The growing list of applications and use cases of blockchain technology in business and life
As Bitcoin and other cryptocurrencies have been picking up steam, focus has turned to blockchain – the underlying distributed ledger technology (DLT) that powers these digital currencies.
Blockchain technology is simple to understand at its roots. Basically, the tech exists as a shared database filled with entries that must be confirmed by peer-to-peer networks and encrypted.
It’s helpful to envision it as a strongly encrypted and verified shared Google Document, in which each entry in the sheet depends on a logical relationship to all its predecessors, and is agreed upon by everyone in the network.
But blockchain technology has many more potential use cases beyond other than just serving as the fuel behind Bitcoin. Below, we’ve outlined some of its emerging t applications across finance, business, government, and other industries.
Blockchain Use Cases in Banking & Finance
Blockchain provides a way to securely and efficiently create a tamper-proof log of sensitive activity. This makes it excellent for international payments and money transfers.
For example, in April 2018, Banco Santander launched the world’s first blockchain-based money transfer service. Known as “Santander One Pay FX,” the service uses Ripple’s xCurrent to enable customers to make same-day or next-day international money transfers.
By automating the entire process on the blockchain, Santander has reduced the number of intermediaries typically required in these transactions, making the process more efficient.
As a large commercial bank, Santander has numerous retail clients who would benefit from more efficient and cheaper payments, particularly in the area of international transfers. Blockchain technology can be used to decrease the cost of these transfers by reducing the need for banks to manually settle transactions.
Blockchain-based systems also have the potential to improve capital markets. A McKinsey report identifies benefits that blockchain solutions offer capital markets, some of which include:
- Faster clearing and settlement
- Consolidated audit trail
- Operational improvements
Startup Axoni was founded in 2013 and builds blockchain-based solutions specifically for capital market improvement. Most recently, Axoni announced the launch of a distributed ledger network to manage equity swap transactions – enabling both sides of an equity swap to be synchronized throughout their lifecycle, communicating changes to each other in real time.
Historic methods of trade financing have been a major pain point for businesses because the slow processes often interrupt business and make liquidity hard to manage. Cross-border trade involves a large number of variables when communicating information – such as country of origin and product details – and transactions generate high volumes of documentation.
Blockchain has the ability to streamline trade finance deals and simplify the process across borders. It enables enterprises to more easily transact with each other beyond regional or geographic boundaries.
Regulatory Compliance and Audit
The extremely secure nature of blockchain makes it rather useful for accounting and auditing because it significantly decreases the possibility of human error and ensures the integrity of the records. On top of this, no one can alter the account records once they are locked in using blockchain tech, not even the record owners. The trade off here is that blockchain tech could ultimately eliminate the need for auditors and erase jobs.
This article originally appeared on businessinsider.com To read the full article and see the images, click here.
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