5 industries that will be disrupted by blockchain

October 3, 2019 admin BlockChain, IT Leadership, IT Strategy, Security, Technology Industry

Credit to Author: Bob Violino| Date: Thu, 03 Oct 2019 10:37:00 -0700

How much of an impact will blockchain have on business and society as a whole? At this point, no one really knows because the ledger model and its use are still relatively new and limited. But it’s likely that blockchain technologies will affect a number of industries more than others — at least initially.

Blockchain has been defined as a “single version of the truth” made possible by an immutable and secure time-stamped ledger. Multiple parties hold copies of the ledger, and blockchain has the potential to deliver trust to many facets of business while decreasing or eliminating fraud and counterfeiting.

In a blockchain model, data is secured through the use of cryptography and new transactions are linked to previous ones, which makes it practically impossible for someone to change older records without first having to change subsequent records.

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Given that multiple systems run a blockchain network, users need to gain control of more than half of these systems in order to make changes. That makes it difficult to alter data in transactions or use fake identities.

Blockchain can be applied to many use cases and industries. But several stand out as being particularly suitable for its use.

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Blockchain can be applied to many use cases and industries. But several stand out as being particularly suitable for its use.

Blockchain technologies can potentially impact many different types of financial transactions, and even make it possible for people to access their funds without the need for banks.

Banks could adopt blockchain technology to increase the efficiency of transactions, reduce costs and provide more robust security for those transactions.

R3 LLC, a blockchain technology company, is heading up a blockchain ecosystem of more than 300 companies that is working to build distributed applications on top of Corda, an open-source blockchain platform. These applications can be used across industries including financial services, insurance, and others, and would support inter-company transfers.

The consortium was launched several years ago and includes financial companies such as Barclays, Credit Suisse, State Street,

Bank of America, BNY Mellon, Citi, Deutsche Bank, National Australia Band, Wells Fargo and Royal Bank of Canada.

Aside from payments, blockchain could be used for fraud reduction, loan processing, and enhancing customer service.

PNC bank has collaborated with Carnegie Mellon University (CMU) through the PNC center for financial services innovation, to determine which services a bank could provide on a blockchain and what internal banking processes the technology might improve. The initiative involves the CMU Coin initiative, a cryptocurrency test bed at the university.

Even though experts say the impact of blockchain on financial services could be significant, they don’t expect it to replace traditional banking for transactions anytime soon. Among the hurdles to widespread adoption are limitations caused by the tradeoffs between scalability and security. And many firms will wait for standards and regulations to be established before plunging ahead with blockchain initiatives.

For government entities and agencies around the world, blockchain can provide an effective way to safeguard transactions, enhance workflows, and build trust among citizens.

One of the capabilities of blockchain technologies is transparency through decentralization, and this enables anyone participating in the blockchain to see and verify data. Agencies could use blockchain in providing some of their services, to provide independent verification of claims, according to consulting firm Booz Allen Hamilton.

Because citizens and government agencies share access to records, the firm says, the potential for distrust decreases. Governments can also use blockchains to protect sensitive data such as individuals’ social security numbers, birth dates, addresses and driver’s license numbers. As the firm notes, government agencies hold digital records for citizens, and are therefore natural targets for hacker attacks.

Such attacks could be avoided through the deployment of blockchain data structures that harden network security by decreasing single-point-of-failure risk. This can prohibit attempts at a breach and make them more challenging, the firm says.

Efforts are underway. For example, the U.S. Department of Homeland Security Science and Technology Directorate has contracted to develop fit-for-purpose blockchains for identity and access management.

Another potential benefit of blockchain for government is cutting costs and reducing inefficiency. Blockchains could potentially reduce redundancies, streamline processes and ensure data integrity.

Booz Allen Hamilton mentions an example involving the U.S. federal government and its ongoing challenge in reconciling intragovernmental transfers. At any time there are trillions of dollars in unreconciled funds in the federal budget, the firm says, and the process of reconciling the funds is time consuming. Using a payment and accounting system based on blockchain technologies could provide a permanent audit trail and facilitate faster reconciliation.

Other possible uses of blockchain in the public sector include record keeping, cross-entity transactions and reconciliation, social and humanitarian assistance, voting, the provision of energy credits through a digital market and self-sovereign wallets for giving citizens more control over their identities and records.

Blockchain has already been used to enhance voting procedures, and experts see the potential of deploying technologies to boost voter turnout and address election security and integrity issues. For example, blockchain could help secure voting systems against tampering, and guarantee that a citizen could not vote multiple times.

So far, blockchain has not been used for any large-scale elections, but it has been implemented for some voting processes such as shareholder voting and mobile voting in primary elections.

As with other sectors, the use of blockchain in healthcare is still a work in progress. But clearly it can potentially affect many aspects of the way healthcare institutions conduct transactions and processes.

This is especially true because so much of healthcare is going digital, in the form of patient records, payments, requests for information, insurance approvals, communications and collaboration, research, etc. Sensitive information in particular has to be sufficiently protected, and blockchain could provide a solution.

Consulting firm Deloitte Consulting LLP has noted that blockchain systems might some day transform the sector, placing patients at the center of the healthcare ecosystem and bolstering the security and privacy of medical information.

For example, blockchain could underpin health information exchanges by making electronic medical records (EMR) more efficient and secure; reducing friction and costs of current intermediaries; and helping link fragmented systems to better evaluate the quality of care.

Looking into the future, a blockchain network for electronic medical records (EMRs) that spans the nation could increase efficiencies and help support improved outcomes for patients, Deloitte said.

One key challenge within the sector that blockchain can help solve is the sensitivity of healthcare data, and the need to keep this data protected. Blockchain can create a secure means to electronically hold medical data and enable someone to control who is able to view the data at any time. The technology can also facilitate the tracking of health data.

HIMSS, a global not-for-profit organization focused on better health through information and technology, says blockchain and distributed ledger technology have great potential across healthcare to improve patient care and reduce costs.

“These emerging technologies have already started to take hold in healthcare networks, from clearinghouses to drug supply chains to provider-credentialing processes and other critical areas,” the organization notes.

HIMSS says there are several key considerations for companies when pursuing implementation of blockchain technology for a particular healthcare use case. These include governance of blockchain when used in a consortium; privacy; regulatory compliance; security; data storage; performance, throughput and scalability; interoperability; and deployment architecture.

Several blockchain use case categories have “generated substantial efforts or interest thus far by stakeholders in the healthcare industry,” HIMSS says. These include digital identity management for patients, participants and providers; financials, insurance and records; clinical research and data access; and health supply chain management.

Companies that provide energy, including gas and electric suppliers and utilities, stand to benefit from blockchain in a number of ways.

Deloitte has noted that blockchain “is a particularly interesting technology for decentralized processes that require large networks and trust relationships between all parties. Therefore, it offers great benefits to the power and utilities market,” with its large networks of power and utilities companies, maintenance subcontractors, local suppliers and end users.

One possible use is with smart grids, which requires a marketplace for supply and demand of power on a local level. “Rather than create a centralized marketplace, smart contracts on the blockchain can be used to balance demand and supply and enable peer-to-peer trade,” the firm says.

A potential challenge of using blockchain for energy industry applications are that devices in the blockchain need to be able to communicate with each other through the internet, Deloitte says. Others are that systems need to be easy to use in order to be widely accepted, and cryptocurrencies such as Bitcoin must be capable of scaling up to the large amounts of transactions needed to roll out smart grids for large numbers of users.

Another use of blockchain is to share data among smart meters in homes in a secure manner. Up to now sharing this data was a threat to the privacy of the owner of the meter, the firm says, and blockchain can provide accurate data to energy suppliers without requiring a direct link to the meters of specific users.

Some energy companies are already making moves in the blockchain arena. For example, in July, Shell Ventures, the corporate venture capital arm of oil company Royal Dutch Shell plc, made a major investment in LO3 Energy, a company that’s building a blockchain-based platform to enable decentralized business models and innovative technologies related to energy, clean technology and utility systems.

LO3 Energy’s technology enables the integration of distributed renewable energy resources (DERs) into local energy networks, and funding will support the company’s drive toward the global commercialization of blockchain-based community energy networks. The system promises to democratize the energy industry, according to LO3 Energy, allowing people to both consume and produce electricity at their home and business.

LO3 Energy’s platform was pioneered with the Brooklyn Microgrid, and the company now runs projects with partners around the world.

Users set preferences on a dedicated mobile app, choosing how and when to use local energy resources available to them and allowing them to select the sources of energy. Electrons flow through the normal grid transmission network, but the private blockchain manages the definition of the energy source and the contract agreement to pay for it.

This enables a range of use cases, including peer-to-peer energy trading, energy hedging for businesses, virtual power plants and dynamic electric vehicle charging.

The transportation and logistics sector is poised to deploy blockchain systems to enhance supply chain services to customers and for other use cases. Technologies supporting blockchains can help cut costs and fuel consumption through greater efficiencies.

The Blockchain Council, a group of subject matter experts and enthusiasts who are evangelizing blockchain research and development and use cases for the industry, says there are several ways blockchain can transform the sector by addressing some of the main challenges it is facing.

One is tracking. A key concern in the industry is payment and dispute resolution. Every day about $140 billion is tied up in dispute settlement payments, the council says, which involves a lot of time and a reliance on third parties. A blockchain-based tracking system would enable easier tracking of vehicles and their status, and eliminate the need for third parties to settle disputes.

Another is the transport of temperature-controlled products such as pharmaceutical items. Temperature shifts during longer-than-expected deliveries can adversely affect these products, which can lead to waste. The use of blockchain for data authentication can help ensure that products are delivered on time under the right temperature conditions.

A third use case is for carrier on-boarding. As with the tracking of records, blockchain can help in validating carriers and drivers. For example, when a freight broker is trying to reach capacity for a load at a given location, the broker can use a blockchain ledger to verify a carrier and assign the load. Blockchain would enable a decentralized system holding the records of carriers.

Efforts are underway to create standards for blockchain use in this industry.

For instance, the Blockchain In Transport Alliance (BiTA), which includes freight, transportation, logistics and affiliated companies as members and claims to be one of the largest commercial blockchain alliance in the world, says it is developing a “common framework and standards from which transportation, logistics, supply chain [and] freight marketplace participants can build revolutionary blockchain and distributed ledger technology applications.”

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