Best Blockchain Use Cases That Made Companies Stronger
Blockchain is the technology that, like the Internet in its time, will change a great part of modern business. How it will be, what problems the control register will solve and what benefits the entrepreneur will receive – read in this article.
How it is now. Speaking in New York at the Consensus 2018 blockchain summit, Fred Smith, founder and president of FedEx, said that due to different terminology, procedures and standards in the logistics systems of different companies and countries, the branch creates an “enormous number of mismatches”. This is the main problem of logistics, because of which business loses a huge amount of money, time and human resources.
To be more precise, according to the researches:
- courts all over the world hold back $140 billion due to mistakes and fraud;
- 10% of freight invoices contain inaccurate data;
- processing and administration expenses in logistics rose to 20% of general expenses for transportation;
- 8.5% of pharmaceutical cargos are damaged due to temperature departure during transportation;
- long-distance truckers in the USA alone drive 20 billion miles a year with slack or empty trucks.
Advantages of the blockchain. According to the report of DHL and Accenture, the implementation of blockchain and smart contracts will provide the following advantages in the logistics business:
- almost complete automation of the information storage process in digital format;
- the ability to involve new business models: micropayments, digital IDs, certificates and many others;
- easing of frictions related to the procurements, management and tracking of transportation, customs cooperation and financing;
- the ability to collect data on how goods are produced, where they come from, how and under what conditions they are transported. This information is stored in the system and can be provided to the consumer, retailers, and government services.
First success. Walmart uses the Hyperledger blockchain to track goods from manufacturers to store shelves. The company puts chips on products and these monitor temperature, humidity and location. These data are generally accessible so that customers can personally make sure of the product quality. The results of the Walmart experiment are described in the New Food Economy report.
In early 2018, iT-giant IBM, together with the Danish sea carrier Maersk, reported of the work on a logistics blockchain platform. Alibaba, Amazon and FedEx have shown interest in their inventions.
How it is now. Each financial and trading operation – from buying ice cream to international money transfer – made with the help or through the bank, has at least three major faults:
- increased transaction costs due to participation third parties in the transaction who play a role of warrantors and payment gateways;
- fraud and data theft risks, which are caused by the participation of third parties (the greater their number is, the higher risks) and the inability of banks to guarantee the safety of data storage (except those who have already switched over to the blockchain);
- if a transaction is not within the scope of ordinary one, its complexity, as well as the duration and price increase sharply (for example, an international bank transfer takes up to three days and costs up to 10% of the transaction charge).
Moreover, when you use a bank to hold money, you give it in bank's hand. And if the bank becomes bankrupt, for example, because of stock market games or unsuccessful investments, you will lose your money.
The advantages of the blockchain. It moves away most of the intermediaries, because the distributing registry itself is a guarantor of fair transactions, which makes transactions faster and cheaper. In addition, the blockchain has created a new accounting instrument, the information in which it is impossible to correct "backdated".
First success. The Spanish international bank Banco Bilbao Vizcaya Argentaria (BBVA) was the first who granted a corporate loan using blockchain technologies. The loan amount is 75 million euros.
In 2017, 12 of the 26 largest banks in China were formed into the consortium China Construction Bank to implement technologies based on a distributing register. The consortium is focused on lending to small and medium business.
Visa presented the pilot version of the B2B Connect payment system for corporate calculations based on the blockchain. The project was set up on the basis of the startup Chain and is being tested by banks such as Shinhan Bank, Commerce Bank, United Overseas Bank and Union Bank of the Philippines.
Less global financial projects on the base of blockchain were set up:
- Bank Hapoalim – management of bank guarantees;
- Barclays – tracking of financial transactions;
- Maersk – marine and transport insurance;
- Aeternity – payment gateway with high transaction speed.
How it is now. The real estate market is bureaucracy, fraud, corruption, and constant ambages. And all these are concerned the high cost of property and the lack of transparency. At the same time, these problems are inherent in all countries, independently of their welfare, state structure, and ease of doing the business index.
The advantages of the blockchain. To ease transactions, which are concerned the real estate, the blockchain provides such opportunities:
- Personality identification and verification mechanisms that can work on the basis of paper IDs and/or biometric data: identification by comparison of fingerprints, eye retina evaluation and so on. It will be safe, because the data in the blockchain cannot be changed (one can only add new information to the data already available), and the system itself is extremely difficult to hack.
- Simple registration of the deal, as well as a guarantee of money and property transfer. Blockchain and smart contracts make this process quick and cheap, because the information, which is stored in the system, is visible to all participants of the deal. Each of the parties can look at the necessary documents at any time and will be confident of its absolute authenticity without additional checking.
- Simple document flow. Transparency, immutability and a common standard of information storage will make it unnecessary for notaries, realtors, insurance underwriters and banks to participate in the sale and purchase transactions of property units.
First success. The first identification document within the blockchain platform was issued on Janina Lowisz. In 2015 the girl became the first citizen of the Bitnation community. Projects such as BioSSL, KYC.LEGAL, AML Bitcoin and Civic concern also with person's identification and verification.
The first real estate transaction within the blockchain platform was carried out in September 2017: a flat in Kiev was sold to Michael Arrington, the founder of TechCrunch, using the startup Propy.
Document flow in the real estate transactions can be simplified with the help of Propy, BREM, Masterchain, Crowdvilla and Propy blockchain platforms. On these platforms, people make P2P contracts for the purchase and sale of real estate. Consensys, Factum and Bitfury concern with real estate mortgage; ATLANT, Etheera, Airbnb, Propy and Blandlord – with rent.
How it is now. Retail today is 4.4 trillion dollars of annual turnover for 250 leading companies, the highest competition and constant striving for innovations, because it is only thanks to them that one can survive in this industry.
The advantages of the blockchain. The recent reports of Deloitte and the Interactive Advertising Bureau define the following strategic lines, where the blockchain will bring the most benefits to retail:
- payments and contracts;
- expertise in working with customers;
- supply chains;
First success. Big retailers Walmart and Kroger, in line with brands like Unilever and Nestle, entered into a partnership with IBM to use Hyperledger Fabric blockchain technology to track the logistics and authenticity of their products using distributed registers. Startups such as Provenance, Everledger and Blockverify, as well as private projects like The Co-op Food also concern with the tracking of the authenticity of the product and its quality.
How it is now. Zenith analysis shows that the market volume of global marketing will increase by 4.6% in 2018. Herewith marketing is gradually completing the transition from the dominance of advertising in the "real" sector – television, radio, billboards, and so on – to the commitment to online promotion. What promises many perspectives, but at the same time causes no less problems:
- People rights in data they generate. In particular, on May 25, 2018, the “General Data Protection Regulation” came into effect in the European Union, according to which personal data of EU citizens can no longer be collected, used, sold or transmitted without the consent of the “sources”. There is no reason to doubt that such laws will soon be adopted in most countries of the developed world.
- Combating with click fraud – "inanimate" traffic. Studies show that in the US alone, business spends $ 7 billion on advertising for bots.
- A large number of intermediaries. A Forrester analyst counted up that if advertisers take away intermediaries, they can increase the CPM from $1 to $5.
- Lack of transparency (honesty). Survey researches and studies show that people do not trust advertising, especially advertising in the Internet. For example, in the UK, 70% of people admitted that they do not believe in online advertising, in general, the third part of respondents simply block it with the help of special applications.
The advantages of the blockchain. Thanks to databases, which are based on the distributing registers, and smart contracts, you can:
- keep track of personal data, in order to report then to state control authorities;
- conclude the contracts with no middlemen, for example, directly with consumers of advertising;
- track the activity and "authenticity" of users in order to distinguish them from bots;
- buy personal data directly from "sources".
All this will carry out with a high degree of automation, maximum accuracy and security, which cannot be achieved through the technologies that are currently used.
In addition, the database about the products movement along the production line and the sales chain created on the basis of the blockchain will uplevel of consumer trust to the product, its seller, retailer and manufacturer. That's because people can personally assure of the quality, origin and authenticity of the products.
First success. About projects that increase consumer trust to the product and brand are written in the section about retail – Walmart cooperation with IBM. As to people control for the personal data that they generate, startups such as Mass, Synapse, Iris and ClearPoll can be noted. You can collect personal data with the use of Blockstack.
New loyalty programs create startups Incent loyalty, OrionCoin, DigitalBits and others. Such projects want to combine all discounts, bonuses, points, promotions and other loyalty mechanisms under one ratio, transferring them to the utilitarian tokens of their platform. Thanks to this, people can collect, sell, buy, present and exchange points in different loyalty programs or simply sell them for real money.
How it is now. The most significant problems of the real sector of production are redundant bureaucracy, difficulties in finding financing, malmanagement, as well as unnecessary complicated and inefficient sales chains.
In addition, the real sector lacks the tools to control assets and improve production and accounting efficiency — no large enterprise can keep track of assets that are in his possession.
The advantages of the blockchain. In an interview with ZDNet, Gary Brooks, chief marketing, global manufacturing and supply specialist of Syncron, told that the blockchain is of special interest to the industry because of its advantages in terms of control, verification and transparency:
- “Internet of Things”, or IoT will register all significant assets, which will allow to monitor over their movement, wear, condition, use and so on in real time;
- accounting, which is built on the blockchain, will bring reporting to a new level, because the information in it will be accurate and trackable, and the system itself will be automatical thanks to smart contracts;
- smart contracts will also make financial transactions more risk-free and at the same time will allow reducing the number of the mismatches and fraud on the market;
- tokenization of business will allow enterprises to raise the finances worldwide, without burdening themselves with unnecessary paper reporting.
First success. The blockchain’s main success in real production is based on the IBM Blockchain activity, which “turns talks about blockchain perspectives into real business results”. The digital giant uses Hyperledger technology of the Linux Foundation to increase production control efficiency, increase sales chain efficiency, and set going the communication with the market and consumers.
"Internet of Things" is being implemented by Maersk together with IBM for sea freight, by Brief Trace for tracking the location and status of pharmaceutical products, by Ripe.io for tracking agricultural products.
Initial Coin Offering, or ICO, is a form of a crowdsale where blockchain startups sell a certain number of tokens to investors and potential users of their services before the official launch of the project. Tokens are a digital analogue of shares, which gives access to the blockchain functionality or can be sold on cryptocurrency exchanges.