What is Blockchain Used for?
Latest posts by Aran Davies (see all)
- How to Build Hyperautomation Tools? - 5 Aug, 2022
- How Many People Does It Take to Form An iOS App Development Team? - 1 Aug, 2022
- How Many People Does It Take to form An Android Development Team? - 29 Jul, 2022
Blockchain, a cutting-edge technology offers decentralization, transparency, immutability, efficiency, and security. There are many utilities of blockchain, and the following are a few examples:
Cryptocurrencies like Bitcoin and Ether are digital currencies created using blockchain technology. They are created using mathematical algorithms and cryptographic standards. Central banks and governments can’t control them.
Transactions executed to transfer cryptocurrencies from one users’ address to another take place on a decentralized public blockchain network. Governments and cyber-attackers can’t shut these peer-to-peer networks down. These public blockchain networks allow anyone to join them, which includes anonymous and pseudonymous users.
Transaction validation processes on these blockchain networks vary, e.g., they might involve transaction validators. These blockchain networks ensure decentralization, transparency, immutability, and security.
2. NFTs (Non-Fungible Tokens): Used in blockchain-based games, also used for tokenizing digital artworks
Several game developers use blockchain development platforms like Ethereum to create blockchain-based games. Many of these games have digital characters or assets with unique attributes. Game developers create NFTs (Non-Fungible Tokens) to represent them.
NFTs are cryptographic tokens, and they are like cryptocurrencies. However, each NFT is unique. NFTs are also indivisible. These characteristics of NFTs make them suitable for tokenizing digital game assets. Axie Infinity is a popular blockchain-based game involving NFTs.
Uniqueness and indivisibility also make NFTs ideal for tracking digital artworks. Artists increasingly tokenize their creative works using NFTs. Some of the NFTs sold for millions of dollars.
3. DeFi (Decentralized Finance) apps
DeFi (Decentralized Finance) apps are DApps (Decentralized Apps) that run on a decentralized public blockchain network like Ethereum. They offer a decentralized model for traditional financial services that are managed centrally. DeFi apps use smart contracts to offer transparency, autonomy, and efficiency.
The following are a few examples of DeFi apps:
Stablecoins are cryptocurrencies, and they are built on decentralized blockchain networks. They offer price stability, unlike many prominent cryptocurrencies.
Stablecoins might be pegged to fiat currencies like USD or precious metals like gold. They might also use popular cryptocurrencies as collateral. An example of a stablecoin is Dai. It’s created using MakerDAO, a DeFi platform.
3B. DEXs (Decentralized Exchanges)
DEXs (Decentralized Exchanges) are DeFi apps that run on a decentralized public blockchain. They enable crypto traders to transact directly without an intermediary. That sets them apart from centralized crypto exchanges. Uniswap is a well-known DEX.
3C. Decentralized crypto lending platforms
Traditional banks and financial institutions have stringent rules for lending, therefore, many borrowers can’t get loans from them. Decentralized crypto lending platforms like Aave are DeFi apps that intend to solve this problem. They bring borrowers and lenders together. They use the transparency and efficiency of blockchain to make the lending process easier.
4. CBDCs (Central Bank Digital Currencies)
Central banks and governments of several countries are working on launching their respective CBDCs (Central Bank Digital Currencies). These are digital currencies. CBDCs will be built using blockchain technology. However, they are digital forms of the country’s official currency.
Central banks of countries will have complete control over their respective CBDCs. CBDCs are expected to provide privacy, security, transparency, and efficiency to financial transactions.
5. Cross-border payments
Cross-border payment transactions take plenty of time due to complex processes. Multiple intermediaries are involved in the settlement process, which increases the delay.
Blockchain provides a distributed ledger that’s visible to all stakeholders at the same time. It offers notable data security features, and blockchain offers efficiency. The use of blockchain in cross-border payment transactions is growing. Ripple is a prominent blockchain platform for cross-border payments.
6. Supply chain traceability
Supply chain management is complex, and tracking a complex global supply chain can be hard. Consumers need assurance that what they buy is produced ethically and safely. Traditional supply chain management involves significant paperwork and manual processes, which makes traceability hard.
Hire expert developers for your next project
1,200 top developers
us since 2016
Blockchain offers a transparent distributed ledger with data security. It helps businesses track the entire lifecycle of a product.
An example is IBM Food Trust. It’s built using enterprise blockchain technology. It helps all stakeholders in the food supply chain to track the lifecycle of food. Growers, processors, shippers, retailers, regulators, and consumers can trace the entire lifecycle of food products.
7. Digital identity management
Provisioning identity documents and managing them involve plenty of complexities. Authorities that provide identity documents use paperwork-intensive and manual processes. Users might lose paper-based identity documents, and getting a replacement can be hard.
Blockchain offers a solution with its decentralization, distributed ledger, security, transparency, and immutability. Identity documents issued using a blockchain platform can’t be tampered with, and it’s permanent. Users find an immutable digital identity document easier to manage. Evernym is an example of companies working in the blockchain-based digital identity management space.
8. Securing healthcare information
Electronic Health Records (EHRs) promise a lot, however, patients don’t have much control over them. Different healthcare provider organizations need to share EHRs among themselves for effective care of patients. Complex processes with silos make this hard.
Blockchain can transform this scenario with its distributed ledger and security features. It enables patients to control their entire set of Electronic Medical Records (EMRs). Effective care becomes easier since different healthcare providers access the same EHRs. Medicalchain is a start-up that’s working on securing EHRs with the help of blockchain.
9. Expediting banking and financial transactions
Many transactions in banks and financial services institutions take a long time. Complex processes and intermediaries make them time-consuming.
The distributed ledger offered by blockchain makes information sharing easier. All stakeholders in the banking system can see one version of truth simultaneously. Security features of blockchain prevent tampering with data. These factors can expedite banking transactions.
An example of a project in this direction is the Utility Settlement Coin (USC) project, which later spawned a company named Fnality International. Leading banks like UBS, Banco Santander, BNY Mellon, Barclays, and ING collaborated in this project to expedite financial settlements.
10. Managing property ownership records
In many countries, managing property records is a challenge. Paperwork-intensive manual processes make it hard to reconcile ownership information with historical data. Multiple government departments and citizens need to put in considerable effort, and litigations are frequent.
Blockchain can help to manage property ownership records effectively. Its distributed ledger helps all stakeholders access property ownership records efficiently. Blockchain-based platforms will make provenance easier, and they offer immutability. Multiple state governments in India are exploring blockchain to manage land records.
Blockchain has a wide range of use cases. Hire developers from DevTeam.Space to execute a blockchain project.
Public blockchain networks like Bitcoin are peer-to-peer (P2P) networks with all data stored on all computers. One can’t shut the network down by attacking one computer. All computers on the network have equal authority, which ensures decentralization and disintermediation.
Users of public blockchain networks like Bitcoin or Ethereum use digital signatures that utilize modern cryptography. These blockchain networks use decentralization, modern cryptography, and consensus algorithms to make the job of hackers very difficult. These ensure data security.
Public blockchain networks are open to all, which includes anonymous and pseudonymous users. However, enterprise blockchain networks are for a list of trusted participants only. Cryptocurrencies need a public blockchain network, whereas enterprise blockchain networks are for other use cases.