5 Key Areas Blockchain is Revolutionizing Outside of Crypto

Blockchain refers to a suite of technologies used in Bitcoin and other cryptocurrencies. Technically, it is the distributed ledger or database shared among computers in a network’s nodes. While blockchain technology became highly popularized because of Bitcoin, crypto, and their related financial transactions, it has now come to represent many different use cases, particularly concerning smart contracts and their role in peer-to-peer online agreements.

Conceptually, blockchain technology lets a computer network agree on the ledger’s true state at regular intervals. The core innovation of Bitcoin, the first cryptocurrency, is that it can reconcile the network’s state and make that state immutable. The shared network data can be in the form of transaction records, credentials, transaction attributes, and other forms of information. Bitcoin’s technology also employs cryptography and game theory to strengthen the network incentives so participants are motivated to stay honest.

The term “blockchain” originates from how transactions are ordered and rendered permanent. Once a transaction has reached the required number of confirmations, it is considered valid. The confirmed transaction is added to the chain and is immutable through cryptographic hash functions and consensus mechanisms.

Blockchain and its associated technologies allow secure value transfer anywhere worldwide between parties without a trusted third party to confirm the transaction’s validity. This capability alone gives rise to many thrilling possibilities.

Today, blockchain technology has transcended its first use as cryptocurrency. It is applied to diverse digital experiments in industries including supply chain, healthcare, and the Internet of Things or IoT. 

The Properties of Blockchain: Why It’s Useful

Initially, blockchain was seen as part of digital currency technology. However, the advent of Ethereum as a “world computer” changed the point of view on the blockchain’s use cases and highlighted the possibilities stemming from the programmability of smart contracts. Just like typical legal contracts, smart contracts set the terms of an agreement. The difference is that they use code. They offer the benefit of being online and not needing a central authority to enhance trust between parties. Hence, they expand the benefits of blockchain to numerous business models.

Blockchain’s programmability, immutability, and flexibility make it an ideal candidate for solutions beyond cryptocurrency. It has other characteristics such as transparency, traceability, and speed—each relevant to modern applications and business. 

How Blockchain Changed Finance

In the early days of crypto, wallets, payment systems, and exchanges emerged, with crypto trading as the most popular activity in the ecosystem. For the first time, the peer-to-peer digital currency exchange could occur anywhere in the world without a trusted party. Soon, coins outside Bitcoin emerged, giving rise to a dynamic, albeit nascent, ecosystem.

Crypto exchanges have enjoyed significant growth in the last decade. Due to intense market speculation driven by exchanges, the crypto industry enjoyed quite a few bull runs. Bitcoin, the cryptocurrency with the most extended history, experienced a bull market in the years 2013 (+700 percent), 2015 (+160 percent), 2016 (+165 percent), 2017 (+1600 percent), and 2020 (+400 percent). The latest bull run continued into 2021 and brought Bitcoin to an all-time high of about $68,700 by mid-November.

However, last year, trust issues sparked by the FTX debacle and the collapse of algorithmic stablecoin projects affected the trading community, contributing to the economic downturn within the ecosystem, referred to as “crypto winter.” The value of Bitcoin and other cryptocurrencies crashed. Security issues also came to light as multimillion-dollar hacks happened in centralized exchanges and DeFi projects. 

In 2023, crypto winter has begun thawing, signaling better times for cryptocurrency and blockchain advocates. Unfortunately, some credibility and security concerns about exchanges remain—among them, whether Coinbase, the largest US crypto exchange, is safe. Trustpilot gave Coinbase a rating of 1.5 stars out of 5 based on 8727 reviews. About 79 percent were negative, with the most common concerns being high fees, account freezes, poor customer service, and safety and security. 

Despite lingering trust issues, new excitement is brewing because of bitcoin ETFs being spearheaded by the world’s largest asset managers. DeFi and other decentralized applications remain persistent in their quest for independence, privacy, and innovation. New financial products, business models, and custody solutions are attracting institutions that promise a wave of investment. 

How Blockchain Technology Reshapes Industries: 5 Top Use Cases

Blockchain is a multifaceted technology with applications beyond crypto, trading, and finance. Because of its ability to represent contracts and facilitate numerous kinds of transactions, it crosses over to different industries. Thus, people from different backgrounds should understand blockchain.

Blockchain has been part of several milestone projects that have changed the public’s mindset. The following are examples of crucial industry areas where the use of blockchain is making an impact outside of crypto:

Blockchain in pharma and healthcare

The global healthcare ecosystem needs disruption. A complicated and clunky behemoth, healthcare suffers from all kinds of inefficiencies. The medical industry suffers from the inability to secure sensitive patient data. Patient records are increasingly vulnerable to hackers and are plagued with access and privacy issues. Data breaches are common among medical providers.  

Blockchain technology ensures data integrity, accessibility, and cybersecurity of EHR (Electronic Health Records). It can provide a valuable security layer while facilitating finely customizable access. It will also allow interoperability among health information systems. This new kind of interoperability can cross organizational boundaries to advance the effective delivery of pharmaceuticals and healthcare to people from different areas. 

Moreover, the technology can bring payments, identity, and records closer together. Blockchain can facilitate new medical payments, insurance products, and other ways of ensuring better patient access to medical care.

Biopharma is another potential sector awaiting blockchain disruption. As the global market for counterfeit drugs is growing, increasing the danger to public health, blockchain provides a way to streamline and verify drug provenance and timestamp the entire supply chain by creating an immutable record. 

Due to its direct relationship with public health, the drug industry is among the largest markets and most critical applications of blockchain or distributed ledger technology.

Tokenization of RWA (Real World Assets)

The market for tokenized RWAs is massive. According to digital asset manager 21.co, the market for tokenized assets could reach $10 trillion in a bull scenario. Their estimate for a bear case was $3.5 trillion.

The market for real estate tokenization, wherein real estate assets are converted to their digital equivalents on the blockchain, is around $200 million. Real estate tokens account for approximately 40 percent of the market for digital securities, which means there is high demand and potential for greater adoption of this type of investment. Moreover, implementing blockchain in real estate investment could reduce fraud, ensure transparency, and manage property titles more efficiently.

Another study by Markets and Markets forecasts that the global tokenization market, which encompasses RWAs beyond real estate, will grow to $5.6 billion by the end of 2026, growing at a CAGR of 19 percent.

Blockchain makes markets more efficient, decreasing costs by eliminating intermediaries and middlemen. It also lowers the barrier to entry, allowing greater access for retail investors. 

Blockchain in governance

Blockchain can transform public, private, corporate, and decentralized governance. In the public sector, blockchain can help governments secure information on citizens, assets, and organizations. It provides an entry point for modernization and smart records while ensuring that such records are highly secure even when shared among governmental bodies and other institutions. Blockchain can bring together various projects with public and private stakeholders through interoperability. 

Blockchains can potentially represent various legal processes with the use of smart contracts. Smart contracts could replace tedious paperwork, eliminating the need for numerous software applications and time-consuming manual steps. Moreover, blockchain technology helps secure data by preventing unauthorized data manipulation through its design. It provides clear audit trails should attempts be made to change the data. Through its distributed nature, it protects data storage by ensuring network security.

On a practical level, blockchain has exciting applications in governance. For example, blockchain-based voting systems can be established to enhance digital identity verification, increase voter trust, and promote secure remote voting for citizens who cannot vote on-site. Another promising use for blockchain is in the Citizenship by Investment Industry or CBI. Countries can use blockchain to record background checks, approvals, and transactions. In addition, it limits access to sensitive data and can program compliance into the CBI process. It can also attract high-net-worth individuals (HNWIs) seeking international mobility or a second passport, as many HNWIs hold Bitcoin and other crypto assets. Blockchain can be used in escrow to guarantee an applicant’s investment. 

In connection to voting and CBI, digital identity is a crucial underpinning to most governance transactions, centralized or decentralized. Self-sovereign identity (SSI), or Decentralized Identity (DID), is a model that provides individuals full ownership of their identity without relying on a third party. 

Blockchain can boost independent social initiatives by assisting in decentralized voting and fundraising. It can also be a game-changer in KYC within financial services and passport identity, potentially connecting personal identification and documents with wearables.  

Intersection with artificial intelligence (AI)

Blockchain has many possible intersections with artificial intelligence or AI. This combination paves the way for many innovative startups, covering everything from decentralized cloud computing platforms for AI development, fake news identification and detection, cybersecurity, intelligent contracts, investment platforms, rights and royalties management, and decentralized marketplaces. Broadly, blockchain tech provides a way to monitor AI by recording all decisions made under machine learning (ML). It could also enable Secured Multi-Party Computations or sMPCs, which securely distribute and compute artificial intelligence models across multiple parties while protecting underlying data.

While connected to crypto, self-executing bot trading systems deserve a mention. AI trading is all about taking a step back and letting the bots run your investments for you. Some companies have already built AI tools to analyze Bitcoin price fluctuations. It bridges AI algorithms to the complex world of automated investments, financial services, and trading. 

Blockchain and IoT

Blockchain could play a pivotal role in the Internet of Things (IoT) economy and the establishment of smart cities. It can revolutionize the network of smart objects by enhancing security and facilitating tamper-proof transactions among objects in real time.

IoT entrepreneurs can include blockchain networks in their business models to facilitate personal data protection, tracking, payments, and scalability. One convenient application, for example, is in e-commerce. Blockchain can facilitate auditable supply chain management, orders, and payments while drones deliver goods. 

Understand Blockchain: A Foundational Tech for the Future

Blockchain’s digital ledger paves the way for integrating many technologies and industries into the world’s financial plumbing. It can also create value and enhance processes in multiple industries. Capitalizing on its properties, including its immutable, transparent, and, at times, decentralized nature, it can reshape traditional paradigms and pave the way for a more secure and efficient future. 

Blockchain is an instrument for increased security and automation, scalability, and growth, and thus is a crucial antidote to global economic stagnation. With its transformative impact, blockchain could boost the global economy by $1.76 trillion in 2030 by improving trust, traceability, and automation. 

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