Three industries that you didn't know blockchain is disrupting
Some have heralded it as the next iteration of a cashless society, a system with the potential to revolutionize archaic methods of transferring money, while others remain skeptical.
A decentralized ledger verified by a network of computers all over the world, blockchain is driving a change in business strategy and consumer behavior by facilitating innovations such as smart contacts and other peer-to-peer transactions. Regardless of your stance on blockchain, its influence is spreading and beginning to have significant implications for the global economy and even for governments as repositories for information.
Moving beyond the emerging phase, businesses are starting to take the technology seriously. A recent study by Research and Markets predicted the global blockchain market will grow at an annual growth rate of almost 56 percent until 2021, while Gartner named it as one if its top 10 strategic technologies for 2017.
Consumers have also been given ways to get in on the act, with the growth of organizations such as the Ethereum public blockchain offering a portal for anyone with an internet connection to set up smart contracts.
Despite the focus attributed to its role as the backbone of cryptocurrencies such as Bitcoin, a common misconception is that blockchain is an innovation limited to the financial services. In fact, its influence is extending across a range of industries and business functions. Outlined below are three industries that blockchain is having a subtle impact on – some not immediately apparent.
An industry made up of complex relationships between a range of organizations, manufacturing is a sector ripe for disruption. From design, to sourcing, to delivery, each stage requires a different contract and relationship between parties. For example, blockchain can automatically monitor prices and delivery times but also act as an inventory for all kinds of raw material.
Each block could potentially contain a range of information only accessible to participants in the chain, from delivery instructions to proof of origin and records of operations. Blockchain’s very nature means it has the potential to compress supply chains, as it cuts out the need for intermediary entities altogether.
The technology allows for total transparency, as smart contracts between individuals and organizations allow the status of a project or transaction to be seen by all participants. With un-negotiable trust built into the platform, there is a significant opportunity for new relationships and business opportunities to flourish, saving time and money for all those involved in the manufacturing value chain.
Traditionally an industry that is slow to adopt change, insurers are realizing blockchain can be a disruptive influence on a range of processes, from underwriting to claims. This trend is coming to fruition as traditional businesses are increasingly challenged by ‘insurtech’ startups that cater to new insurance models, particularly as innovations such as driverless cars enter the mainstream. Industry initiatives such as B3i have emerged in recent years, as it becomes evident that blockchain can help to meet these challenges.
Automated in nature, smart insurance contracts enhanced by blockchain could pay out without the policyholder having to act, saving substantial costs and administrative time for insurers processing claims. Passengers going on vacation that take out policies affiliated to blockchain will see those policies adapt autonomously.
For example, the claims process would be triggered if a flight does not leave on time, giving the potential to transform the customer experience as well as back-end processes. The security benefits of blockchain also mean there are significant implications for claims verification, requiring independent validation by several parties. Although regulatory concerns are holding back widespread adoption, this is a sector likely to embrace blockchain.
The rise of blockchain has sparked fears it could replace aspects of utility companies’ business, by enabling trends such as peer-to-peer energy trading, given that technology reduces the necessity for intermediary organizations.
A more likely scenario is that distributed systems will help to update legacy power systems to deliver efficient and reliable energy. For example, integrated B2B trading systems would allow organizations to trade energy between themselves, preventing downtime and possibly resulting in huge benefits and cost savings for grid operators. Although such systems require some future-gazing to imagine, blockchain may have a role to play today as the backbone for the ‘smart grid’ systems that identify network issues automatically and reconfigure in response.
From a consumer perspective, blockchain could make processes such as meter registration and the switching of providers cheaper and more efficient. UK startup Electron has developed a blockchain platform alongside the Data Communications Company for just that purpose. Given the close ties to the public sector, concrete use cases and industry standards must be developed to get such initiatives off the ground, despite the opportunity for established utilities to lead a new age of decentralized power.
Blocks in the road
The benefits to blockchain are seemingly manifold; transparent and virtually tamper-proof, many predict that it will have an impact on the same level as the internet itself. As with any budding technology, however, the reality is that blockchain is only now emerging from its infancy and challenges plague businesses as they attempt to use it, such as scalability and cost.
To harness it correctly and provide more efficient service for their customers, businesses will need to be prepared to transform their infrastructure and services accordingly. It’s important that organizations at least understand the trends and potential applications of the technology, to ensure their systems are compatible with digital innovations, not necessarily a small task with a revolutionary platform such as blockchain.