives. Issues such as identity theft are both common and costly. In the US alone, the Federal Trade Commission (FTC) processed 1.4 million fraud reports totaling $1.48 billion in losses for 2018. But that’s only a concern for those with government-issued ID. According to the World Bank’s 2018 Global ID4D Global Dataset, one billion around the world people have no proof of identity at all.
Blockchain technology can support digital identities that replace traditional forms of ID, as well as centralized databases, making decentralized ID a major blockchain use case. For instance, some cryptocurrency wallets can serve as login credentials to various decentralized applications and websites. MetaMask is currently the most prominent example of this use case.
Taking decentralized identity a step further, blockchain can be used to create digital forms of identification required to access government services, vote in elections, or view medical records. Estonia utilizes a blockchain technology called Keyless Signature Infrastructure (KSI) for its ID-card system, which is currently being used by 98% of the nation’s citizens. More countries throughout the world are also considering blockchain as a solution for improving upon or replacing their existing identity management systems.
DeFi (Decentralized Finance)
The global financial system has a number of inefficiencies that have proven difficult to overcome, even with the emergence of new payment technologies. Cross-border transactions generally have very high fees and take longer to complete than domestic transactions. Much of the value transfer on savings and lending goes to banks or other institutions, rather than the people sending and receiving the funds.
Another issue with the traditional finance and banking industry is limited accessibility. In many developing countries, significant portions of the population have no bank accounts or bank cards. According to the 2017 Global Findex database, 1.7 billIon people over the age of 15 lack access to a bank account.
DeFi (decentralized finance) is one of the most widely recognized blockchain use cases. The aim of DeFi is to create an open financial system in which ordinary users can lend and borrow money using software, rather than a bank. While it’s a relatively new industry, with its roots emerge in mid-2017, DeFi has since grown voraciously. In February 2021, the total amount of funds locked in DeFi applications surpassed $37 billion. Many people believe that DeFi applications (e.g. crypto exchanges, lending/borrowing platforms, and marketplaces) could one day make banks and other financial institutions obsolete.
Most DeFi lending and borrowing applications run on blockchains. They use digital currencies that can be sent and received globally at lower costs than fiat currencies, like the USD or EUR. Because DeFi doesn’t require an intermediary, most platforms generally offer more competitive rates for lending, borrowing, saving, and other financial activities.
Most importantly, smart contract technology enables users to execute financial decisions in real-time without the hassle of filing paperwork or having to trust that an institution is keeping their funds safe. All it takes is a few clicks of the mouse.
The top five DeFi applications by funds locked are currently Maker (lending), Compound (lending), Synthetix (derivatives), InstaDApp (lending), and Uniswap (decentralized exchange). These five, and most other DeFi applications, are built on the Ethereum blockchain. Additional blockchains have started supporting DeFi applications, as well.
Gaming
Massively multiplayer online games (MMOs) and mobile app games are far more advanced than even just a decade ago. Still, there are a few limitations that can be overcome with blockchain innovations. For example, gaming has traditionally depended upon the security of centralized servers run by gaming companies or cloud service providers. These servers are responsible for protecting sensitive personal data as well as valuable in-game items. Unfortunately, security breaches have become increasingly common, especially for the world’s most popular game companies.
In January 2019, a Fortnite security vulnerability left 80 million user accounts at risk. Attackers had the ability to take over player accounts and gain access to their V-bucks, an in-game currency. They could also access in-game contacts, record in-game conversations, and eavesdrop on conversations taking place at the player's home.
In June 2019, a similar login flaw exposed 300 million EA Games accounts. In another major example, the usernames and passwords of more than 172 million accounts were exposed in the September 2019 hack of Zynga, the company behind the Words With Friends mobile app.
There are two major reasons that gaming is becoming such a prominent blockchain use case. First, storing user data on distributed ledgers instead of centralized databases greatly reduces the potential for large-scale attacks as seen with the examples above.
Second, blockchain can be used as a way to improve the storage and trading of in-game assets. Non-fungible tokens (NFTs) are digital currencies which represent 100% unique items, both real-world and virtual assets. When used in gaming, NFTs allow users to have 100% control of their in-game assets via cryptocurrency wallets. Furthermore, NFTs can be easily traded for fungible currencies (e.g. Bitcoin or Ethereum) or other non-fungible tokens on marketplaces thanks to commonly-used smart contract standards like ERC-721.
Many blockchain games have already gained loyal followings, making gaming an excellent blockchain use case and area for future growth. Spells of Genesis, 0xUniverse, and Gods Unchained are just a few examples of today’s most popular blockchain games that utilize their own non-fungible tokens.
Healthcare Recordkeeping
Electronic medical records (EMR) are intended to provide patients and healthcare providers with a standardized way of sharing health data. In theory, this is supposed to improve patient health outcomes and optimize communication between various providers, clinicians, and researchers.
The reality is that today’s EMR system has led to more problems than solutions. One survey looked at 571,045 providers affiliated with 4,023 hospitals. The data showed that 75% of surveyed hospitals use 10+ disparate EMR vendors. In other words, healthcare data can be dispersed among a number of different systems that aren’t connected and can’t share information. The lack of streamlined communication often results in poor patient experiences.
Improving the state of healthcare record keeping is a promising blockchain use case. In fact, blockchain technology is already being applied to improve the interoperability of EMR systems. With blockchain, patients have the ability to own their own medical records and share relevant information in real-time.
Instead of relying upon one provider to send over records via fax or email, the patient can simply grant permission to relevant parties such as health facilities or even specific doctors, nurses, or clinicians. Furthermore, blockchains are being designed to streamline compliance of complex patient data privacy laws such as the United States’ Health Insurance Portability and Accountability Act (HIPAA).
BurstIQ and Medicalchain are examples of blockchain-based platforms that aim to empower healthcare data sharing and interoperability. In July 2018, Medicalchain conducted a pilot partnership with The Groves Medical Group to bring blockchain medical records to four UK-based general practices which could support over 30,000 registered patients and 1,000 private patient families. In March 2019, BurstIQ announced that three of Colorado’s clinical health data organizations, Colorado Regional Health Information Organization (CORHIO), Quality Health Network (QHN), and Colorado Community Managed Care Network (CCMCN), would begin piloting its platform.
Blockchain Use Cases With Komodo
Komodo is a multi-chain platform that offers composable blockchain solutions to meet any blockchain use case. With the Komodo's blockchain technology, developers can customize and launch a chain, activate modules, and start building blockchain-based software in minutes.
To find out more about how you can utilize this technology for your own blockchain use cases, check out Komodo’s Developer Documentation or read this blog post on how to make a blockchain.
If you're a business looking to integrate blockchain technology, fill out the form on our business page to contact our business team.
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