Blockchain technology is a core component of cryptocurrency and understanding how crypto transactions are facilitated. Blockchain, introduced in 2008 along with the proposal for Bitcoin, is an open-source database that stores information in blocks that are chained together in chronological order. These blocks have storage limits, and new blocks are created when they reach capacity.
For Bitcoin and other cryptocurrencies, blockchain functions as a decentralized ledger to store transactions that can be viewed by anyone. It does, however, have potential applications across a broad range of industries to enhance transparency via smart contracts stored in shared and secured databases.
“In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared,” write authors Marco Iansiti and Karim R. Lakhani in a 2017 Harvard Business Review article. “Intermediaries like lawyers, brokers, and bankers might no longer be necessary.”
The following are three industries in which blockchain has been utilized to boost transparency, enhance efficiency, and cut costs.
Many insurance companies have taken advantage of blockchain to automate time-consuming processes and reduce the frequency of insurance fraud via smart contracts. Claims can be stored on the blockchain, which automatically rejects duplicate claims for the same incident. IBM has built a specific network for the insurance industry in partnership with the American Association of Insurance Services. Known as openIDL, the network streamlines compliance requirements and automates regulatory reporting.
Insurwave is a blockchain network that caters to marine hull insurance companies. Developed in collaboration by companies including Microsoft and A. P. Moller-Maersk Group, Insurwave provides accurate, up-to-the-minute information, including ship location and safety hazards, to insurers and customers. Nationwide, meanwhile, is testing out a blockchain-based solution that promises to instantly validate insurance coverage in real-time. This would be especially beneficial for insurers and law enforcement.
Blockchain can also disrupt the travel industry by allowing consumers to book accommodations without the fees charged by most platforms. Hotel booking platform GOeureka provides users with the option to book one of more than 400,000 hotel rooms with no commission costs. TUI Group is working to provide similar services. The use of blockchain for the travel sector could ultimately render platforms like Airbnb and Expedia obsolete.
Dozens of shipping companies, including Chronicled and SkyCell, leverage blockchain technology to enhance operational efficiency. With blockchain, these companies can more accurately record data and track shipping containers. Logistics companies can also use data obtained from blockchain to implement quicker routes. This, in turn, can increase revenue and decrease instances of mislabeled or stolen cargo, which costs the industry more than $50 billion per year.