Weekly Roundup: A Review of Blockchain Tech Outside of Cryptocurrency
In this week’s edition, we skip our usual price movement commentary to remind you of all the other uses that the blockchain has outside of acting as the motor for all cryptocurrencies. Even in the wake of the waning ICO boom, serious engagement of blockchain tech is underway in many industries outside those involving finance, and several governments around the world are already using it as a secured storage mechanism for sensitive, personal data, providing a newfound level of incorruptibility that had been sorely lacking in systems of the past and perhaps even humanity itself.
Bitcoin Still Very Much Alive
Over the past few years, it has become darn apparent that bitcoin is not going away. Rumors of its death are always greatly exaggerated (it has now been declared “dead” by varying media sources over 275 times), and there still stands a real chance that the whole “blockchain revolution” might just be a fad, waiting to be played out. Bitcoin’s unalterable perception as being used for illicit activities, theft, heists, and cons of some very creative nature has rendered it unpalatable among businessmen and traders who consider themselves to be professional or upstanding, yet the blockchain technology behind bitcoin remains foolproof and unhacked. Today, bitcoin enjoys an almost-$140 billion-dollar market capitalization, making it bigger than the clear majority of all companies listed on the NASDAQ stock index.
So, in the face of its wild-west reputation and intimidating complexity, how does bitcoin continue to succeed and grow in popularity? The answer lies in the engine under its hood: the blockchain. As a reader of this site, you are likely to be already familiar with the idea of decentralized networks and public ledgers, mining, and the reward system for adding new blocks to the chain. This original idea by Satoshi Nakamoto has proven itself to be so tamper-resistant, that miners collectively pour millions of dollars into their bitcoin mining rigs annually, with the daily amount of electricity used to mine bitcoin surpassing that used by many small countries.
The Blockchain Outside Bitcoin
The decentralized nature of bitcoin, fueled by blockchain technology, is now starting to appeal to large corporations, governments and other entities looking for a more efficient and secure way to perform transactions and maintain records or databases. In short, Satoshi managed to create not just the first viable digital currency, but a radical, innovative approach to solving problems inherent in conventional methods of recordkeeping, as well. Let’s take some time to review just a few of the areas in which the blockchain is currently being employed (outside of bitcoin, or other cryptocurrencies for that matter).
I. Centralized Finances
Executives at mega-gargantuan financial institutions like Visa and MasterCard are finding the non-malleable, non-corruptible mechanism of the blockchain ledger system to be attractive, and are actively pouring millions of dollars into the development of how to utilize it for their own advantage. Over 50 major financial institutions have now publicized the fact that they are considering employment of the blockchain to cut costs and improve day-to-day operations via shortening transaction, settlement, and payment times. The title of the first one to successfully do so belongs to the multi-national Banco Santander, which announced only days ago that it would now host blockchain payments services.
The credit rating agency, Standard & Poor’s, is now using blockchain technology to simplify and quicken backend processes in their rating systems, under the firm belief that its potential as a trustworthy, distributed ledger system should not be underestimated. The world-renowned financial intelligence company has also stated that they would consider making changes to credit ratings of major financial institutions if the blockchain could provably offer a positive, transformational effect on classic financial business systems of these institutions.
II. The Government
Different branches of various governments around the globe are exploring the potential of the blockchain to replace or streamline a wide array of bureaucratic processes, from recordkeeping to fraud reduction to saving money on clerical costs. As early as 2016, the U.K. Government Office for Science published recommendations to be taken on behalf of the country’s government concerning the implementation of blockchain technology. The U.K. recognized the fact that a successful transition would require a magnificently coordinated effort from all departments of the government and mapped out leadership of the project, as well as a plan for successful integration with their currently-standing processes. Their report also included five use-case studies which attempt to demonstrate the blockchain’s potential use for:
- protection of systems and infrastructure from cyber attacks
- reduction of operational costs
- improvement in record keeping of social service benefits and eligibility
- improvement in accountability of expenditures, and
- reduction of tax fraud (however ironic the idea may sound at the present moment)
The United States Postal Service is also looking into the possibility of using blockchain technology to improve their own operations, going so far as to patent their own versions of the blockchain. Specific applications to be considered include improvement of identity services, transportation, logistics, as well as maintenance of their own financial service products. Somewhat like bitcoin, “Postcoin” would be rewarded to miners who successfully added blocks to a chain of postal data, which would then be redeemable at a local post office for a fixed amount of dollars.
One proposed method of reducing the ever-growing costs associated with healthcare administration is use of the blockchain, primarily to centralize the storage of medical records, claims histories, service authorizations and member eligibility status, among many other potentially sensitive or personally-identifiable pieces of information. This need is particularly present in the United States, where the medical insurance industry is highly fragmented, non-standardized, and overtly-middle-manned. Because coordination of benefit payments through multiple plans and providers is often a headache-inducing problem for health insurers, physicians, and patients alike, a new method of securely storing and accessing healthcare data is highly desirous in countries with a privatized healthcare sector.
In 2016, the U.S. Department of Health and Human Services announced a competition for the public to submit original whitepapers detailing possible use case scenarios of blockchain technology in the healthcare sector, garnering much interest and yielding some highly original and fascinating results. Papers winning cash and other prizes highlighted subjects like privacy, security, improved information exchange, claims administration and storage of sensitive patient data. As an example, the first winning paper detailed a blockchain-based method of storage and analysis of healthcare data with total privacy; access only being granted through secured smart contracts and authorized digital identities.
As the blockchain becomes more of an integral and accepted part of business operations, the possible applications of its utility are being explored in a vast array of industries, including entertainment, agriculture, payment remittance, and even the media. The concept of micropayments (made possible via cryptocurrencies) would be useful for websites and bloggers that want to charge their readers a fee per-article, without deterring readership by breaking the bank. Internet titans Facebook and Google could be among the first to adopt the blockchain as a useful way of managing their extremely large business networks.
Satoshi’s Gift to Mankind
While attempting to solve a basic problem of the “double-spend” which had plagued digital currencies for years prior, Satoshi Nakamoto stumbled upon a technology that offered a far broader range of applications than simply the engine behind bitcoin, in that any industry which relies upon data security, integrity, or transmission for its profits, may very well consider employing the technology of the blockchain in years to come. Only time will tell if the blockchain is just a fad or not, but so far it has proven itself to be anything but otherwise.