Blockchain Technology Future and How It’s Used in Various Industries
Besides financially, also think of the management of private data. Did you know that Facebook collects your data and then sells it to advertisers so that you are flooded with advertising?
Blockchain technology strives for a world where everything is decentralized - where everyone in the network has the right to decide what is or is not allowed. A blockchain is a collection of data that is all stored in chronological order on a digital, decentralized network. It is impossible to adjust this data, which makes it seen as objective and impossible to manipulate. What is the future of this technology, and what are possible Blockchain technology use cases? We’ll cover this and more.
Table of contents
Brief Overview of Blockchain Technology – What It Is; Benefits and Drawbacks
Blockchain Technology Use Cases in 2021
Brief Overview of Blockchain Technology – What It Is; Benefits and Drawbacks
To understand Blockchain technology, it’s important to know what it is and how it works, as the hype surrounding blockchain seems to be lasting. Banks and multinationals have technology on the agenda. A blockchain is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of its data. This is because, once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks.
The claim that "blockchain is Bitcoin and vice versa" is no longer true. Bitcoin has been a starting point for the blockchain, but the blockchain has hundreds of other applications and possibilities that will be exploited in the future. It will minimize transaction costs and play a role in our business as well as our private life. It is not yet clear how quickly the blockchain will fulfill these promises. As with TCP/IP technology, where it took ten years for the full ARPANET to transition to the protocol, the blockchain will also take some time to be widely used.
It is clear that there is a lot of potential and possibilities, but it will still take a few years before the technology is rolled out globally. There are also some discussions on the political level. But it seems like a matter of time that blockchain technology will bring about change in everyday life. There are many benefits of blockchain technology, but it also has its drawbacks:
Efficient/Private/Secure/Transparent Transactions + Decentralization
The benefits of a blockchain stem from its technology, which we discussed in the previous section. Below, we have listed the most important benefits:
The biggest feature of blockchains stems from the fact that the public address transaction ledger is open to all for perusal. In financial systems and businesses, this adds an unprecedented and extra layer of liability, holding each sector of the business accountable to act with integrity in the growth of the business, community, and customers.
Most blockchains also have open-source software. Anyone can view the code anytime, anywhere. This also means that there is no real authority over who controls the code of Bitcoin (or other open-source coins) or how it is edited. Everyone can propose changes or upgrades to the system. If a majority of network users agree that the new version of the code with the upgrade is solid and worthwhile, Bitcoin can be updated.
The blockchain can process a transaction faster than, for example, a bank. A blockchain eliminates the need for an intermediary. Banks and notaries are examples of intermediaries that can be put out of work by the blockchain. However, it will not run that fast. There are also banks that are trying to use blockchain technology to their advantage again. For example, there are already several private or authoritarian blockchains.
However, banks are only open five days a week, at fixed opening times. The blockchain is there 24 hours a day! Especially for international transactions, the blockchain can offer a fast and more efficient solution.
The advantage of blockchain is that it is much more secure than other archiving systems. Each new transaction is encrypted and linked to the previous transaction. Simply put, the blockchain, as the name suggests, is a network of computers that come together to confirm a "block." This block is then added to a ledger, which, in turn, forms a "chain." There is a series of complicated math numbers that make up the blockchain. They cannot be changed as quickly as they form. This immutable and imperishable nature of blockchain makes it safe from falsified information and hacks. So, both parties do not need trust to be able to trade with each other.
After a computer approves the transaction, it is added to the blockchain block. You may be able to change the information on one block with a lot of effort, but not on the next block(s). This makes it extremely difficult to change information on the blockchain.
A blockchain does not store information in one central place. On the contrary, the information is stored in every block of the blockchain and is thus spread over a large network of computers. When a new block is added to the network, every computer on the network updates this change.
Because the information is stored on multiple computers across the entire network, rather than a central place, it is difficult to tamper with the blockchain. If a hacker gets hold of a copy of a blockchain, only this one copy is at risk and not the entire network. As you can see, decentralization goes hand in hand with blockchain security.
Blockchain technology ensures lower costs because intermediaries are no longer needed for transactions. Get rid of notaries, accountants, banks, and (fingers crossed) some governments. In areas such as counter-transaction processing, product structuring, account management, auditing, and financial control, savings can be as high as 60-75%, and this is only a small part of where blockchain can be used. Therefore, the potential total savings on operating activities will be about 50%, which, with the development of technology and the transfer of all processes to the blockchain, can be increased to 80%. This adds up to billions of US dollars.
Weak Points and Downsides of Blockchain
Next are some main blockchain technology problems:
In blockchain systems, information is not changed or deleted, so the database can grow to a huge scale. For example, the Bitcoin blockchain occupies more than 200 GB on the hard disk of each node of the network, and the total energy consumption of all miners exceeds this figure in a number of small countries, such as Denmark or Ireland. Under such conditions, it is costly for a business to ensure the operability of such a large network. This leads to the next problem - scalability.
The limitations of scaling blockchain-based systems are inherent in the architecture itself. Of course, more modern systems are capable of providing high transaction throughput. For example, the TRON blockchain is capable of processing up to 2,000 transactions per second, which is more than that of the international payment system VISA. However, the problem of storing and distributing data remains unresolved.
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Private Access Risks
As mentioned above, everything has its own price. The price of anonymity and autonomy is the lack of insurance. The blockchain determines which data will be open and which will be closed. Non-public information is in the custody of the user or the company. For example, the deceased owner of the Quadriga CX crypto exchange "took with him" the private key from the wallet of the platform with digital assets in the amount of $200 million.
However, despite these shortcomings, blockchains provide effective solutions for businesses that deal with a large amount of verifiable data and make it easier to verify information. Technologies are developing, and all controversial issues will sooner or later be eliminat
Blockchain Technology Use Cases in 2021
Blockchain technology has various use cases in 2021 and beyond. Below, we have listed some important ones:
1. Banking and Finance
The most affected sectors with the advent of blockchain technology are, of course, banking and financial services. While some think and/or hope that the entire banking system will disappear and the blockchain will take over, the reality is a bit more nuanced.
Today's banking institutions are more likely to use this (relatively) new blockchain technology to make financial services faster, safer, and easier. A lot of private blockchain-based development is taking place in the finance and banking sector. Nasdaq is working with Chain.com, one of the many blockchain infrastructure providers, to offer technology for processing and validating financial transactions.
Bank of America, JPMorgan, the New York Stock Exchange, Fidelity Investments, and Standard Chartered are testing blockchain technology as a replacement for paper-based and manual transaction processing in such areas as trade finance, foreign exchange, cross-border settlement, and securities settlement.
Healthcare is a digital island kingdom. Data exchange between professionals does take place, but there are still major areas for improvement. Examples are, in general, medication data, data exchange between hospitals, and also exchanges between general practitioners and the care sector. The rise of web-based solutions in mental health care creates a challenge there too. A collection of organizational, financial, legal, and technical factors underlies it.
It is tempting to see new technology - such as blockchain in healthcare - as the solution to this “silo” problem in healthcare. But technology alone cannot solve this. Blockchain can play an important role in a new relationship between a patient and his data, for example, through greater transparency and control over data exchange. It is expected that global healthcare-market spending on blockchain will hit $5.61 billion by 2025.
3. Supply Chain
The use of blockchain technology in the supply chain has many advantages. Blockchain technology improves the transparency and traceability of materials in the supply chain. The added value of this will be especially evident in scenarios where there is a lack of trust between both parties, and for this reason, one of the parties does not want to exchange information immediately. On the other hand, this technology is still under development, and parties are still experiencing difficulties in linking Blockchain technology to physical objects, but it is almost certain that Blockchain will bring new possibilities to the supply chain.
By using blockchain technology, it is possible to digitize physical assets. This maintains an immutable database and allows all transactions from supplier to end-user to be traced. Because all data in the supply chain can be effectively controlled, administrative processes will run more smoothly, and costs will be reduced. Manual checks that normally take a few weeks can be accelerated by an available database with all relevant information.
Many parties that work with blockchain face challenges such as the relatively high costs and steep learning curve. Yet, there are certainly opportunities for blockchain in the insurance industry. According to the Accenture Technology Vision 2019 survey, more than 80% of insurance companies claimed they adopted or were planning to adopt the blockchain technology. It’s true: Many blockchain insurance projects are lingering at the proof-of-concept stage. However, to accelerate adoption, some companies have chosen to collaborate and form alliances, such as the Blockchain Insurance Industry Initiative (B3i) or the Institutes’ RiskStream Collaborative.
The big common denominator is that the low-hanging fruit for blockchain applications is in process optimization. For example, the submission, processing, and payment of claims can be much faster, even in real-time. There is also rapid profit to be made with regard to fraud prevention and the exchange of customer information - especially when data is shared across multiple parties.
In the longer term, new insurance models may even emerge. Linking peer-to-peer technology to smart contracts opens the door to micro-insurance for specific products and/or a limited time, such as renting a car for a half-day at a low premium. The advisory role will also change but not disappear. Despite the disruptive nature of blockchain, many parties agree that the role of a third party as the intermediary will not disappear. Almost everyone mentions the need for a “human eye.” In addition, the expertise of the adviser only becomes more important with an increase in (new) insurance models.
5. Cyber Security
Many professional accountants began their acquaintance with the blockchain through Bitcoin and other cryptocurrencies, but the scope of application of the technology is not limited to this alone, as you know. The collapse of cryptocurrency quotes in 2018 led to the fact that now the main area of their attention is not the volatility of rates but other ways of using the blockchain by client companies. As with any new (albeit relatively new) technology, this requires a thorough additional analysis of the impact of the blockchain on the internal control system and other management aspects.
Cybersecurity blockchain technology is a relevant topic that arose in the information field long before the discussions of actually integrating the distributed ledger technology - but only today is it starting to rise in the course of almost every discussion in the board of directors. Its relevancy is due to the enormous risk to operations and financial results that are posed by hacking and leakage of confidential data. Blockchain is a breakthrough in cybersecurity for the entire digital world. The new technology will provide the highest level of confidentiality, availability, and data security. However, the complexity of its implementation can cause difficulties with development and real use.
6. Other Startups and Businesses
Starting your own business is a dream for many people. Only a few dare to do it in the end. If you are considering starting a business in the crypto sector yourself, this may be the right time to take the step. The big advantage is that blockchain technology is not just limited to crypto coins. It has shown that it has value in other areas as well. For example, it can increase productivity, and blockchain technology makes concluding agreements a lot easier.
Broadly speaking, we can distinguish the following four advantages:
- Collect money
- Build networks
- Carry out efficient and secure business transactions
- Conduct seamless business operations
Future and Potential Uses of Blockchain Technology
With the blockchain revolution, all processes are automated, and we have less and less need for intermediaries to operate manually. After all, why should we have everything done manually when we could also make a large part of these administrative tasks fully automatic on the blockchain?
It will ensure that many jobs will be jeopardized, but also opportunities will also be created in this new digital world. It will depend on how much you want to move into this new era and how much you want to be a part of it. Despite the fact that this technology is still relatively new, it is very promising for the future of many industries. Speed, efficiency, and transparency are core values that can only lead to success.
Especially the financial market is turned upside down because we are dependent on an external organization for almost every financial transaction. For example, do you want to buy a house? This is not possible without a notary, who also appropriates a considerable sum of money. We keep a large sector going by putting our money in the hands of external parties that we only blindly trust, but what is this trust based on?
With the blockchain, there is transparency and openness, and everyone can always consult all previous transactions. In addition, it works on a decentralized platform on the basis of smart contracts where no consensus is possible, and everything is recorded.
Why Choose Exceed Team for Blockchain Projects?
Exceed Team can be your trusted partner for Blockchain projects. Here are four reasons why customers choose us:
- Adaptability: We can work with a vast pool of technologies, including blockchain. Our expertise allows us to build reliable IT-solutions from scratch, tailored to your needs.
- Security: Data security is among our top priorities. We always adhere to the latest regulatory standards.
- Transparency: You can supervise every stage of project development to ensure it progresses as planned.
- Individual approach: Your needs come first. We have the capacity to provide you with as many niche-professionals as necessary.
Have more questions?
Blockchain Technology FAQs
What is blockchain technology, and how does it work?
Blockchain technology strives for a world where everything is decentralized - where everyone in the network has the right to decide what is or is not allowed. A blockchain is a collection of data that is all stored in chronological order on a digital, decentralized network. It is impossible to adjust this data, which makes it seen as objective and impossible to manipulate.
What are the pros and cons of blockchain technology?
The main pros of blockchain technology are:
- Increased efficiency
- Cost Reductions
The main cons of blockchain technology are:
- Fewer user rights because an independent third party is no longer present
- Less privacy because blockchain transactions are public
- Protection for citizens does not exist because there is no central authority to act on behalf of the citizen if delivery is not made.
- The technology is not scalable; it can only process a limited number of transactions per time period.
- Correcting errors is not possible.
- Validation of persons and rights is still done via old-fashioned login methods and is therefore susceptible to fraud.
Where is blockchain used today?
Blockchain technology has various use cases in 2021 and beyond. Some important ones are:
- Banking and Finance
- Supply Chain
- Cyber Security
- Startups and Businesses
Is there a future in blockchain?
Yes! With the blockchain revolution, all processes are automated, and we have less and less need for intermediaries to operate manually. After all, why should we have everything done manually when we could also make a large part of these administrative tasks fully automatic on the blockchain?
How can we use blockchain technology?
Blockchain transactions are transparent, safe, and reliable, which means that the possibilities in use cases and applications are endless. Now the focus of the blockchain is mainly on cryptocurrencies, where a logical follow-up could be banking transactions. Almost every bank has recently invested and researched the technology to accelerate transactions in a uniform, secure manner.
Blockchain technology will ensure that many jobs will be jeopardized, but also opportunities will also be created in this new digital world. It will depend on how much you want to move into this new era and how much you want to be a part of it. Despite the fact that this technology is still relatively new, it is very promising for the future of many industries. Speed, efficiency, and transparency are core values that can only lead to success.
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