Blockchain technology came into the limelight in 2008 with the exponential popularity gained by Bitcoin – a blockchain-based cryptocurrency. However, the origins of Blockchain date back to the late 1980s with the roots of Merkle Tree and to the early 1990s with the work of Stuart Haber and W. Scott Stornetta. Haber and Stornetta envisioned a system working on a cryptographically secured chain of blocks whereby no one could tamper with the documents’ timestamps.
After that, once Satoshi Nakamoto’s whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” went viral, there was no looking back. However, the Bitcoin phenomenon also became a kind of soft barrier for blockchain technology. Until recently, blockchain applications were not very popular beyond the digital currencies and the financial sector.
Today, blockchain technology is still far from mature, yet its application is growing across significant sectors, far beyond digital currencies.
This article will highlight the scope of blockchain technology applications across several industries. So give it a read and get in touch with us if you would like to provide some feedback or would like to get more information on how we can help your business with blockchain technology.
- Blockchain technology, blockchain network, and distributed ledger technology across various industries
- Finance and Banking
- Healthcare Technology
- Supply chain management
- Transportation and mobility
- Information and communication technology
- Energy and Infrastructure
- What should you do for your business?
Blockchain technology, blockchain network, and distributed ledger technology across various industries
- Finance and Banking
- Healthcare Technology
- Supply chain management
- Transportation and mobility
- Information and communication technology
- Energy and Infrastructure
Let us begin with the most commonly discussed industry of finance and banking.
Finance and Banking
In the finance and banking sector, blockchain poses several benefits in terms of transparency, security, and improved record-keeping. It makes it a perfect solution for banking purposes such as Anti-Money laundering, client onboarding, or fraud prevention. The obvious use is monitoring, as blockchain provides transparency, better traceability, and faster analysis thanks to being digital.
Another option could be sharing distributed ledger with regulators and eliminating the need to prepare reports, and, on the other hand, helping with identifying risks faster. Using blockchain will support automation which will cause reduced costs of procedures and increase the speed of decision-making.
You might wonder why these blockchain applications and their descriptions might come up on hundreds and thousands of sites on the internet. What new do you get by going through this article, you ask? Well, let us introduce you to the term “RegTech“. It has been around for quite some time, but it’s not yet widely popular.
What is RegTech (Regulator Technology)?
RegTech uses new technologies to deliver regulatory requirements in the financial sector. The main areas associated with RegTech are risk management, compliance, transaction monitoring, regulatory reporting, identity management, and control. It aims to secure transactions and increase transparency by leveraging the benefits of distributed ledger through Blockchain technology and cryptocurrency.
The big problem
RegTech came to the scene after the financial crisis in 2008. One of the global financial crisis’s consequences was the increase in supervisory regulations by 492% (2008–2015). At the same time, the fines imposed on the largest banks from 2009–2014 increased 45 times. Since then, financial institutions have to comply with the requirements of the control system, targeting not only malversations but also user data security.
Despite the considerable expenditure on implementing the new regulations, financial sanctions resulting from an incomplete adjustment are unavoidable. Only in the United States financial institutions were fined for more than $160 billion since the global economic crisis in 2008.
It is estimated that banks currently spend over $70 billion a year on compliance. RegTech can help reduce these expenses while increasing quality and efficiency.
Benefits of implementing RegTech
The most significant benefits of implementing RegTech solutions are quality coordination of data exchange between the financial sector and the regulation institutions, boosting data processing via the usage of business intelligence tools, or simplified risk detection and analysis.
This may evolve towards technology-enabled process efficiencies, data sharing and aggregation, real-time data monitoring, and anomaly detection or blockchain-based platforms for compliances in the future.
RegTech is a dynamically developing sector due to the restrictive rules applicable to institutions in the financial industry. The use of new technologies will reduce the costs associated with human error, data storage, adapting to the regulations, and on the other hand, help to avoid penalties and reduce fraud.
The features of blockchain, such as Blockchain ledger, smart contracts, data tracking, transparent distributed ledger, public and private blockchain networks, and so on, make it great for solving problems faced by banks and other financial institutions.
The new technologies and the healthcare industry have a lot more in common than most businesses estimate. No wonder, the global blockchain in the healthcare market is can reach $5.61 billion by 2025. Implementing blockchain technology could help solve pressing problems in the healthcare industry, costing us hundreds of billions of dollars annually.
This section of the article will highlight problems within the healthcare industry and how blockchain could come in handy.
Urgent problems in healthcare
One of the pressing problems is the lack of a universal patient identification system and record management. Why is it so important? This is one of the reasons for mismatched patient EHRs (Electronic Health Records) or Digital personal medical records.
According to statistics, as much as half of the patient’s personal medical records are mismatched during the transfer of the data between healthcare systems. One in five patient records is not accurately matched even within the same healthcare system.
It is estimated that between 2009 and 2018, more than 176 million patient records were exposed to data security breaches. It includes both banking information and genomic testing records. The alarming thing is that there was a 44.44% (month-over-month) increase in healthcare data breaches in October 2019. It means that over 600 000 healthcare records were reported as impermissibly disclosed, exposed, or stolen in those breaches. Paper-based record-keeping would be more secure, but the sheer amount of data generated on a day-to-day basis makes it almost impossible to manage.
Another major problem affecting the healthcare industry is insurance fraud. It includes unnecessary medical care, illegally prescribed medications, and false corruption claims. It is estimated that medical fraud costs about $68 billion a year, only in the USA. In 2014, the USA’s government recovered nearly $5,7 billion in healthcare fraud cases, but that’s still a tiny part of the problem.
The healthcare sector also faces the stiff issue of illegal drug sales. According to Health Research Funding Organization, 10% to 30% of the drugs sold in developing countries are counterfeit. An even bigger problem is that 16% of counterfeit drugs contain the wrong ingredients, while 17% have incorrect levels of necessary components. That’s why pharmaceutical companies must emphasize the safety of the entire supply chain of drugs. Companies may be losing $200 billion annually due to counterfeit medicines.
Solutions in the form of Healthcare blockchain
According to a BIS Research report, the healthcare industry could save up to $100 billion annually by 2025, thanks to blockchain technology. These savings are due to reductions in data breach-related costs, IT costs, operations costs, support function and personnel costs, counterfeit-related frauds, and insurance frauds.
Blockchain technology enables pharmaceutical companies to track drugs along the entire supply chain, making it harder for thefts and allowing rapid detection of irregularities. It ensures the higher security of our data, provides informational transparency, and enables us to have real-time and up-to-date information. Thanks to this, it is possible to identify fraudulent claims faster and minimize insurance fraud.
Estonia, one of the first global leaders in blockchain technology, has a nationwide electronic medical records system, which integrates and stores data from healthcare and other sectors using blockchain solution.
Blockchain capabilities assure data protection, integrity, and system access logs, which improves security. Another leader is The United Arab Emirates. UEA’s strategy covers, i.e., using blockchain technology in the healthcare system to track health professional licenses.
The insurance ecosystem is developing dynamically, but along with this growth, new problems emerge. Blockchain can be an excellent solution for the insurance sector and help with fraud detection, underwriting reduction or improving cyber insurance policies.
The global market for blockchain in insurance can grow to $1.39 billion by 2023. Blockchain technology can help to save reinsurers up to $10B and reduce risk by facilitating information-sharing and cutting costs by automating processes at the same time. No wonder that 65 per cent of insurance executives agreed that their organization must adopt DLT to remain competitive.
Problems in the Insurance sector
Fraud activities in the insurance industry
Despite intense efforts, the insurance industry has been unable to reduce fraud. Fraud costs constitute one of the most significant costs for the insurance industry. The insurance industry consists of more than 7 000 companies, and the premiums they collect each year are estimated at over $1 trillion. This is a massive market, and its development also creates new opportunities for committing illegal activities, which can be worth more than $40 billion per year. Moreover, it is very difficult to detect fraudulent activities using standard methods.
Today’s underwriting process is highly dependent on paper-based record keeping, with minimal online-enabled applications and tracking capabilities. This is the reason for huge costs and disagreements about record management – which information was shared, by whom, and when, and this can cause problems for underwriters and their clients.
The policies in cyber insurance are a relatively new product. Cyber insurance inten to protect the insured against the costs associated with hacking, cyberattacks, and breaches of the digital information stored.
The number of ransomware attacks is increasing year by year. 105% more attacks were reported in the first quarter of 2019 when compared with the first quarter of 2018. There was a 93% increase in the amount of ransom demands over the same period, with the hackers requesting $224,871 on average to release data.
Blockchain technology as a solution for the insurance industry
Blockchain technology can help to understand financial and price risks better by allowing storage and sharing of information more quickly and securely across parties in the insurance ecosystem. It creates a trust layer that adds security and the ability to establish trust between entities. This way, with the support of blockchain tools, insurance companies can build products fitted better to the market.
The insurance market is highly competitive, and customers expect the best value for money. Blockchain technology can bring a significant increase in efficiency, cost savings, transparency, faster payouts, and security in asset management.
A very important advantage of implementing blockchain solutions is fraud mitigation while allowing for real-time data sharing between various parties in a trusted and traceable manner.
Smart contracts could save P&C insurers more than $200B a year in operating costs and lower their operating ratio by anywhere from 5 to 13 percentage points. Using blockchain technology allows for automatically collecting records of agreements, transactions, and other valuable information and taking actions using smart contracts. So far, there have been few blockchain technology use cases in the insurance sector.
On estimate, in 2020, about 1.7 MB of Data was generated Per PERSON Per SECOND. That is over 2.5 quintillion bytes of data every single day. We store a lot of data and information, thus making it susceptible to a security breach.
The estimate shows that human error (95%), hacking (45%), phishing (22%), and malware (17%) are among the significate source of breaches. It costs businesses over $75 billion yearly to recover from ransomware attacks.
More about problems in the cybersecurity sector
Today’s businesses are highly dependent on the internet and digital technology. On the one hand, the increasing speed of internet connectivity, with the introduction of 5G, is helpful for businesses and individuals. However, on the other hand, the increased rates possess more significant challenges in terms of cybersecurity. In a recent issue of the Journal of Cybersecurity by Oxford University Press, they present several alarming pieces of evidence.
Significant major cybersecurity issues that businesses face nowadays include, but are not limited to, inability to recognize threats, unaware employees, security breaches due to remote work or human error, targeted ransomware attacks, slow introduction of security patches, and lack of due attention to cybersecurity issue by just considering it as another IT issue rather than a financial one.
It’s worth noting that cybersecurity is a concern not just for SMEs but also for businesses that invest considerable resources in securing themselves from breaches. For instance, Dyn, one of the largest DNS (domain name service) providers, experienced a major attack in October 2016 that disrupted large online businesses such as Spotify, Netflix, and Twitter. In February 2020, Amazon Web Services also experienced a similar attack.
In such a scenario, blockchain technology has answers that would be a boon to cybersecurity.
How can Blockchain technology aid in cybersecurity?
The fundamental principles of blockchain technology, such as decentralization, and consensus-driven, trustless framework, make it naturally secure, vigilant, and resilient to breaches. Blockchain addresses the leading problem of cyber security, human error, through data storage automation.
Nodes in blockchain systems automatically cross-reference the data, and then flag any misrepresented information. Hence data in blockchain-based solutions cannot be tampered with. The advantage the hackers have is that they are ususually using their distribution carefully.
By deploying blockchain technology and decentralizing the digital assets and security infrastructure, makes it is possible to defeat the hackers at their own game. For instance, decentralizing DNS entries can help prevent DDoS attacks.
The security patches, firmware updates, and installers can be verified before execution using blockchain technology. This would irradicate any changes of malware or other threats penetrating the security system unknowingly. Moreover, blockchain integration and encryption to validate and verify the system access process would rule out any unauthorized ingress. DAC. Digital services and consulting on blockchain technology could help you discover and address your business’s cybersecurity needs with the chance of security, trust, and privacy.
Supply chain management
Supply chain management involves a large volume of data and high complexity. A significant part of it is due to the fact that paper-based record-keeping is still very common, especially in the maritime sector, which forms a large part of the international supply chain. The supply chain management industry still requires considerable digital transformation efforts.
The recent disruptions in the supply chain due to the COVID-19 pandemic have caused huge losses to businesses in the sector. However, at the same time, it has presented itself as a huge opportunity as well, as highlighted by a number of global firms (See: Mckinsey, Deloitte, EY).
Current major problems in supply chain management
There are major bottlenecks in terms of data storage and exchange at the moment in supply chain management (SCM). Especially for smaller suppliers in the business structure, and the rigid nature of people involved in the operational process. The major concern cited to not moving towards digitalization in that of security. It causes considerable loss to various stakeholders in the industry. Delayed shipments, misplaced paper-based documents, corruption and so are some of the major barriers that need to be addressed.
In a recent report, other important problems highlighted for SCM include: cybersecurity, increasing tariffs or transaction costs, inflation, delayed cash flow etc. The same report also highlights a greater need for control and monitoring over the supply change as well as the removal of redundancies.
At the same time, among the technology adoption for overcoming the challenges, blockchain technology ranks last among all available solutions. It indicates a lack of awareness regarding the benefits of blockchain tech applications in SCM
Blockchain applications for solving supply chain issues
Smart contracts are the first major application of blockchain tech in the SCM. It would bring in increased automation, transparency, security and efficiency in the supply chain operations. In international transactions, the positive impact of blockchain tech would be been higher.
Secondly, blockchain technology applications would be useful in improving information sharing and security. Storing data on blockchain-based solutions would ensure easy access with high security as tampering with the data would be impossible without flagging it in consequence.
Thirdly for SCM, blockchain tech can significantly improve the traceability of the shipments as well as the required transportation documentation (such as waybills or bills of landing), which would reduce fraud, delays, corruption and resulting costs. The trustless nature of blockchain technology also helps in addressing the trust issues that usually exist between the stakeholders within an SCM transaction.
Overall blockchain tech, has the potential to address the major problems being face by the SCM and can help improve the profitability of the existing business models in the industry.
Transportation and mobility
The transportation and mobility sector took a huge hit during the COVID-19 pandemic. Perhaps, it’s one of the most affected sectors by this crisis. This brought about a change in transportation modes as well as mobility behaviour around the globe. According to a report on passenger mobility in the EU, a car is the most dominant mode of transport. However, there is a surge in the shared mobility market which in prospect may go beyond $751 billion by 2030.
The change in trends has brought about some issues and challenges as well. A lot of them overlap with the supply chain industry and logistics industry, due to their similarity. Let’s take a look at them in brief.
Current issues in the transportation and mobility sector that blockchain can solve
Autonomous mobility is gaining traction and it requires vehicle-to-vehicle communication in a network. This raises the security issue and a need for safeguarding the vehicles. Blockchain technology-based encryption can help secure these. It would be nearly impossible to hack it.
There is a looming issue of recording the mileage of vehicles. A number of instances of odometer tempering have been recorded. Blockchain-based smart odometers integrated with GPS can completely solve this issue. The GPS data stored on the distributed network in a blockchain would yield tamperproof data storage, which would help overcome this issue.
The rise of shared mobility needs to facilitated with the ability of two individuals to interact (I2I) directly without the intervention of a 3rd party. Such an I2I interaction, for such connected devices or vehicles, can be facilitated by blockchain-based solutions.
Lastly, as highlighted above in the insurance section, blockchain technology has an important role to play in terms of auto insurance. Just like the tamperproof odometer, a vehicle information system built on the blockchain-based network would prove to be a boon.
Amidst the COVID-19 pandemic and resulting lockdown, the entertainment industry was one of those sectors which experienced an accelerated shift towards the digital world. By the end of 2022, the total global revenues can reach close to $30 billion. The rapidly growing market size brings a lot of opportunities as well as challenges, due to technological progress, digitalization, personalization, behavioural changes among generations, and the continuous evolution of the pandemic effects.
The challenges in the entertainment industry rather are similar to those existing before the pandemic but at a bigger scale. There are already initial signs of implementation of blockchain technology in the entertainment industry, however, there is significant scope for accelerated adoption.
Difficulties faced by the Entertainment industry
One of the major threats faced by the entertainment industry is that of cyber security. The increase in digital distribution, such as through streaming sights has increased the importance of uninterrupted service, provisions to protect intellectual property, secure privacy of the users, and membership transactions.
Another issue that the entertainment industry has been facing since the digital revolution, is that of content piracy. Then there are the high costs of streaming and storage of content. These costs can rake up for global platforms such as Netflix or Amazon prime, hence there is also a need for decentralized data storage and access.
Let’s look at the plausible solutions for these difficulties.
What can blockchain tech do?
Blockchain technology has already seen deployment in terms of fairer content sharing through smart contracts and distributed ledger technology. This is beneficial all stakeholders, as the revenue can be automatically distributed as per the pre-determined contractual arrangement. Blockchain startups in the film and TV sectors have already experienced a surge of 713% YoY funding in 2021, with the investments reaching $25.2 billion. This is only projected to grow further north.
Blockchain technology-based decentralized media libraries have also started to appear, and a number of blockchain companies and startups have been acquired by larger companies in recent times. For instance, Spotify acquired a blockchain startup Mediachain.
Blockchain technology has also a significant role to play in the gaming sector, as it could enable more transparent competition and reward distribution. The betting sector has also seen a rise in the use of cryptocurrencies. On the other hand, blockchain also has a significant role to play in the emergence of NFT and Metaverse concepts and their digital assets.
Information and communication technology
It has been 1000s of times, but we have to say it again, “The advent of information and communication technology has revolutionized all aspects of business and society”. The global market size of ICT is projected to touch $5.5 trillion by the end of 2022.
During the COVID-19 pandemic, accelerated ICT adoption seen in several sectors lead certain trends such as remote work prevailing across various industries. The emergence of 5G, web 3.0, artificial intelligence and metaverse has presented new opportunities and have posed several issues and concerns too.
Businesses and government agencies have put forth their roadmaps for digital transformation or digital strategy that would determine how the economy and society would progress and evolve in the coming decade.
Let us see which are some of the major concerns in the ICT industry at the moment.
Current concerns in the ICT industry
A major concern that the ICT industry is currently facing is the volume of carbon emission footprint, as per the International Telecommunication Union. Even though lately the increase in efficiency of technology has flattened the emission curve, still there is a significant need for hardware and software intervention. Moreover, as individuals and organizations seek more and more computing/storage capacity, there is a need to increase the efficiency of available resources. For instance, large organizations having spare capacity in their ICT infrastructure could give certain access to other organizations or individuals. It would have a positive impact, financially for the organization or entity sharing the resource in particular, and also on the environmental footprint in general.
Data privacy and security are other major concerns that the ICT industry is dealing with. The increasing number of IoT devices and technology deployment across various sectors, the importance of addressing security concerns has never been higher. Securing the privacy and user identity of common users that are not tech-savvy also falls to the business providing ICT services.
Blockchain-based solutions that can help
Blockchain applications can answer most of the vital concerns that the ICT industry is facing today. Blockchain-based decentralized cloud solutions can help organizations or other entities to securely share their idle or spare resources with others in return for favourable rewards. It could be done through a public ledger or a private one and can enable in a mutual exchange of resources in the network of connected devices.
The overall effect of such a blockchain could solution would be, higher transparency, wider coverage of services or resource availability, reduced maintenance costs, decreased network congestion, lower environmental impact and even help avoid the risk of single-point failure.
The question about security in ICT can also be answered through the use of distributed ledger technology. There is no central organization that can control the stored data. Moreover, as the data is decentralized in nodes across the network, it would be virtually impossible for anyone to hack or tamper with the data. It also means that no organization or government could censor any content.
At the same time, Blockchain has the ability to promote sustainability by increasing the efficiency of energy consumption as well as optimum utilization. Hence it can contribute to decreasing the emission footprint of the ICT industry. European Union’s digital strategy has kept the keen emphasis on using blockchain for climate action.
Energy and Infrastructure
Affordable clean energy is one of the top priorities of world governments today. Almost 80% of public research and development funding goes to low-carbon technologies, and this percentage is rising. During the COVID-19 pandemic, global energy consumption declined by 4.5 per cent in 2020, however it rebounded by almost 5% in 2021.
In the infrastructure sector, the current investment trends show that there is a gap of almost $15 trillion, which is equivalent to 0.55% of GDP. In some regions of the world, this gap is more and in some, it’s less. Have a look at the map below (see source) which shows the range of investment gaps.
Globally, in terms of both energy as well as infrastructure, there are significant challenges apart from investment that need to be addressed. Let’s discuss some of them in brief.
Challenges that need to be addressed
Energy systems are experiencing a transformation. They are becoming more and more digitized and decentralized. Adapting to this trend requires governments and companies, to increase exploration, consideration, and accelerated adoption of distributed technologies.
ICT-based emerging technologies are already adding value to the energy markets with concepts such as microgrids, smart grids, smart meters, dynamic pricing, and prosumers, gaining momentum. This raises the based concerns as addressed in the ICT industry section, but also in terms of control, trading methods, customer service and sharing resources.
Despite efforts several efforts by the world governments and agencies there is still a considerable gap in the investments required to drive the global infrastructure.
Infrastructure is linked to the economy, poverty, environment, and sustainability. The main areas where infrastructure requires due attention are increasing power generation capacity, telecommunication, sanitation, rail and road infra, and supply lines especially for water.
Using blockchain technology solutions
Blockchain technology for the Energy sector
Blockchain-based solutions are true disrupters for the energy markets. For are some of the potential benefits of blockchain-based solutions for the energy sector.
Billing: Blockchain-based solutions such as smart contracts combined with smart metering could enable automated billing for distributed generators and consumers.
Markets and Trading: Blockchain-based trading platforms could help to evolve the wholesale energy markets, commodity trading, risk management, and forecasting.
Grid management: Blockchain-based solutions, by their inherent nature, would prove to be useful for storing data, managing smart grids, facilitating entity interactions, and securing data transmissions.
Resource sharing: Using blockchain technology would especially be beneficial for individual and business offers towards sharing the charging solutions, for example of electric vehicles or future mobility solutions.
Marketing and Sales: Blockchain could be combined with AI and machine learning, which can help business to adapt to consumption patterns and individual preferences to enhance marketing and sales. At the same time, thanks to the blockchain technology, companies can maintain the privacy of individual users.
Blockchain technology for Infrastructure sector
Blockchain technology might have a direct impact on infrastructure, and it can contribute to the factors that constitute the development of global infrastructure. We have discussed almost all of the first above which come together to accelerate the growth of the infrastructure sector, such as supply chain, insurance, banking and so on.
What should you do for your business?
Blockchain technology solutions are having growing applications in various industries around the globe. Some of the sectors you can see above, however other industries such as the automotive industry or car manufacturers, manufacturing industries, and retail systems, also use blockchain technology.
We can predict that more and more blockchain solutions would emerge in the market, especially new blockchain startups. Hence, it’s worth assessing quickly and efficiently where could your business use blockchain technology.
Get in touch with us and ask how we can help
Whether you are working in supply chains, manufacturing processes, record management, healthcare blockchain, bitcoin-based charities, retail space, land registration, verifying ownership, IoT devices, public ledger, equity swap or any other industries. Blockchain could help you in getting a competitive edge.
At DAC.digital, our unique methodology would help you and your business partners to reap the benefits that blockchain could provide.
PhD Yash Chawla
R&D Communications Advisor, DAC.digital | Asst. Professor, Wroclaw Tech.
Yash is a researcher, academician, and consultant in the field of marketing and innovation management, with keen interest in marketing communications, creative thinking, and sustianable development. He strives to make a positive difference for students, professionals and the society.