Business Use Cases for Blockchain

Cryptocurrencies like Bitcoin are just the beginning of what blockchain technology can do. Established companies like Microsoft, IBM, Google and Ford are using the power of blockchain to change the way they do business. Keep reading for an in-depth look at some of the most exciting blockchain use cases for enterprises.

Blockchain use case as a payment network

Along with public cryptocurrency systems that anyone can use like Bitcoin, there are also a growing number of private blockchain-based payment networks. One particularly practical use case for these networks involves remittances. Remittances are private, cross-border money transfers.

When remittance payments flow through the fiat banking system, the transaction must pass through a number of third-party middlemen agencies that provide oversight along the way. These agencies screen for money laundering and provide oversight to make sure that the funds go where they are supposed to go. This is why sending money this way is expensive and takes a long time to accomplish.

Companies like IBM and Ripple have already developed private networks that banks and other financial institutions can use to offer their customers faster, cheaper ways to transfer money. Facebook also has plans to launch a private, blockchain-based payment network. According to Business Insider, its features will include not only remittance payments but also a virtual checkout system for shopping on other websites and a rewards program.

The main downside of private payment networks from a security perspective is the fact that they are centralized. This makes private blockchain payment networks easier to hack compared to decentralized, public payment networks.

Blockchain as a database

One of the biggest advantages of blockchain-based databases is that they don’t require as much administration and hardware. Rather than renting or purchasing expensive server backends, you can set up a decentralized, trustless network for processing transactions. In addition, decentralized, blockchain-based networks are inherently fault-tolerant. In other words, they can continue operating even if a power outage, natural disaster or some other disruption knocks some of its nodes offline. Another plus is encryption, which makes it nearly impossible to tamper with data on a blockchain once you record it.

There are some downsides to consider as well. Many of today’s blockchain-based networks are slow compared to relational databases and other common enterprise solutions for storing and managing large amounts of data.

Jump over to software engineering blog TechBeacon for an in-depth look at the pros and cons of using blockchain in enterprise environments.

Blockchain as a supply chain solution

Blockchain really comes into its own as a solution for making supply chains more efficient. Many supply chains are in need of streamlining because the products that are being manufactured are becoming increasingly complex. For example, today a single car consists of 30,000 individual parts. Coordinating the production and assembly of all these parts requires hundreds of companies to communicate and cooperate with one another. To fill this need, manufacturers and parts makers rely on a network of middlemen agencies.

Using blockchain, companies can completely transparent systems for ordering and managing parts. With these new systems in place, they no longer have to rely on intermediaries to manage bank balances, negotiate prices and perform other similar tasks. It’s often hard to get companies to share their data. But with a blockchain-based system, all of the supply chain transactions are visible to all parties involved. What’s more, once recorded, the information stored is immutable and nearly impossible to change.

Despite all the potential benefits, the politics involved in upgrading to a blockchain-based supply chain system is a potential roadblock. In order to switch to blockchain, all the parties involved in the logistics of delivering products to the companies that need them need to reach an agreement on not only how the system will work but also who will have the ability to access and update it. Getting everyone on the same page can be a big challenge, especially if one of the parties involved lacks the necessary skills or equipment to make the switch.

For more information about how supply chain blockchains work, read this excellent write-up on the subject from Chainpoint. For even more in-depth analysis, read this article from Paul Brody of Ernst & Young.

Blockchain-based smart contracts

Smart contracts– “if/then” type computer protocols that are designed to verify, enforce and allow the creation of irreversible, secure transactions without the need for oversight– provide yet another use business use case for blockchain.

For example, smart contracts can replace the current system we use to transfer ownership of a car from one person to another. The way we track ownership of a vehicle now involves the exchange of paper titles. Smart contracts offer a more efficient alternative because it’s nearly impossible to forge an electronic title that’s been written to a publicly verifiable, encrypted blockchain. The funds transfer triggers the smart contract’s condition. This in turn prompts the smart contract to automatically transfer ownership of the vehicle.

On the other hand, blockchain-based smart contracts are not very flexible. Many types of agreements require a degree of wiggle room that smart contracts don’t currently support.

For more information about how smart contracts work, read this article from Ethos.io.

Blockchain use case as the basis for public identity systems

Identity management is yet another potentially revolutionary use case for blockchain. Problems related to identity management plague businesses, governments and individuals alike. For businesses, laws around identity and privacy add complexity to workflows and reduce efficiency. Governments have similar issues because the processes involved in issuing identity cards and combating identity fraud eat up valuable resources. At the same time, individuals have to contend with the identity management bureaucracies that governments and businesses create– and they also have to safeguard their documents to avoid becoming victims of identity theft.

Blockchain offers a number of advantages that our current identity management systems lack. One obvious benefit is that once an identity gets recorded to a blockchain, it’s there for good. Fraudsters may be able to create fake passports today, but blockchain-based identity systems could put those kinds of criminals out of business.

If you use the internet on a regular basis, you probably have several different identities that you use to log into various apps and websites. You have to use a different password for each one. Every time you move, you have to update your address on all of them. Blockchain-based identity systems can help streamline these systems by offering public, secure identity databases that any business or government entity can access. IBM, Verses One and uPort are just a few of the companies that are building blockchain-based identity systems.

To learn more about identity management and blockchain, read Lucas Mearian’s excellent write-up on the subject.

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Crypto Tax Guide for the United Kingdom

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Crypto Tax Guide for the United States

• How to report crypto in your taxes?
• What tax forms do I need for crypto?
• NFT Taxes: The Complete Guide for the US

Crypto Tax Guide for Australia

• NFT Taxes: The Guide for Australia

Crypto Tax Guide for Canada

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Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.