What can you do with blockchain technology?

• Blockchain ledgers offer distinctive features such as immutability and decentralization, which prevents recorded data from being tampered with and eliminates reliance on vulnerable third parties.

• These qualities make blockchain a viable solution for the data fragmentation problem that many industries face.

• Currently, blockchains are seeing early-stage adoption beyond cryptocurrencies, in areas such as finance, healthcare, supply chain management and identity verification.

In 1991, scientists Stuart Haber and Scott Stornetta developed a new type of digital ledger technology that provided an extremely secure, yet highly decentralized way to store information.

Their solution, known as blockchain technology, leveraged cryptographic techniques to link blocks of data together in a tamper-resistant way.

Almost two decades later, a pseudonymous programmer called Satoshi Nakamoto published the Bitcoin white paper outlining a digital currency system built on top of Haber and Stornetta’s creation. 

Fast forward to today, an entire industry of blockchain-based cryptocurrencies now exists. But it isn’t just digital assets that benefit from this innovative solution. Other industries are starting to explore the advantages blockchains provide too.

The traditional financial world has been slow to adapt to the innovative changes ushered in by cryptocurrencies and blockchain technology. Several highly influential figures have repeatedly dismissed the ecosystem altogether, from JP Morgan CEO Jamie Dimon to the late Vice Chairman of Berkshire Hathaway, Charlie Munger.

But as the crypto industry has matured and the practical applications of blockchains have become clearer, some legacy financial institutions have begun exploring the potential of blockchains for improving key operational processes.

Despite Dimon’s stern opposition to crypto-related technologies, JP Morgan has launched several of its own blockchain-based banking solutions, including Onyx and Quorum. 

The latter represents a private version of the Ethereum network. Ethereum is the second-largest blockchain after Bitcoin in terms of market capitalization and the most popular blockchain for DeFi. These services seek to leverage the efficiency of blockchain technology for payments, document storage and other important functions across the banking sector.

JP Morgan isn’t alone in their adoption of blockchain. Various large banks and financial institutions in the US have also embraced the benefits of an on-chain financial system:

• Citi, MasterCard, PNC, and BNY Mellon were among the participants in the Regulated Liability Network, which simulated B2B payments around the world via blockchain.

• Citigroup used the Avalanche blockchain to simulate forex trading.

• Bank of America holds hundreds of blockchain patents and recently heralded the Avalanche blockchain as “the future of tokenization”.

Financial institutions outside the US have also followed suit: 

• UBS issued a $370m tokenized bond on the Swiss SIX Digital Exchange and more recently tested a tokenized money market fund on Ethereum.

• Japan’s SBI Group borrowed tokenized Yen to purchase a Yen-denominated tokenized bond, all of which took place on a blockchain.

All over the world, banks and other financial institutions are using blockchain technology to bring efficiency and transparency to their business processes.

In the medical industry, data privacy and security are paramount. Whether it’s confidential patient information or clinical trial data, ensuring the secure storage of this critical information is imperative.

Data fragmentation in healthcare is a well-known issue. A 2021 study found that it’s responsible for up to $1 trillion in wasted spending by the United States government every year. Oftentimes, health care centers in the United States rely on several IT providers to store patient personal data, health records, insurance information, prescriptions, employee files, pricing/billing information and more. This system presents a number of problems including centralization issues. If one data source is compromised, millions of patients' highly sensitive personal information could be leaked. 

In contrast to these centralized yet heavily fragmented systems, blockchains deliver a tamper-proof, highly secure and decentralized alternative.

Blockchains offer a range of benefits to the healthcare system, including unifying fragmented patient data without creating single points of failure. Several major companies worldwide are already using blockchain technology to improve their services –

• Aetna, CVS and Elevance Health are just some of the companies using Avaneer’s private blockchain network to store and share real-time health data.

• ProCredEx streamlines the process for credentialed professionals to receive verifications in a cheaper and faster way.

• Synaptic Health Alliance, which includes Humana, UnitedHealth Group and Cognizant, uses blockchain technology to store health care data.

• Patientory and Embleema use blockchain technology to ensure that patients own their medical data while also allowing them to get paid to share their data on-chain.

• Leading pharmaceutical companies like Roche and AstraZeneca use Guardtime’s blockchain to create efficient drug pricing.

The global supply chain has many moving parts that need to work together efficiently for operations across all sectors to run smoothly. From sourcing to warehousing and distribution, every item shipped globally must be tracked and monitored to ensure it reaches its intended destination on time.

Supply chain data is often fragmented across the many companies involved in the process, each with their own centralized private servers. This inconsistency and centralization can create many points of failure throughout the system. It also makes for an inefficient process where logistics and transportation companies must juggle different data sources that don’t always match up.

Although the end customer only sees two steps of the process — placing the order and receiving the item — there are dozens of processes behind the scenes that take place. From locating the item in the warehouse, to packaging it and transporting it to a distribution center, a single item can pass through dozens of fragmented business processes before it reaches the customer’s door.

Using blockchains, businesses like Amazon that heavily rely on efficient supply chain management are creating a transparent and unchangeable record of each item’s journey from start to finish. 

Blockchains offer a reliable way of tracking the provenance of items — something that’s incredibly important for consumers when purchasing ethically-sourced items or genuine products.

In recent years, some of the world’s largest tech companies have integrated blockchains into the supply chain to solve this exact problem:

• Hyperledger Fabric is a specialized blockchain infrastructure used in supply chain management by some of the world’s largest companies, including Amazon and IBM.

• Amazon Managed Blockchain (AMB) consolidates supply chain companies’ data to provide real-time data as well as a complete history of product location, or “track and trace”.

• IBM provides a similar service to AMB, resulting in real-time tracking, more efficient inventory management and faster responses to supply chain disruptions, such as in the food industry to reduce food waste, and large international companies such as Walmart, Nestle and Visa are using its services.

While the end customer may not even realize that their item has been shipped and tracked using a blockchain based system, they can see the results. All around the world, blockchains are helping to speed up delivery times and reduce shipping costs across the intricate world of supply chain management.

The current system of storing personal information has many flaws. Among the most well-known is the fact that the centralized servers that store private information are prone to breaches. In 2013, Yahoo suffered one of the largest breaches in history, exposing the information of 3 billion users after a database hack.

These data breaches have far reaching consequences, which have been felt by more than one-third of US citizens who have experienced identity theft.

Public blockchains offer several advantages to the current system for storing personal data, namely decentralization. Each full node in the network maintains its own copy of the ledger, removing any single points of failure. Blockchain data is also immutable, meaning that it’s almost impossible to change previous database entries. 

One project pioneering the digital identity movement is Worldcoin, which uses biometrics to generate a personal “World ID.” The only data that it requires is a code based on users’ iris pattern, which is then stored on the Ethereum blockchain.

Ownership of one’s identity-related data is generally considered a core tenet of the “Web3” vision. While blockchains aren’t the sole component of Web3, they do play a very important role by storing personal/sensitive data and helping users grant permission for who can access their information. 

As a result, blockchain technology is enabling people to retain full ownership of their data. If someone wanted to sell some or all of their data to a third party, they might be able to do so, and be compensated for it.

One country at the forefront of blockchain ID adoption is Brazil, which leverages its national b-Castrados blockchain network as an extra layer of security for its new National Civil Identity Card. While the ID itself is still in physical form, it can also generate a digital version of itself that can be validated via QR code. This has several advantages over the status quo, including:

• Once someone’s information is stored on the blockchain, nobody can change it.

• Users’ data is no longer stored on a centralized server, which negates the threat of server hacks.

• If someone doesn’t have their physical ID, they can still verify their identity with their smartphone via QR code.

Electoral fraud, ballot stuffing and rigging are just some of the issues regarding present-day voting systems. These vulnerabilities create a lack of confidence and undermine the integrity of public elections.

Blockchains have emerged as a potential way to ensure security and transparency in national elections. Overall, blockchain-based voting could provide a solution for many of the current challenges facing the voting process:

• Blockchain immutability helps to address issues such as double-counting and tampering with ballots

• Blockchain’s real-time verification helps eliminate potential delays with mail-in ballots

• Blockchain’s digital nature help identify any tampering/mistreatment of physical ballots

• A digital ID combined with blockchain voting could ensure that individuals meet all qualifications for voting and verify whether someone has voted.

• Blockchain transparency would allow anyone to verify the outcome of a particular election.

Currently, there are several ongoing projects in the US working to make blockchain-based voting a reality:

• Votem’s blockchain-based voting system has assisted in both political and nonpolitical events and made headlines for its integration in Montana and Washington, D.C.’s voting systems during the 2016 election.

• Votem is also exploring use cases in corporate voting events, such as pension fund decisions.

• During US elections in 2018, 2019, and 2020, Voatz conducted a successful blockchain voting pilot programs in West Virginia, Colorado, Oregon, and Utah.

• Follow My Vote emphasizes the need to provide transparency in elections and seeks to allow anyone to audit the results of any election.

With an estimate $1.7 to $4.5 trillion worth of counterfeit and pirated goods being sold annually, blockchains have yet another potential use case – item authentication. 

Because blockchains are immutable, they’re a powerful tool for verifying data. As a result, there are already several companies testing blofckchain’s capacity to minimize the damage created by counterfeited goods:

• Origyn uses the Internet Computer blockchain to create digital certificates of authenticity for luxury watches, gold bars, fine art, and more.

• Luxury brands including LVMH, Prada, and Mercedes-Benz have formed the Aura Blockchain Consortium, which is testing a new authentication system with the Ethereum blockchain at its foundation.

• Richemont, the parent company of Cartier and other luxury watch and jewelry brands, is using Arianee to authenticate items using the Polygon blockchain.

Blockchain solutions could also bring reliable automation that saves on time and resources currently being used in authentication. 

For example, online luxury goods marketplace The RealReal employs over 100 product authenticators. While implementing stringent authentication procedures is important, a real-time authentication system via blockchain technology could provide a more efficient process.

Developments in recent years show that blockchains can be used for much more than just sending and receiving digital assets. However, it’s worth noting that many of the use cases presented within this article are still in testing or development, and may not necessarily become fully-fledged solutions in the future. 

While cryptocurrencies are just one facet of blockchain technology, interacting with digital assets can be a popular entry point for many.

Kraken currently offers more than 200+ blockchain-based cryptocurrencies. Start your blockchain journey today.