Blockchain Use Cases

Now that we have understood the many theoretical aspects of blockchain technology, it is important that we investigate how it is being put to real use. In this chapter, we will focus on the real life applications of blockchain and how they are disrupting the world as we know it. Starting with the most mainstream example of blockchain use cases, Bitcoin, we will move on to see how blockchain is changing anything from government and finance, to shaping the future of Internet of Things and data storage.

What is Bitcoin?

As it stands, the most popular representation of blockchain use cases in the world is the crytocurrency Bitcoin. In its purest form, Bitcoin mimics mainstream currencies by being a medium of exchange or a storage of value. In fact, in most modern monetary systems currency is not represented by a physical commodity, but by what is commonly known as ‘fiat’ money. Fiat money retains its value by being acknowledged by a government or an institution as a legitimate source of currency. Where Bitcoin differs from central bank-backed currency is that it uses the power of the internet as a means to operate in a transparent, encryted and decentralized way.

As Bitcoin does not require validation by a government or a bank, how does a typical transaction work in this early blockchain example? Firstly, both parties of such transaction have a public key and a private key that provide a digital signature – a proof of ownership and a reference point for both the sender and the receiver. The sender issues a desired amount of Bitcoin to the receiver’s public address. After the transfer is completed, the transaction, digital signature, as well as timestamp, are broadcasted to all of the nodes in the network for validation. Once the network nodes confirm that the transaction is valid, the block containing the information is added to the chain of similar blocks that precede it. At this point, the transfer is irreversibly added to a blockchain and open for anyone to view and confirm that it did take place.

Applications of Blockchain: Beyond Bitcoin

While Bitcoin is definitely one of the most mainstream examples of blockchain in action, it is important to remember that this payment method is only the tip of the iceberg in current blockchain use cases. When we really consider the benefits of blockchain, we envision real practical applications for many features of this nascent technology.

The ledger for example, allows for a radically different method of storing information in the new era of data that is not monopolised by one central party, but commonly owned and authorized by a decentralized network of nodes. If we focus on the implications of this new trustless way of building databases and organisations alone, we can anticipate how applied blockchain will have a truly radical impact on a multitude of industries, markets and charitable causes. Following this, the encrypted, responsive nature of blockchain technology paves new ways for storing and securing the ever more increasing networks of data exchanges, which increase in traffic and volume every single year.

The tokenization aspect also means that real life applications of blockchain technology will also help in creating new avenues of generating wealth, if we consider how various, previously solid, assets can now be liquidated and sold as fragments through a decentralized ledger. Similarly so, blockchain allows users to monetize their activity more, whether we consider selling their data to advertisers or creating their own content.

These and many more blockchain use cases will be covered in this chapter of the Academy. Here at Lisk, we are very excited to inspire potential blockchain app creators to understand the magnitude of this technological phenomenon and imagine what aspect of the modern world they want to disrupt and improve.

Smart Contracts & Dapps

One aspect of blockchain technology which not only drastically increases a number of blockchain use cases, but also their ability to fundamentally disrupt a variety of industries and non-profit causes is the invention of smart contracts. Smart contracts are contracts written in code and embedded onto a particular blockchain. The code contains all the rules, conditions, expiry dates and all other relevant information needed for its fulfilment, which execute automatically once the terms are met. 

As opposed to traditional contracts, a smart contract example would include conditions pre-written in a programmer language which is very different to ones based on human language, which can be very subjective and open to judicial interpretation. Instead, a smart contract behaves in predefined ways and is automated in the pattern of “if this happens, then do that”, which is a more objective, data-driven way to ensure contract conditions are met.

What makes smart contracts so key in expanding blockchain use cases is that the fact that the conditions for completion and requirements of all parties are entirely quantifable. This means that a certain numerical action needs to take place in order for the smart contract to be activated, refunded, or terminated.

A smart contract is agreed upon and stored on a decentralized, encrypted ledger. This elevates its blockchain uses for a variety of reasons. First of all, the decentralization of a blockchain hosting the ledger means that it is not processed by and thus entrusted in a central entity who might have self-interest in manipulating the data. Similarly so, the encryted nature of blockchain technology means that any smart contract example and its history is permanently embedded into blockchain and any outside manipulation will be noticed and corrected by other nodes on the network. This helps all parties benefit from the trustless nature of the infrastructure. Any tampering would require huge amounts of computing power and would not be financially or logistically viable.

Lastly, the failure of one particular smart contract does not necessarily spell doom for the overall database, or ethical integrity of blockchain technology itself, as all smart contracts are verifiable on a case-by-case basis. Thus what we end up with is creating what logically behaves as a single, large and secure computer system, but in fact, it comes without the risks, costs and trust-related issues of a traditional, centralized model.

The automated, verifiable and trustless nature of smart contracts has added a new aspect of tangible blockchain uses in the real world, one that allows it to pose a serious challenge to the majority of centralized industries. Most traditional businesses rely on legal infrastructure and agreements in order to conduct business with third parties. This requires a variety of middlemen, as well as incredibly big budgets dedicated to documentation processing and contract enforcement. By opting for a blockchain-based smart contract system, most businesses can reduce the risk of fraud and the costs of middlemen, whilst avoiding having to hand all data over to another centralized entity. In essence, they allow any business agreement to be automatically executed or enforced.

Most importantly however, smart contracts in blockchain use cases can help to save the most important resource of all – time. Businesses waste a great deal of time handling paperwork, enforcing contracts and interacting with middlemen. Smart contracts help to save companies countless man hours that could potentially be spent elsewhere.

Smart Contract Use Cases

While the technological basis for these inventions sounds theoretically appealing, it is also important to note that smart contracts are being used in everyday situations. To give a specific smart contract example, in 2016 financial company Markeit utilised smart contract technology to create and manage a fully functioning network of credit default swaps trading. There is also a significant push and legal debate regarding the validity of smart contracts in selected legal proceedings. It is likely that in the future lawyers will switch from writing traditional contracts to a sort of a hybrid, where contracts are written in code, verified in blockchain, but also backed by a traditionally articulated version.

Blockchain Applications

It is also essential to note what is a smart contract in relation to the end user and how it can affect a variety of outward facing, business-to-customer industries. Smart contracts can signify particular business processes and can be coupled together on a blockchain in order to perform more sophisticated functions. Another exciting smart contract example is the emergence of blockchain applications, sometimes referred to as ‘dapps’. Within the context of blockchain, blockchain applications can be understood as blockchain-based user-facing interfaces which connect the end user to the technology through a combination of underlying smart contracts.

To best compare these applications to similar inventions in the traditional internet sphere, one should think of the relationship between blockchain applications, smart contracts and the blockchain in the same way traditional web applications use HTML, CSS and JavaScript to render a particular page. They do so by using particular platform application programming interface, or an API to access its database. Similarly, dapps use smart contracts in order to connect to the particular blockchain upon which they are based. The introduction of this new generation of apps heralds a new era of blockchain usage, by bringing the efficiency, flexibility and security of blockchain-based smart contracts to the end user through a much-needed option of front-end interface.

As such, smart contracts help all participants exchange capital, property, or anything else with value in a totally verifiable, conflict-free method, while cutting out any central entity, or any unnecessary third party.

Decentralized Government

In this chapter, we will explore how blockchain technology is being used to permeate and improve government activity around the world.

To look for beginnings of mainstream blockchain use cases in ushering a new era of a decentralized government, look no further than Europe’s own self-styled ‘CryptoPolis’ – Chiasso, Switzerland. Along with its sister city, Zug, often referred to as ‘Crypto Valley’, this community on the Swiss-Italian border has recently allowed its residents to use crytocurrency to make small tax payments.

While this option can be considered more a novelty, with mainstream currency still preferred for heavy tax lifting, Chiasso’s crypto-friendly fiscal policy provides a glimpse of how this technology can be implemented by governments in the future.

Blockchain Voting

Almost three quarters of all countries in the world can technically be considered at least partial democracies. That means they are dependent on voter consensus to elect officials and decide on nationwide referendums. Unfortunately, current voting systems are some of the most outdated, inefficient and manipulation-prone aspects of modern governance. Blockchain technology can be implemented to help encrypt and easily trace back the validity of the voting ballots of individual citizens. The decentralized ledger managing blockchain voting data also means that results are not processed by a central entity, which eliminates the risk of voting result manipulation in corrupt countries.

Another key feature of governance which will be revolutionized by blockchain uses is notarization service. Such administrative timestamps validate the exact time an action takes place in a citizen’s life; starting from events such as birth and death, but also when receiving new identity documentation, receiving certificates of education or exchange of ownership titles. Much of these processes are still done either on isolated databases or via brick-and-mortar bureaucracy, which is prone to mistakes. However, due to the encrypted nature of the data stored on a blockchain, all of these recordings will be safe and only visible to the owner or permitted parties.

The encrypted, decentralized and agile method of information storing pioneered by a future blockchain government ledger will result in a more responsive and user-friendly governmental interaction. What is being dubbed by tech enthusiasts as “responsible open data”, will enable blockchain-backed governmental bodies to process transactions with multiple citizens at the same time, such as registering a vehicle or processing social security documents from their home with the full assurance that their interaction was certified and stored safely on an encrypted ledger.

Using the decentralized government ledger in order to process and store such administrative procedures can help the government by improving documentation safety and processing power, while at the same time benefiting the citizens by potentially allowing them to cut down on time-wasting bureaucracy and frustrating governmental office lines.

In a lot of developing countries and emerging economies, control and distribution of social welfare can also be slow and prone to corruption. Third world governments either do not have the infrastructure to effectively handle government payments, or rely on third-party systems.

Just as with a decentralized government ledger managing governmental procedures, voting and documentation, it is easy to apply a blockchain example with a trustless ledger that can be beneficial in fairly managing and efficiently distributing social welfare funds in countries that might not be lucky enough to afford reliable, traditional and centralized infrastructure.

Blockchain in Banking

The earliest blockchain use cases were within the currency and payment realm. For this reason, and perhaps because of the overall surge in market utility and capitalization of blockchain projects, the financial industry has taken a significant interest in this nascent technology, heralding a new era of blockchain banking.

For example, last year Barclays placed themselves at the forefront of adoption by implementing the  security and transparency aspects of blockchain technology into their transaction processes. This multinational bank did so by announcing a first of its kind, blockchain-backed credit transaction between Ornua and Seychelles Trading Company. It included the first trade documentation to be encrypted and managed on a blockchain network. The use of a decentralized ledger to store and send the documents saved the bank significant time and money on the transaction, a far cry from the costly ten-day process it would have taken Barclays via traditional channels.

What is interesting in this case is that Barclays clearly found a competitive advantage in incorporating blockchain technology in banking. Other transnational giants are also taking notice. The accounting and professional services company Deloitte has recently published a report which outlines key advisory principles for blockchain adoption on a global scale, elaborating on areas such as macro implementation in governmental and legal practices, or cybersecurity controls. Comprehensive, data-driven research by a trusted information source such as Deloitte clearly signals the demand for information by similar financial institutions who want to understand how their banks, hedge funds and similar organizations can find their own blockchain use cases.

While it may not be as media-worthy as fintech or trading, the method of recording loans and securities by banks could also take advantage of blockchain technology. Accenture has recently estimated that the global financial industry could save up to $10 billion by using blockchain to store and process clearing and settlement. Similarly so, when a US company raises capital using a syndicated loan it can take up to 19 days for the transaction to be completed by the banks. After that, if the loan is switched to another bank, or it is repaid early, the relevant documentation is still often processed by fax.

Similar to transferring credit documentation to a decentralized ledger, blockchain banking will be able to save significant amounts of time and billions of dollars in capital by choosing to migrate all loan and security documentation to an agile ledger which streamlines document storage and processing times. Banks will be able to benefit from blockchain by being able to bypass the rising costs of maintaining aging infrastructure and complying with regulatory burdens.

Accepting blockchain technology in banking and the broader financial system could improve the industry by paving the way for a much more responsive and flexible infrastructure. Santander, Spain’s biggest bank, estimates that implementing blockchain technology could save the financial industry up to $20billion per year.

Blockchain and Financial Technology

On the side of fintech and digital innovation which is already beginning to take hold of the financial industry, blockchain examples are already being implemented to solve traditional woes by allowing international payments at reduced costs and shorter processing times. It is also important to remember that originally crytocurrency was invented to bypass central regulatory bodies and outdated legal infrastructure revolving around banks and the financial industry. By exploring financial solutions within blockchain, we potentially open up avenues for new legal landscapes and perhaps even more efficient and customer-friendly business models.

Blockchain in Healthcare

When it comes to the global healthcare, anything from wearables to the progress of medical research can be made more efficient and secure.

The industry is one of the most proactive and excited about switching to a blockchain healthcare system, with over a quarter of stakeholders surveyed by the research company Deloitte disclosing an investment of over $5 million or more into the space. Such statistic spells the obvious. The future of healthcare will be all about efficient data processing and sharing, bringing about a new era for one of the most promising blockchain use cases yet. Mainstream digitization of records in the previous decade has solved accessibility problems, heralded opportunity for analysing medical trends and assessing the quality of care.

However, these processes are still flawed by mass isolation of locally centralized data which leaves the information prey to profit-seeking companies and stunts research. Transitioning to a blockchain healthcare system would cut costs and improve security, privacy and interoperability of health data, by introducing a new model of health information exchanges to generate clearer health insights and ensure better results for patients.

The blockchain healthcare use cases increase even more if we consider smart contracts which they could be employed on a healthcare-focused ledger in order to easily process surgery receipts between the hospital, patient and the insurance provider.

In a similar way, a ledger can also be used for supervising drug intake and distribution, regulation compliance or managing healthcare supplies. For example, an individual patient could interact with a specific blockchain healthcare platform in order to easily view all of their claims, medical history, transactions, as well as overdue payments. Alternatively, they can also use a blockchain in order to apply for transfers or schedule appointments with their immediate medical staff, which are activated by smart contracts as soon as payment is processed and doctor confirms availability.

This nascent technology could also be used to integrate and encrypt digital assets, such as blockchain medical records, or processing claims on a ledger. In cases where sensitive matters require patient confidentiality, a healthcare ledger could be the perfect solution in order to ensure relevant data is protected and encrypted in a very sophisticated manner. Similarly so, research conducted via HIPAA laws (Health Insurance Portability and Accountability Act) i.e. in a confidential and secure manner, could be easily stored on a private blockchain which tends to this specific research data needs and can be accessed with extra authorization by concerned parties.

Blockchain Healthcare Applications During the last decade, we have observed the rise of healthcare hardware and more recently, fitness wearables. Devices such as pacemakers and insulin-dispensers have long supported us through otherwise life-threatening ailments, while inventions such as activity trackers help us monitor our physical development and help keep our bodies in shape. Whether its a life support machine, or a fitness tracker, the fact of the matter is that these machines control and collect an increasing magnitude of, often very sensitive, usage data. As we progress into the future and rely on these external devices, new solutions will be required to streamline these new networks and secure the information that they produce and retain.

We have discussed how the healthcare industry and our increasing reliance on everyday healthcare and fitness hardware can benefit blockchain use cases. But what about the progression of health sciences themselves? Just like other areas of science, progress within health treatment depends on breakthrough research developing new clinical studies, disease prevention, or technology to help treat patients. With financing opportunities centralized and often scarce, many promising studies fall by the wayside and go unexplored. It is reasonable to predict researchers being able to create their own tokens, or participate in a research-based blockchain healthcare ledger to fund their studies. By interacting with said ledger, donors would be enticed by not only having one central place to pick and choose from their areas of interest, but also they could potentially be able to access real-time research data and benefit from a crowdfunding-esque micropayment donation system. On another hand, the trustless nature of the ledger would also minimize the chance of academic fraud and of duplication of work.

Blockchain in Real Estate

The global real estate market is overdue a huge blockchain disruption and in this segment of the Lisk Academy we will detail how blockchain technology can change this huge industry and how it will be improved through this change. 

A future-proof, blockchain real estate market could help with creating new business models of connecting potential buyers and sellers. For example, it is easy to envision how properties of all kinds could be liquified, tokenized and traded much like stocks on exchanges. This blockchain example will also positively affect transaction times as property sellers find they can sell fractions of shares on a particular property, as opposed to having to search for a single buyer. As well as this, it is more than likely that the whole real estate industry will benefit from this shift, by lowering the barrier of entry to real estate investment. New definitions of property ownership and rental contracts will arise from this shift in the real estate business.

The user-friendly automation of all relevant processes and documentation on a decentralized, blockchain real estate platform could also help by cutting out additional inspection costs, registration and loan fees, as well as property taxes, all enforced by quantifiable smart contracts.

How Can Blockchain Technology Improve Real Estate

It is also important to note how blockchain uses could potentially revolutionize rental property payments. Cost-efficiency and better decision-making in leasing transactions can be achieved with a shared database, where a whole vertical of stakeholders including owners, tenants and service providers can interact with ownership information, or transaction history in an open, secure way.

Combined with new models of flat ownership that could potentially span the global market, decentralized payment projects could be used to facilitate low-cost, high-speed transnational micropayments which would distribute the payment among all stakeholders concerned. Within the context of payments, introduction of smart contracts into blockchain real estate ledgers and transactions, has clear potential in streamlining various real estate processes, such as releasing apartment ownership, or rental documents upon a completion of a cryptocurrency transfer. The benefits of this aspect of blockchain use cases when applied to real estate are already being recognized by a variety of private institutions and governmental bodies.

Blockchain and IoT

Blockchain will help the nascent Internet of Things industry secure new, decentralized networks and process huge swaths of information in real time. It will also open up new avenues of inter-device cooperation and monetization.

According to recent estimates, an average person creates almost a Gigabyte of data each day. With this statistic in mind, the idea of an ecosystem of ‘smart’ everyday devices interacting with us during our daily activities, otherwise known as the Internet of Things is rapidly becoming a reality. Our usage of devices and their own individual activity, whether for personal reasons or industry applications, will require new, secure decentralized networks in order to support the huge swaths of data said devices produce. This phenomenon provides one of the most exciting blockchain use cases.

Current IoT networks rely on centralized communication processes, known as the ‘Server/Client Paradigm.’ This means that any interaction between devices needs to be processed by a monolithic, central database, even if they are positioned next to each other. While this method has allowed the internet as we know it to flourish, it is not sustainable to process the waves of data that future IoT networks will produce and demand to support. Applying traditional centralized, cloud-based data processing solutions to IoT networks would carry unsustainably high infrastructure and maintenance costs.

The implications of IoT are as important for the end user as for the global industry. This technological phenomenon will vastly improve the collection of data, especially how, when, where and why it is collected. However, as we progress into this ‘Internet of Things’, obvious security concerns come to mind. The idea of a rogue device, virus, or agent taking over and disrupting our homes or transportation systems has been used to scare viewers in many science-fiction films.

It is estimated that by 2025, there will be more than 80 billion inter-connected devices around the globe. Blockchain can help IoT machines drastically improve industries such as agriculture, manufacturing, transportation and as well as consumer-based applications. Collecting and controlling data from such newly found networks will help civilization gather better insights and make better choices about how to optimize life, or increase cost-efficiency of a particular process. However, as these networks progress and get more sophisticated, with potentially millions of similar devices joining a particular network, new methods of network administration and scalability will have to be invented in order to facilitate the traffic that will arise.

Blockchain and the Internet of Things

In order to avoid major crashes and system failures, blockchain IoT networks could use a decentralized ledger to store and process swaths of data, as well as various requests, all at the same time.

When discussing blockchain technology use cases of future smart machines interacting with not only human recipients, but also each other in real time, we can envision the key role smart contracts will play in ensuring each party fulfils its part of the working relationship. Going a step further, its also within reason to assume the existence of blockchain IoT applications as a combination of a multitude of smart contracts with a human-focused interface. Within the context of smart contracts, we can predict a future where smart machines interact with a ledger based on their specific preconditions. For example, an insurance company can automatically adjust rates for an automobile, or apartment properties depending on particular parametres and current state to make sure the end user benefits from dynamic, case-dependant prices.

The tokenization feature of a blockchain IoT also means that smart machines can be used for revenue generation. Through tokenization, IoT device owners will, for example, be able to use blockchain to manage and sell data they generate for digital currency.

Blockchain Data Storage

Blockchain technology will be used to create new, decentralized data storage networks, putting the power of choice back in the end-user’s hands.

One of the most heralded achievements of the internet era, both for personal and industry use, is cloud data storage. While this invention is quite recent it is already under threat of being upended by incoming blockchain storage technology competitors.

One of the examples of this representative of near future blockchain use cases is how cloud storage companies try to avoid the loss of data. While big companies depend on spreading file duplicates throughout various data centers in order to avoid intrusion, decentralized blockchain technology would more or less eliminate the risk of meaningful disruptions.

This is due to data being stored on dozens of individual nodes, intelligently distributed across the globe, with no central entity needing to control access to a user’s files, improving security and decreasing costs via decentralized file storage. While current network scalability still needs to evolve in order to accommodate large-scale file blockchain storage infrastructures, we can easily envision an industry where fragmented, encrypted data is supported by a network of decentralized nodes in a much more user-friendly and cost-effective way than the current, central database solutions.

Another way blockchain use cases could revolutionize current file storage systems is by using what is known as an ‘incentive layer’. This means that while data is not actually stored on a decentralized ledger, the relevant storage network is using it to process subscription payments, avoid fiat exchange rates and store access information. Using said ledger to interact with a storage blockchain project would benefit the end user by improving settling times as well as increasing privacy and reliability due to a decentralized network and transparent-record keeping.

Such flexibility and the possibility of user-centric storage networks, means that by moving their data to blockchain data storage, users would also be able to benefit from a more agile, customizable system, by being able to manipulate metrics such as speed of retrieval or redundancy that is adjacent to their particular needs.

Tokenized Blockchain Storage

With a blockchain storage tokenization system, network economy can be leveraged to incentivize individual nodes for upholding the network and sharing a portion of storage capabilities. Much like storing content for personal use, blockchain technology uses in file storage can also allow users to upload and easily share and monetize their content, while cutting out the costs of relying on a centralized third party, or alternative costly intermediaries.