This is 4 part series covering about the basics of Blockchain:
In this Part 4, we will cover about Blockchain usecases.
The use cases in this chapter only scratch the surface of the potential for blockchain technology. As the technology matures, this list will grow.
1. Financial Services:
The financial services industry has several exemplary use cases for blockchain.
a) Commercial financing:
Businesses need to purchase goods and services on credit with end-to-end visibility to avoid and resolve transaction disputes.
For example, IBM Global Financing (IGF) provides financing to its global partners, which enables them to purchase goods and services from suppliers with credit approved by IBM. With over 4,000 partners and suppliers all using different and often incompatible systems, IBM moved all the information to the blockchain and presented it to users as a distributed ledger.
The benefits of implementation are:
- Complete visibility of the order-to-delivery pipeline
- Reduction in number of disputes filed
- Reduction in the time required to resolve dispute
b) Trade finance:
Businesses need a way to streamline the process of obtaining approvals from multiple legal entities (customs, port authorities, trucking or rail transportation firms, and so on) for the movement of goods across borders. The blockchain can be used by the legal entities to sign all approvals, and it keeps all parties informed regarding the approval status, when goods are received, and when payment is transferred from the importer’s to the exporter’s bank.
The benefits for trade finance include the following:
- Complex processes simplified into a single process, all accessing a shadow ledger
- Increased access to capital, because it’s not caught up in long settlement times or errors and disputes
- Increased trust and accountability among enterprises, regulators, and consumers
c) Cross-border transactions:
Banks need a way to manage nostro/vostro accounts. Nostro (ours) refers to an account a domestic bank holds in a foreign bank in the foreign country’s currency. Vostro (yours) is how the foreign bank refers to that account. Such accounts are used to facilitate and simplify trade and foreign exchange transactions through reconciliation. Nostro/vostro accounts can become stored account transactions on a blockchain to dramatically improve transparency and efficiency through automated reconciliation of accounts.
The benefits include:
- The ability to manage transactions across all of a bank’s vostro/nostro accounts through a single interface
- Greater visibility of transaction status, current balance, and tracking over time
- Consistent, timely, and accurate picture across all nostro/ vostro accounts
2. Insurance:
The insurance industry can also use blockchain. Insurance providers need an efficient way to process claims, verify that an insurable event (such as an accident) actually occurred, and provide customers with fair and timely payouts. With automated insurance claim processing, policy conditions are written into a smart contract stored on the blockchain and connected to publicly available data via the Internet. Whenever an insurable event occurs and is reported by a trusted source, the insurance policy is automatically triggered, the claim is processed according to the terms of the policy specified in the smart contract, and the
customer is paid.
The benefits for insurance are as follows:
- Eliminates the cost of processing insurance claims
- Reduces the opportunity for insurance fraud
- Improves customer satisfaction
3. Government:
A considerable amount of government involves recording transactions and tracking ownership of assets, all of which can be made more efficient and transparent through the use of blockchain. Establishing trusted identity remains a problem due to forgery and expensive background checks required in verification. Millions of
people worldwide may have forged their identity documentation and may not be exactly who they say they are. Millions upon millions of refugees and their children go undocumented. People in the poorer parts of the world may not have sufficient proof to establish identity as required by certain service providers; for example, banks typically require proof of residence or utility bills to establish identity, neither of which may exist in the developing country.
Organizations can apply blockchain by issuing digitally authenticated birth certificates that are unforgeable, time-stamped, and accessible to anyone in the world. The benefits to this include:
- Reduced costs and time in identity verification
- Reduction in human trafficking
- Transparency in grant allocations
4. Supply Chain Management:
When something goes wrong with a complex “system of systems,” such as an aircraft, it’s important to know the provenance, through supply chain management, of each component, down to the manufacturer, production date, batch, and even the manufacturing machine program. Blockchain holds complete provenance details of each component part, accessible by each manufacturer in the production process, the aircraft owners, maintainers, and government regulators.
Benefits in this category include:
- Increased trust because no single authority “owns” the provenance information
- Increased efficiencies lead to reductions in time taken to diagnose and remedy a fault improving system utilization
- Specific recalls rather than cross fleet/generic
Provenance is also important in the food supply chain.
5. Healthcare:
The healthcare industry needs a more efficient and secure system for managing medical records, pre-authorizing payments, settling insurance claims, and performing and recording other complex transactions. Blockchain promises to provide much needed relief.
a) Electronic medical records
Electronic medical records are currently maintained in data centers (in a cloud-like environment), and access is limited to hospital and care provider networks. Centralization of such information makes it vulnerable to security breach and can be expensive.
Blockchain holds the complete medical history for each patient, with multiple granularities of control by the patient, doctors, regulators, hospitals, insurers, and so on, providing a secure mechanism to record and maintain a comprehensive medical history for every patient.
With this in mind, the following benefits are realized:
- Tamper-resistant means of storing medical history
- Reduced time in resolution of insurance claims and increased efficiency in providing insurance quotes
- Complete medical history of the patient for use by physicians for precise drug recommendations
b) Healthcare payments pre-authorization:
The term “clinical attachments” is a concept surrounding the need for additional clinical information when a payer is adjudicating a healthcare claim. Claims are often submitted without all the required supporting detail, so payer(s) need to request additional detail, which adds costs and delays to the settlement process. Further, matching up the claims with the supporting information is challenging for all parties involved.
Blockchain can simplify this complicated and time-consuming process and automate the collection and sharing of information. Additional benefits include:
- Claims can be reviewed and paid more efficiently and quickly.
- The system can suggest alternative services that have better coverage.
6. The Internet of Things (IoT):
As machines interact with one another, any relevant interactions can be reported by the machines and recorded in the blockchain to increase efficiency and accuracy and reduce costs. The trade logistics use case applies blockchain to automate IoT processes.
Currently, freight logistics involve many different parties: manufactures, forwarders, shippers, custom agents, and insurers. Although parties often interact and depend on one another, they may have different goals and use different systems to track shipments. An IoT-enabled blockchain is used as a shared ledger to record shipping containers as they move through system. Smart contracts can be automatically updated through the IoT Foundation and can be optimized to exploit IoT-enabled international trade on blockchain.
The following benefits can be realized:
- Greater transparency of shipment progress improves efficiency.
- Trust grows, as all transactions are indelibly recorded.
- Accuracy is improved and costs are cut through IoT participation.
- Participants gain the ability to optimize and automate business processes through IoT.
- Future vision allows for “freight autonomy.”
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