A blockchain is a shared and immutable data storage technology that is used for payments, supply chain management, trade operations, tokenization, and privacy solutions.
The technology is finding its way into the corporate world because of its unique properties that allow the creation of programmable, transparent, accessible, secure, and trustless systems.
Anndy Lian, an intergovernmental blockchain expert, told Techopedia:
“It is not just financial systems; blockchain can empower individuals to take control of their personal data and privacy, mitigating risks associated with centralized data storage. We’re at the early stages of understanding how blockchain and crypto can revolutionize various industries. From supply chain management to healthcare, the potential applications are vast.”
What are the benefits of blockchain applications? What are the challenges that companies may face when adopting blockchain tech? We explore these and highlight some of the most popular use cases of blockchain for businesses in various sectors.
Key Takeaways
- Blockchain tech has unique properties that allow the creation of programmable, transparent, accessible, secure, and trustless systems.
- Blockchains are used for payroll, supply chain management, trade operations, tokenization, privacy, and retail operations.
- Businesses can use public blockchains like Ethereum or create their custom private blockchains.
- Businesses can use blockchain to build trust, improve privacy, reduce costs, facilitate cross-border payments, and more.
- Uncertainty around crypto regulation is a key hindrance in adopting blockchain technology.
What Are the Major Blockchain Applications Across Industries?
Here are some of the most popular blockchain use cases and examples of using blockchain for small businesses and large corporations.
Payroll
Payments are an obvious use case of blockchain technology. The cryptocurrency industry has used blockchain technology as a bedrock to build peer-to-peer payment systems, while governments are leveraging blockchain technology to create central bank digital currencies (CBDCs).
The growth of remote work has also helped this trend grow as crypto payments facilitate easy, quick, and cheap cross-border payments.
Supply Chain Management
Blockchain supply chain management solutions modernize complex chains that have numerous intermediary parties, processes and endpoints.
The transparent and immutable nature of a blockchain ledger ensures that all concerned parties have a single trusted source of information while providing information in real time to all concerned parties.
Blockchain supply chain solutions also reduce paper-based processes and email exchanges and allow automation, thereby increasing transaction speeds.
Trade management company Covantis created a network to process the execution of bulk agricultural trade operations from the appointment of third-party providers to sharing of documentary instructions and generating drafts and final documents.
Trade & Commerce
Blockchain solutions for trade and commerce created a reliable platform to help buyers find sellers, negotiate with each other, and complete the trade without having to meet each other.
These trading platforms store agreed-upon contracts on the blockchain, while smart contracts custody funds and automate payments when real-world conditions are met. All the information remains visible to all parties on the blockchain.
IBM created a blockchain-based trade management platform we.trade that solves the issue of lack of trust. Importers and exporters that don’t know each other can securely connect with each other on we.trade.
Real World Asset (RWA) Tokenization
Tokenization of real world assets is a promising blockchain use case for businesses that want to increase market liquidity for illiquid assets like real estate. Tokenization can also be used to safeguard intellectual property like copyrights and patents by storing them on an immutable blockchain network.
RWA tokenization is among the top five crypto market trends and technologies in 2024. Traditional finance companies are tokenizing illiquid real estate and fine art into thousands of digital tokens, bringing down the entry barrier for small investors. At the same time, the global nature of public blockchains like Ethereum (ETH) has allowed RWA tokens to reach investors from across the world.
Lian said:
“I believe that tokenization has the potential to democratize access to investment opportunities, allowing individuals from diverse backgrounds to participate in previously inaccessible markets.”
The world saw the first tokenization of real estate in June 2019 when a luxury property called AnnA Villa in France was divided into thousands of digital tokens on the Ethereum blockchain with a minimum entry ticket of investment of €6.5. The tokens came with ownership rights, voting rights, and a one-year vesting period for initial token holders.
Decentralized Identity
Data privacy and security are key issues that businesses have to deal with every day. Using blockchain technology, corporations can leverage a privacy-preserving identity management system called decentralized identity.
Decentralized identities are stored on the blockchain and are not controlled, managed, and stored by centralized third parties. The use of zero-knowledge proof technology, which is gaining popularity on public blockchains, allows organizations to create identifications and certificates that can be verified without revealing any information. Decentralized identification prevents certificate fraud, fake credentials, slow verification processes, and data leaks.
Health-focused enterprise enablement company BurstIQ provides a blockchain-powered platform called LifeGraph that manages sensitive health data. Healthcare and life sciences companies can secure customer data to a single source where participants can control others’ access to their data. Permissioned data can be analyzed, without violating data privacy norms, for improved efficiency, better decision-making, and increased effectiveness in medical processes.
Non-Fungible Tokens (NFT)
Although crypto NFTs are typically associated with absurd market prices, their broad use cases are often misunderstood. Consumer brands like Nike, Puma, and Louis Vuitton have used NFTs as a marketing tool and as a way to digitize and enhance shopping experience.
Since acquiring digital art studio RTFKT in 2021, Nike has occasionally released exclusive NFTs that can be redeemed for physicals. Similarly, in 2023, French luxury fashion house Louis Vuitton sold “phygital” NFTs called Treasure Trunks – worth €39,000 a piece, as reported by Vogue – that granted owners access to goods and experiences.
In September 2022, Starbucks piloted a customer rewards program powered by NFTs called Starbucks Odyssey. However, the company later shut the program in March 2024.
Benefits & Pitfalls of Blockchain for Business
Benefits
- Trust
- Improved Privacy & Security
- Reduced Costs
- Faster Settlements
- Programmability & Customizability
- Tokenization
Challenges
- Technical Expertise & Investment
- Regulation Uncertainty
- Risk of Hacks
- Limited User Adoption
- Energy Consumption
- Scalability & Interoperability
Benefits of Blockchain for Business
Here are the key benefits of using blockchain tech for business operations:
1. Building Trust
Blockchains when paired with smart contract technology can create trustless systems that are immutable, transparent and objective in nature. In a world where there is growing distrust over corporate practices, the use of blockchain technology can help generate trust.
2. Improved Privacy & Security
Although blockchains are not immune to hacks, the development of cryptographic technologies such as zk-proof can ensure data privacy and safety. ZK-proof technology is especially useful in protecting private data as it allows data verification without revealing any information.
Businesses can also leverage public blockchains such as Ethereum to store data and transact upon. The decentralized nature of public blockchains ensures that no centralized party has the power to modify or delete stored data.
3. Reduced Costs
Blockchain technology can help organizations reduce costs by making supply chain and trade management systems efficient, transparent, and accountable. This is especially useful for corporations that have to conduct business operations on the assumption of trust.
4. Faster Settlements
The use of blockchain technology shines when it comes to payments. Cryptocurrency blockchains are global in nature and operate 24/7 making them perfect channels for cheap and immediate cross-border payments.
Unlike the traditional banking sector, businesses will not have to wait for banking hours for settlement and will not incur multiple fees applicable in international money routing.
5. Programmability & Customizability
Businesses have the choice to use different types of blockchains depending on their needs. For example, public crypto blockchains are suitable for handling payrolls, while private blockchains can be developed to allow access to only concerned parties within a supply chain or trade operation.
Furthermore, the use of programmable smart contracts allows the development of applications that use the underlying blockchain networks for data storage and transaction settlement. Smart contracts also allow automation where transactions self-execute when specific conditions are met.
6. Tokenization
Tokenization fits financial use cases. The borderless nature of public blockchains like Ethereum and Solana allows tokenized financial assets to attract a wider pool of investors from across the globe.
Potential Challenges & Pitfalls
Here are the biggest barriers to blockchain adoption in business:
1. Requirement of Technical Expertise & Investment
Businesses will incur costs when recruiting blockchain experts and implementing blockchain technology. The use of public blockchains will require businesses to pay gas fees and auditing fees when setting up applications and smart contracts. Meanwhile, the development of private blockchains from scratch may be expensive and time-consuming due to its complexity.
2. Regulation
The uncertainty around cryptocurrency regulations is one of the biggest challenges in implementing blockchain technology for businesses. Cryptocurrency and blockchain applications often face difficulty finding banking partners in regions with unfriendly and unclear crypto regulations.
The uncertain crypto rules and regulations can hamper business progress and discourage customers from using blockchain-based applications.
3. Hacks
Blockchains are not immune to hacks. 51% attacks, double-spending, and sybil attacks are key risks to public blockchains. Furthermore, businesses must conduct thorough audits of their smart contracts before deployment or risk being compromised.
4. Limited User Adoption
Blockchain technology is relatively nascent, and therefore, businesses may encounter resistance from trade partners, supply chain management parties and consumers when they introduce blockchain-based solutions. Low awareness about blockchain and cryptocurrency technology among concerned parties is a major hurdle in this area.
5. High Energy Consumption of Proof-of-Work Blockchains
Proof-of-work (PoW) blockchains like Bitcoin are criticized for their high energy consumption rates and carbon footprint. Businesses looking to use these blockchains may attract criticism from customers and investors.
6. Scalability
Public blockchains like Bitcoin and Ethereum often face scalability issues that have resulted in limited network throughput. High transaction volumes on these networks can result in transaction execution failure, exorbitant transaction fees, and delayed transaction processing.
7. Interoperability
Blockchains are often referred to as “data silos” as they tend to exist in isolation from other blockchain networks.
The lack of interoperability between blockchains leads to inefficiencies as businesses will have to rely on third-party solutions to retrieve data from a foreign blockchain.
Fragmentation of data can also hinder collaboration and stifle innovation between businesses or departments within a corporation.
The Bottom Line
Blockchain is a revolutionary technology that offers unique value propositions like trustlessness, transparency, immutability and decentralization.
When duly implemented, blockchain can help corporations make their business operations more efficient and bring about a social and cultural change where trustless and transparent systems become the norm.
Source: https://www.techopedia.com/blockchain-for-business-your-enterprise-guide
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
