Despite blockchain’s origin and initial bitcoin transactions in 2009, the technology went mainstream only after the advent of “blockchain 2.0,” when new application areas such as payments, smart contracts, digital identity, exchanges and documentation across industry verticals evolved.
Smart contracts is a key application area, which is one of the central components of next-generation blockchain platforms. Digital identity verification powered by the blockchain enables consumers to verify their identities without the need for centralized storage of identity documents. In a way, such verification can easily bypass the need for centralized services and additional storage capacity, and could even remove the human element from the verification procedure altogether.
Banking, Financial Services And Insurance (BFSI)
Blockchain could have compatibilities with the financial services industry ecosystem: It supports organizations operating in the BFSI vertical to enable uninterrupted processes, detect and prevent fraudulent transactions, reduce the need for human intervention and help reduce infrastructure, operational and administrative costs.
Blockchain’s faster processing capabilities can enable banking organizations to provide swift banking experiences with less complexity across processes and operations. This, in turn, is expected to create a wide range of avenues for new business models in which financial organizations can grow their businesses further. I believe the advent of a stable cryptocurrency and easy-to-understand protocols and payments systems will drive its large-scale adoption in the coming years, thus proliferating the growth avenues for the technology across industries.
Banking and insurance companies are now exploring the integration of blockchain across applications such as payments, clearing and settlements, identity management and exchanges, as well as how it can help them meet regulatory compliance. MasterCard, for instance, launched its own blockchain payments network to help partner banks and merchants to make secure and faster cross-border payments. Global banks such as Santander have partnered with Ripple, a blockchain-based, real-time gross settlement system, to offer a blockchain-based payment network that can complete cross-border transactions.
Government And The Public Sector
Governments across countries have started adopting blockchain technology to improve the transparency and efficiency in operations and enhance the overall experience for public services delivery. My company’s research estimates the blockchain government market to be worth $3.5 billion by 2023.
The government of Estonia began testing blockchain in 2008 and is one of the early adopters of the technology. Some of the adopters include the national judicial system, legislative system (e-Law, e-Court and e-Police) and commercial code system. The scalable technology is developed to ensure the integrity of the data stored in government repositories. The Dubai government’s Smart Dubai initiative focuses on building shared blockchain platforms to improve the delivery of basic government amenities. The government has partnered with IBM and ConsenSys for strategic consulting and advisory on the pilot blockchain project.
Moreover, governments in the developing countries, such as India and China, are now investing in blockchain technologies to streamline their business processes across applications such as asset registry, voting, taxes, payments and smart contracts. The investments in this technology are expected to drive the global market.
Retail And E-Commerce
Various stakeholders in the supply chain management industry have started adopting blockchain technology to improve transparency and efficiency in their business operations and facilitate the tracking and tracing of raw materials, finished goods and merchandise. For instance, IBM collaborated with Maersk, a shipping giant based in Denmark, to develop a global trade digitalization platform to provide end-to-end supply chain visibility and paperless trade for the entire global shipping ecosystem. By adopting blockchain solutions, the retail and supply chain industries could find it easier to monitor the movement of products, from their origin to the point they reach the customer.
Companies are also adopting such blockchain-based solutions to streamline aftersales and customer loyalty management. Loyyal, a U.S.-based tech startup, has built a blockchain technology platform to enhance loyalty and incentive programs.
Organizations are increasingly working in collaboration with blockchain technology vendors to explore various applications and leverage the power of blockchain to improve on various business processes and operations. I believe the market will witness huge investments in blockchain technologies as several industries are spending heavily on digitization and financial services. As a result, many innovative applications across industries are in the cards for blockchain technology, as it has the proven potential to disrupt businesses, economics and society.