With cryptocurrencies like Bitcoin and Ethereum making daily tech and financial headlines, a buzz about the underlying technology is everywhere.
For those who don’t know much about blockchain or the underlying premise of the platforms they support, here is a basic introductory video provided by the IBM Think Academy.
While avoiding much detail about the complex digital wizardry involved in blockchain, the key is to be aware of how blockchain-based platforms can reduce the wastefulness in transactions and not just the financial kind.
There are many articles illustrating this reduction-of-waste concept that uses the example of the purchase of a car or home.The start-to-finish process of making such a purchase currently takes a few weeks to complete. Blockchain can reduce this to minutes or seconds.
Blockchain reduces the duration of time needed to complete these transactions, the labor involved, and often the associated fees that are currently necessary to undergo large transactions. Third parties, such as lawyers, listing agents, and banking representatives each have their own industry process and an associated fee for assisting you with these large purchases.
What’s the bottom line?
Blockchain-based platforms can make acquiring things that are traditionally impossible in a peer-to-peer manner not only readily accessible but also available more quickly with a high degree of “trust.”
It’s been said that blockchain doesn’t build trust in transactions, it eliminates the need for trust altogether. The data within blockchain-based platforms is decentralized, meaning that every entity within the network stores data and is able to view and validate the digital mathematics and process. Thus, “trust” is inherently built into the system by dividing the burden of authenticating each transaction across the network and making the provenance of each party’s holdings very apparent.
Which industries will blockchain shape in the future?
A lot of them. Too many to list.
Any industry that adopts blockchain will likely do so first and foremost to reduce waste and the associated costs of conducting business. This isn’t the first time technology has allowed for this to happen, and history has shown that eliminating processes, and therefore expenses, liberate both time and money for other innovation.
With that said, there are some specific industries that warrant some notations.
Cyber Security – One very important element to remember is that blockchain is still prone to human error. Smart contracts and the systems themselves have the potential, albeit shrinking, for security issues or unintended and malicious outcomes. Cyber Security and blockchain professionals are in high demand and are diligently working to develop better platforms.
Supply Chain Management and Regulatory Compliance – If some blockchain platforms gain industry-wide acceptance, massive sourcing and regulatory processes could go by the wayside. Take the diamond industry for example; the sourcing and authentication of diamonds are meticulous and lengthy. Blockchain could make these transactions mundane and replace the current diamond exportation establishments with a decentralized global community. Imagine the same for other rare minerals, fossil fuels, or perhaps synthetic compounds used in manufacturing.
Forecasting – Data scientists, business analysts, and marketers alike will rejoice at how blockchain will aid efforts to create accurate predictions for critical business decisions. The endless stream of connected transactions will make it easier to understand how and when transactions are happening and who was involved. This will lead to better predictive models, and again, reduce waste involved with testing markets and trends.
Micropayments – Open your favorite search engine and type in “micropayments.” Blockchain can make business models based on micropayments work by maintaining low transaction costs. One example would be digital newspapers. Scrap the pricey membership and pay just a few cents to only read the articles you are interested in. The newspaper could then spend a few cents to pay for reader feedback so as to not publish unwanted content that will not produce revenue. Both transactions would happen without a large fee, maintaining profitability and reducing waste for readers and companies alike. Similarly, pay-per-click advertising, among many other marketing tools, will find abundant new opportunities with digital payouts streamlined.
Legal – There is a lot of debate on how blockchain and smart contracts are going to be legally represented within industry and the larger global community. Currently, the mediation of issues arising from human error within blockchain-based platforms is the most concerning. Until various legal standards arise, the premise of decentralized regulation has many concerned about the long-term legacy that blockchain could have in some industries. Lawmakers and lawyers alike will play a crucial role in shaping future blockchain-based industries.
In short, blockchain technology has created a technological shift of focus for some of the largest known industries in today’s markets. Many are starting to rethink business models or create entirely new ones altogether. With entire revenue streams at risk, blockchain is being taken very seriously.