The idea of a system that can unite users from across the globe, provide efficiency and better access and remain entirely decentralized has been discussed for a few decades. However, only the rise of cryptocurrencies has brought it lightly under the name of blockchain. The system is one of the main things you should become familiar with when you’re looking to become an investor, alongside the exchange you’ll use, the current Ethereum price levels and the fluctuations you should be mindful of.
In recent years, however, the blockchain has begun to be recognized for an additional set of possible use cases aside from the world of digital asset trading. While the technology has not yet been implemented globally, many analysts estimate that it’s bound to change procedures across many industries and business sectors.
It can be challenging to fully grasp what the blockchain represents unless you have at least some basic knowledge of computer science and systems. It can help to imagine it as an encrypted and verified document in which all entries depend on the existence of predecessors. Also, everyone with access to the network agrees with the tasks and has access to all the modifications. With this aspect in mind, here are some of the emerging blockchain applications you should be aware of.
International transactions
Given that the blockchain rose to prominence due to its connection with cryptocurrencies, it should be no surprise that one of its most obvious use cases is in the financial world. The advantage of the decentralized ledger is that it can create efficient logs of sensitive activity. Because information cannot be altered in the system, once a task has been completed, there’s no way to undo it. This means that data has an additional layer of tamper-proofing compared to traditional mediums.
The blockchain is much faster than other methods, enabling faster transfers. Across international borders, transactions usually take a significant amount of time to be completed. Differences in currencies and time zones are largely to blame, as well as administrative requirements. If money is needed for an emergency, it might not arrive on time, or you might be offered the option of paying extra fees to expedite the process.
Banks would benefit from a blockchain-based system just as much as individuals. The decentralized ledger can improve cost-saving and remove the need to settle and handle transactions individually. This way, the banks will have an easier time handling processes and become more efficient institutions.
Trade Finance
Trade finance refers to the financial instruments used by companies to facilitate international commerce and trade. This medium makes it easier for importers and exporters to transact business. It isn’t a singular process but more of an umbrella term that refers to several products and institutions that use tools and products to make transactions feasible. One of the main advantages of this method is that it reduces the risks that come with global trade. Usually, the needs of importers and exporters will be divergent to a greater or lesser degree. The parties involved include banks, insurers, credit agencies and service providers, so it can be difficult for everyone to find a middle ground that satisfies the requirements of everyone involved without compromising.
Traditional methods and processes associated with trade finance have often been a legitimate pain for businesses due to the slow processes that often act as an interruption and make liquidity difficult and virtually unmanageable. Blockchain can streamline processes and simplify tasks. Companies are better equipped to transact beyond geographical borders, and it’s easier to maintain the integrity of a large number of documents.
Regulatory compliance
Ensuring that business processes remain in line with regulatory compliances is very important for businesses. Anything less than that can translate into legal troubles, which cause companies to lose significant amounts of capital. The loss of reputation is also no joke and is something many businesses don’t recover from.
The increased security the blockchain can offer decreases the possibility of human error, ensuring that the records and documents you keep maintain the integrity of their information. No one can alter the forms once they have been completed using blockchain technology. Not even the owners can go back and replace them. Anything that needs to be changed must have a new document added. However, there’s a drawback here since the blockchain can ultimately not be used as a simple tool and end up completely eliminating the need for expert auditors. The problem of jobs being erased due to technology is a potential issue that needs to be addressed.
Money Laundering
Money laundering is the process of illegally concealing the origin of money, mainly when obtained through illicit means such as corruption, embezzlement or gambling. Money laundering is a significant issue within enterprises and in society as a whole, and authorities have long attempted to abolish it. It is more complex than it seems at first glance because individuals conducting criminal activities have developed ways of bypassing the system and its rules.
A new system could help solve the issue, and the blockchain might be the answer. The technology enables better record-keeping practices, assisting businesses to combat illegal practices. Companies have an easier time identifying clients and verifying their identities.
Insurance
The fact that blockchain can help insurance practices is arguably one of its most important use cases. This process is achieved through the use of smart contracts, allowing both customers and insurers to deal with claims in a transparent manner. Security is also significantly increased since the network validates all documents. Invalid claims are automatically rejected as the system eliminates multiple claims coming from the same source. Some insurance networks have already started using similar techniques to streamline requirements.
Blockchain is a relatively new technology, and there’s still room for much progress. Whether or not the system will be used on a large scale in the future remains to be seen, but there’s certainly no denying the fact that its usage could dramatically improve business processes and, as a result, human lives.
Baburajan Kizhakedath
