Spend any amount of time in the blockchain sector and you’ll find a flood of opinions for ways blockchain technology will be “a game-changer.” Where this goes wrong is that it’s light on how it will change the game exactly and why there’s a game at all. But with the right use cases, organizations can benefit from the efficiency and shared recordkeeping a distributed ledger can offer.
A private blockchain’s benefit is that it creates a common version of the truth that’s difficult to change and easy to audit. It also limits network participants to ensure data is secure. For businesses, this means better collaboration and more transparency within a group.
6 no-nonsense use cases based on Hyperledger FabricTable of contents:
Like any technology, it takes a while for the value to finally emerge. Take photography for example. Since the beginning, the point has always been the same. It captures a copy of the truth — however selective — and keeps it forever.
Just like blockchain, early photography was not user-friendly, not cheap, not fast, and not for the masses. Think of blockchain today as photography circa 1860 — technically limited, reserved for specialists, and complicated to use.
At the time, few grasped its full potential. Many critics objected because an existing medium — painting — captured moments just fine.
Photography’s business benefits are clear to us today in hindsight, though. The global medical imaging market — a spinoff of photography — is worth $25 billion in 2019 according to a recent Markets and Markets report. If Instagram were a stand-alone company Bloomberg estimates it would be worth more than $100 billion.
Of course, the fundamental reason we still take pictures has not changed in nearly 200 years. What has changed is the tools, specific use cases, and major advances in usability. We’re still innovating with blockchain. That’s not to say that there are no benefits, rather breakthroughs unfold as companies invest in development.
Below are six no-nonsense use cases for private blockchains today.
Blockchain as a tamper-proof audit trail
What blockchains do is clear — they record a tamper-proof audit trail and distribute a current copy to everyone who’s interested in seeing it. Whether that’s in an open forum like Ethereum or in a closed group like the Linux Foundation’s Hyperledger Fabric, the motivation is largely the same.
What isn’t as clear yet is why.
Die-hard proponents harp on how blockchain will fix the world’s problems. This is overly optimistic, of course. The one reason to use a blockchain is to establish an audit trail, especially if you can’t trust the other actors you’re working with. If you share data with people you trust or don’t share much data at all, use a database. This has been our line from the beginning.
Whether you’re tracking invoices, managing commissions, checking a contract’s validity, settling internal payments managing access to records or tracking supply, tamper-proof auditing matters, and can significantly reduce liability and overhead.
We’ve worked on several of these use-case puzzles in in-house proofs of concept applications and in applications for our clients. To explore exactly how blockchain technology will grow existing businesses and spinoff new industries, it’s often important to try to build out a proof of concept first.
Here’s an overview of some of our POC projects and some ways to apply blockchain technology to business.
Managing data access
One blockchian use case is in keeping track of records and who has access to them. In a proof of concept application we’ve developed, our team created an app that manages medical record storage for patients and their doctors based on Hyperledger Fabric.
Patients use their private keys to access a patient portal and can grant and revoke access to doctors. In turn, doctors use their keys to enter a doctor’s portal where they can add records of procedures.
The system shows how blockchain plays a role in securing patient data and can improve some inefficiencies in the current system especially, in the cost to secure medical data. The system’s built-in security allows patients, doctors, and administrators to seamlessly coordinate over the application.
Tracking supply and origin
Another excellent use for a tamper-proof audit trail is in supply chain tracking. One of the areas where we believe this will have a big impact is in the pharmaceutical supply chain. In our supply chain POC, we explored the role of blockchain in verifying that a product has been shipped from a valid source and that it traveled through the supply chain in the right conditions.
Counterfeiting and mishandled drugs account for billions of dollars of losses to Big Pharma each year. Ensuring that consumers get exactly what they’re paying for and verifying that it’s not harmful is the main benefit to this use case.
Additional use cases in the supply chain sector are in food tracking. As with pharmaceuticals, tracking food to its source can help regulators verify that fish, for example, were properly harvested and is the species the package claims. It can also help retailers contain outbreaks of food-borne illness by quickly pinpointing which farm your spinach came from.
Walmart together with IBM has already launched a Hyperledger-based application, FoodTrack to accurately audit the source of leafy greens in its stores.
Blockchain logistics offer significant utility in handling complex supply chains efficiently.
Among the first blockchain use cases were in the payments. Cryptocurrency lends itself well to cross-border and digital payment systems. Bitcoin especially has captured a competitive advantage for a niche market. Bitcoin, however, is more of a philosophical choice than a practical one. Other blockchain protocols offer better usability and scalability, especially at scale.
We’ve designed a remittance service using the Stellar protocol as an example of a system that will transfer money quickly and cheaply across borders. Cryptocurrency enables fast money transfers anywhere in the world. With cryptographic guarantees, blockchain technology facilitates peer-to-peer payments by making sure users can’t spend their tokens twice — something other payments processors use banks and credit rating agencies to do.
This, of course, removes money transfer services from the transaction, significantly reducing the cost to transfer money internationally. When end users can trust that the counterparty is good for the money, it enables more trustworthy peer-to-peer payments.
For internal settlements, though, Hyperledger Fabric offers a way to both manage and carry out payments between an organization’s branches or close partners. An open and transparent ledger helps organizations ensure trust and create a transparent record. Network participants can clearly see where transactions go and for what.
Large organizations with global offices struggle with the complexity of invoice processing. Some branches within an organization still do it manually, which can get too complicated. Centralized record-keeping software also limits transparency and can cause chaos when organizations don’t share access to it.
A private blockchain puts all the records a conglomerate produces in one place. No one organization can change the records or add new records without the other participants seeing the change.
Just as a private blockchain can help with invoice processing, it can also track commissions and clearly show a history of accepted work and the payments for it. This is especially useful for conglomerates that operate in multiple countries that struggle with managing commission payments.
Whether a particular partner uses a different accounting system, or are purposefully misrepresenting commissions, an application using Hyperledger Fabric can help establish order.
For companies with many branches and partners can create an ecosystem with a private blockchain. Today, when a contract ends something has to happen like to issue an invoice or renew a contract, it’s manual or semi-manual automation. Currently, companies have to integrate multiple systems and fight data siloing. Using the blockchain we have one place to store all information consistently and transparently. Moreover, we can use smart contracts to trigger new automatic actions when the contracts expire.
Contract validation features can combine with other features like invoices and internal payments. One of the biggest challenges with large companies is transparency and trust between parties. A private blockchain together with traditional IT solutions can resolve these problems.
I hope if you’ve taken anything away from this article, it’s a better understanding of the fundamental feature of blockchain systems — tamper-proof auditing — and how it drives to blockchain use cases.
Shared recordkeeping, supply chain management, provenance, and payments are particularly salient now with existing blockchain tech to build apps around. Other use cases will take more time to work out — especially considering usability for a general audience. Don’t let it discourage you, this is a normal and healthy part of any technological innovation.
As more businesses find blockchain use cases, new ways to innovate will continue to emerge. Blockchain is here to stay, but an honest assessment of what it is — and what it isn’t — is vital to use it right.