Future of the Blockchain Technology: Use Cases, Risks and Challenges
Blockchain Technology Explained Briefly
As you may have already noticed, Blockchain technology is the center of attention in current news headlines. As a result, many search for IT staff augmentation services to utilize Blockchain technology in the business.The technology has been deemed “disruptive,” and the future of Blockchain is commonly associated with one that could “alter life as we know it.” However, there remains a bit of confusion about what exactly Blockchain technology is, where it’s used, who's using it, and how it’s developing. In this article we will clear up some of that confusion for our readers, and provide important insights on the direction in which the future of Blockchain is treading.
What is Blockchain?
The principles of Blockchain technology are not as alien as they may appear. A Blockchain is a decentralized and secure database built over a secure network used to store data and relay information. Blockchains record and relay information and transactional data in blocks. Parties involved in these transactions can remain anonymous while enjoying security, transactional transparency, speed, and cost efficiency.
How Does Blockchain Work?
What does a blockchain look like? Data in a Blockchain gets recorded in a linear matter, with each new block within a Blockchain containing data from all previous blocks. Imagine a block to be sort of like a sheet of paper, filled from top to bottom and front to back, with a date and time,. but with a long code written across the sheet.
The data within these blocks is encrypted through the use of complex cryptographic principles and security algorithms.
Before being added to a Blockchain, transactions must first pass validation. This validation is performed by miners. For their efforts, miners enjoy monetary reward in the form of cryptocurrencies, such as Bitcoin.
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As many of our frequent readers may have noticed already, there is quite a bit of hype surrounding the uses of Blockchain technology - but why? For starters, it’s a technology that will change the world. It can provide decentralization. The data contained and relayed within a Blockchain architecture cannot be controlled by a single entity. Transactions and information stored within are immutable and transparent. Once a transaction is added, it can’t be changed, taken down, or hidden. With regard to transparency, anyone can see what was sent and when. One can assume that there are two individuals behind a Blockchain transaction, but not exactly who and why.
Blockchain and Bitcoin: Is There a Difference?
There are a few primary differences between Blockchain and Bitcoin, though it is not uncommon for people to mistake both for the same thing. It is imperative to draw a line between the two. A Blockchain is a distributed ledger, providing transparency, security, and trust. While Bitcoin, as well as other cryptocurrencies, needs a Blockchain to be transacted. The Bitcoin was invented back in 2009 by the enigmatic Satoshi Nakamoto. The original purpose was to bypass government and middlemen control over transactions. All Bitcoin transactions are stored in a Blockchain. In essence, without Blockchain, there can be no Bitcoin.
It is worth mentioning that the future of Blockchain technology can go beyond cryptocurrencies. It can provide uses that can disrupt current industries while improving our way of life. Let's dive into how Blockchain technology could change the world, as well as who uses Blockchain tech today.
What Does Blockchain Solve?
Blockchain technology tackles issues related primarily to the following:
- intermediaries
- transparency
- decentralization
- trust
- data security
- accuracy
- transactional freedom
Similar to how the world was changed and shaped by the advent of the internet, the future of Blockchain technology is set to change the world and the way in which individuals carry out their business.
Data and transactions entered into a Blockchain are immutable and unchangeable, which means that it is both accurate and secure. Once a transaction is sent, it can no longer be rescinded, and thus, there can be no smoke and mirrors when it comes to payments. As opposed to the real world, wherein parties may not trust one another, in a Blockchain architecture, the issue of trust is eliminated. Due to the decentralized and tamper-proof technological environment, transactors can place their full trust in the incorruptible and failure-proof Blockchain.
The use of Blockchain technology could end the need to rely on intermediaries as payment providers - think banks and various other financial institutions. Instead, anyone with an internet connection can create a cryptocurrency wallet, carry out borderless transactions, and handle their funds without intermediary oversight. The future of Blockchain goes a long way toward cutting transaction costs and increasing transactional speeds.
Current Applications of Blockchain
Blockchain technology is already seeing use in quite a few industries that rely on data that is exact, secure, and immutable. Industries are using this technology to gain a competitive advantage over their non-Blockchain competitors.
Popular Blockchain Use Cases
You may be thinking, “great, miners, Blockchain, Bitcoin; so what and who cares.” Blockchain technology, with all its features, can be quite helpful in targeting and solving a slew of issues that impact our lives. Most of them pertain to transparency, trust, data security, and transactional accuracy. As well, there is the avoidance of a need to rely on third parties, and much, much more.
Let’s start with the supply chain industry - one that envelops everything from food and wine, to the screen you’re reading this on.
Blockchain supply chain use cases: Through the use of Blockchain technology, manufacturers can identify the origin sources of goods, deliveries, and production activities all through a supply chain management process. This can give average consumers the ability to confirm the source of goods and items that they buy, which can go a long way toward pushing back on counterfeit items or misrepresented foodstuffs. There are a few notable projects that use Blockchain technology for supply chain management transparency, such as Ambrosus, which targets the safety and origins of food products, and Vechain, a Blockchain based platform that allows both consumers and retailers to confirm the authenticity and quality of purchased products.
Blockchain in healthcare today: Another industry for which integrity and transparency provided by Blockchain is important is the pharmaceutical industry. When you’re dealing with medical prescriptions, drug records, patient treatment data, and the transportation of expensive medical equipment and other medicinal items that can spell life or death for a patient – transparency, accurate data, security, and trust are absolute musts. A Blockchain provides all of this. Speaking of which, DHL, a global logistics leader, is working together with Accenture, a global management and professional services company, to integrate Blockchain technology with the pharmaceutical industry to improve serialization accuracy.
Blockchain and energy management: The energy sector is also worth mentioning. For instance, Power Ledger is a project that uses Blockchain as a solution that allows users to trade electric power with one another in exchange for crypto payments. The Power Ledger platform that enables Blockchain solar energy management allows users to sell excess energy reserves in solar panels for profit. This could cut back on the authority of middlemen and electricity providers, as users would function in an environment wherein energy can be shared amongst one another in a transparent manner.
Aside from these industries, there are many more that may see applications of this technological revolution, including real estate, music, politics, education, charity donations, and many other potential industries. For instance, we have:
- Aventus is a Blockchain project that grants its users the ability to redefine ticketing supply chain rules.
- Rentberry is a company that utilizes Blockchain technology to make the process of obtaining a long-term rental space more secure, transparent, and cost-efficient.
- Helbiz leverages Blockchain technology, decentralized cloud servers and smart lock hardware to end the need for intermediaries and third-party involvement in car rental processes.
- HempCoin aims to help provide banking services for the cannabis industry by utilizing Blockchain and cryptocurrencies.
The above projects should give you some idea about the potential of Blockchain as well as the impact of Blockchain on businessesses. More on that to come.
Blockchain Impact on Countries
While the exploitation of Blockchain technology can yield tremendous benefits, not all global nations are on the same page with regard to adopting it. There are countries that have been more accepting of the technological change this particular tech can provide, while others are lagging behind.
Estonia is one such nation that has openly adopted the tech and can see how Blockchain technology could change the world. The country has been testing the benefits of Blockchain for at least a decade now. Blockchain is used in Estonian data registries for judicial, legislative, health, cyber security, and banking purposes. Other nations such as Switzerland, Sweden, the United States, and South Korea, to name a few, are quite receptive to the future of Blockchain.
It should be highlighted that, while global nations are generally open to the decentralized database technology, their stances may differ on cryptocurrency use regulation. Regulators are working on means of handling the tech and drafting appropriate regulations so as to not impede its progress and to nurture the social impact of Blockchain technology.
Development and Adoption of Blockchain Technology in the Future
While it’s not quite clear where the adoption of this technology may land in the far future, it’s quite evident that nations and industries are flocking to it.
Potential Use of Global Blockchain Technologies by Industries and Society
There are myriad sectors that can, and do, derive benefits from blockchaining, ranging from entertainment to philanthropy.
Financial Inclusion: There are many individuals living in underdeveloped countries without access to banking services. Blockchain technology can help solve this problem, as it can provide access to transactions and end the need for a physical infrastructure. This is to say - Blockchain powered financial inclusion. Aside from this, Blockchain technology can be used to improve transactional speeds, and decrease banking fees and the possibility for human error or mischief when handling finances.
Democracy and governance: Blockchain and governance go together quite well. Voting, crowdfunding, communal services, registrars, and more can be put on a Blockchain database for increased transparency. Can Blockchain tech put an end to corruption? It would take time, but it’s definitely possible.
Internet of Things (IoT): The Internet of Things (IoT) can be described as a network that connects physical devices such as home appliances, motor vehicles, sensors, as well as other electronics, and allows them to communicate with one another. There can, however, naturally, still be lapses and errors in communication due to power outages and data leaks. IoT Blockchain uses can help reduce data lapses and improve the transparency and security of communication between devices as well as data storage. The future of Blockchain in the IoT industry is one with many benefits.
Retail: Blockchain and retail go hand in hand. The distributed ledger technology can be used to improve supply chain goods tracking, and to prove the authenticity of goods by providing the ability to discern fake items from authentic ones by scanning a barcode.
Insurance: There are many Blockchain insurance use cases. The secure technology can be utilized to both detect and prevent fraud in the industry, and improve organization with regard to property insurance claims. It can also simplify user onboarding for new policies, or even open up the possibility of having a universal insurance database.
Digital Identity: There are several projects targeting Blockchain digital identity management. The technology can significantly reduce identity theft and fraud, and promote transparency. It can also reduce the threat of third party involvement in sensitive personal data.
Agriculture: Despite there being fewer uses of Blockchain in agriculture than in other industries, progress is still being made and is focused on eliminating the need for middlemen in agricultural supply chains. Additionally, many records on food certificates, sustainability, and safety are recorded on paper and in private databases. This method of data storage can lead to excessive managerial costs and opens up a vast amount of opportunities for corruption and fraud. Blockchain tech can aid greatly in reducing fraud, decreasing costs, and promoting efficiency.
Education: Blockchain in education can be used to create immutable performance records, transcripts, diplomas, certificates, etc. It can also provide more efficient means of accessing records and can also be used to help build recognition of achievements. The social impact of Blockchain tech is astounding.
Energy, Climate, and Environment: Blockchain technology can aid the previously mentioned sectors by giving users more data control and optimizing the efficient use of energy. It can also support the peer-to-peer transfer of energy reserves in a transparent manner.
Rentals and Ride Sharing: We’ve all heard of Uber; and while the service is definitely useful, there is a major drawback in that it is centralized and drivers must pay a fee to the Uber platform for each completed ride. Blockchain technology has the potential to revolutionize the ride sharing industry and to enable peer to peer car rentals and ride sharing.
Philanthropy: Let’s be honest with ourselves, there have definitely been doubts as per the transparency behind certain charitable organizations and philanthropic acts. Individuals are not able to openly track the movement of funds, thus, figuring out if funds have been used properly becomes quite the task. Blockchain and philanthropy go together quite well.
Healthcare: The healthcare industry is one that is in desperate need of accountability and transparency. Blockchain technology can provide transparent and decentralized solutions for storing patient medical data, healthcare records, prescriptions, insurance plans, and coverages.
Real Estate and Land Rights: The future of Blockchain technology can help effectively store information on purchased land, record ownership certificates, and provide a decent amount of legal and economic safety for real estate owners and land holders. This would also help cut out real estate fraud and bad actors. Additionally, there are Blockchain projects that focus on tokenizing real estate properties to allow large quantities of individual investors to get a share of that property for future investment returns.
Entertainment: Blockchain can have a significant impact on issues that plague the entertainment industry such as copyright infringement, piracy, and content consumption. Through the use of the technology and cryptocurrencies, artists, writers, and musicians could distribute their creative content on a global scale, while retaining full control over said content.
Generally speaking, there are myriad sectors that can derive benefits from blockchaining. Businesses are frequently searching for Blockchain solutions that can be used to enhance their operations and help them to gain a competitive advantage. Due to the fact that incorporating Blockchain technology can be a daunting task, it makes sense to seek out expert help.
The future of Blockchain technology has the ability to end severe issues experienced by modern banks. As it currently stands, banks and their personnel manage all client funds and handle money transfers. Thus, they act as intermediaries. Where there is human involvement, there can be lapses in security and transparency. By their nature, Blockchain databases are more secure and transparent, and would reduce the possibilities for record-keeping errors as well as make transactions faster and cheaper for banks due to their decentralized aspects. According to IBM, banks are lining up to adopt the tech.
In terms of personal finance and payments, Blockchain technology and cryptocurrencies can rectify the need to rely on third parties (banking and financing institutions) for such purposes. Anyone with an internet connection, can create a digital currency wallet and carry out transactions on a Blockchain without having to adhere to regulatory oversight or any geographical restrictions. This leads us to our next point - the further geographical expansion of Blockchain technology, and quite importantly, bringing banking to developing nations.
Further Geographical Expansion of Blockchain Technology
There are clearly tons of Blockchain benefits, but perhaps the greatest effects of its future expansion will be seen in underdeveloped countries like Zimbabwe, Venezuela, and the Philippines, and in regions where banking services or connectivity remains an issue. According to David Crosbie, a University of Pennsylvania lecturer, the future of Blockchain technology has the ability to improve the quality of everyday life in developing countries, generate automation, comfort, and move nations closer toward well developed western societies.
Developing nations are plagued by inept and poorly operated government bodies, as well as bureaucracy, ancient (by modern standards) record keeping systems, and corruption. Blockchain technology can act as a bridge towards automation, banking, connectivity, and transparency for these nations. Despite the impact of Blockchain technology being most closely associated with cryptocurrency transactions, in reality, the benefits that developing nations can reap for record keeping and the financial sector could prove to be astounding. However, the task of utilizing Blockchain technology on a global scale will be met with challenges.
Despite the difficulties that will meet Blockchain’s global expansion, it will definitely continue to develop in countries and industries where it is already being utilized and, more so, in those industries that have a technological and physical infrastructure to support it, such as the United States, Estonia, Switzerland, etc.
Additionally, Blockchain technology has seen increased attention from various banks that are keen on utilizing it to improve various internal processes.
Challenges and Risks of Global Blockchain Growth
One of the greatest issues facing the use of Blockchain technology on a global scale and in developing countries has to do with infrastructural support. Utilizing what Blockchain has to offer requires a technological infrastructure. Thus, it is faster and more efficient to integrate it in places like the United States, Japan, and certain European nations, for obvious reasons.
To take advantage of the future uses of Blockchain technology, connectivity is a must, as is access to affordable communication and computer systems. This access, and these systems, are seen as a luxury for many people in developing regions.
It will take a lot of effort to convince individuals, governing bodies, and businesses as to the benefits of Blockchain use. Aside from the social and economic impact that it can have on all facets of human life, global regulations on the impact of Blockchain technology and cryptocurrency uses differ. It can impact future global Blockchain growth and its ability to help individuals.
There is also the fact that Blockchain technology requires a massive amount of energy to support it, which can lead to issues with its adoption in developing nations. The technology also has the possibility to automate and disrupt various jobs, which can lead to the unemployment of many individuals; the results of which are quite obvious.
Does Blockchain Have Potential for International Development?
There is a future in our world for international Blockchain development and use. It’s quite clear that there is avid interest in the technology, stemming from regulatory attention, the projects that garner astonishing financing, the cryptocurrency market’s growing market capitalization, and nations like Estonia getting behind the technology and integrating it with all vital aspects of a modern society.
It’s quite clear that there is avid interest in the technology, and many facts prove it. Blockchain enjoys a lot of attention from regulatory bodies, and there appear more Blockchain-powered projects that garner astonishing financing from investors. Additionally, the cryptocurrency market’s capitalization is growing and there are progressive nations like Estonia that get behind Blockchain and integrate it with all vital aspects of a modern society.
Granted, while the future scope of Blockchain technology is bright, it is one that will come at a high initial implementation cost. Its execution will need the coming together and collaboration of corporate, societal, and regulatory parties.
One thing is, however, certain that professionals and companies that take advantage of Blockchain technology now, and take the time to fully understand all of its complexities and benefits, will without a doubt have a dramatic competitive advantage in the future. Considering the fact that the technology’s implementation can be a daunting task, it makes sense to seek out expert Blockchain development services in line with the proper utilization of DevOps services.
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