If you’re a newcomer to blockchain, it can be tough sorting out the reality from the hype. What are the actual use cases and what’s just fluff? And what’s actually being done with blockchain right now? Who’s piloting innovative platforms and products that will change the way our lives look two, five, or ten years down the line?
That’s why it was so incredible to share an overview of this technology with a group of Belgian entrepreneurs in a casual talk recently on a gorgeous, balmy rooftop overlooking Tel Aviv.
We touched on a few different industries where blockchain not only has the most potential to solve problems but where platforms and apps are actually being developed or piloted by a number of companies.
Supply Chain
Supply chains are basically the journey a product makes from all its component parts, whether those are ingredients in a food product or rivets in a car or truck. The problem with this industry is that today nobody truly knows what a product is made from, where those components come from, and where they’ve all been. Companies’ supply chains use proprietary and internal centralized databases and information isn’t freely shared.
So if there’s ever a problem, it’s hard to know where the problem entered the system, who’s responsible – and most importantly, it’s difficult or impossible to notify up and down the chain to prevent repercussions. As consumers, we’re familiar with this through the recall process, which is incredibly costly and inefficient , not to mention a PR nightmare.
Using blockchain in supply chain tracking creates transparency and traceability so it’s easy to find out more about a product’s product origins, transportation history, and more. This lets consumers buy with confidence and trust, and ensures easier compliance and accountability.
While a number of companies are piloting blockchain for supply chain, one good example is the Olam Platform, which lets all logistics parties in the supply chain communicate and consume services. Its parent organization, Olistics, is using blockchain to create a decentralized, open source, standard platform.
Banking
There are at least two main problems that blockchain promises to bring to the banking and financial industry. First, antiquated financial models keep transactions slow and relatively expensive. Banks are also large organizations, often near-monopolies in certain areas, creating a natural resistance to change. And who can blame them? They millions in service charges while providing astonishingly low levels of service. Plus, consumers have no say in how their data is collected, stored, or used.
The second problem isn’t always visible in developed countries, but it remains a fact that a large percentage of the world remains unbanked – 80% in some areas of Africa, but up to 40% even in some parts of the U.S. – due to lack of access to a nearby branch or mobile phone, minimum balance fees, and an overall distrust of the banking system. And again, who can blame them? Banks aren’t usually looking out for your best interests.
Using blockchain in banking could save banks and consumers billions, steeply reducing processing costs while at the same time increasing processing speed. This is probably why banks are piloting or embarking on blockchain projects more than any other industry.
For banks, blockchain promises to lower transaction costs while increasing transaction speed – a win-win overall. Consumers will also have more transparency and insight into their personal data and how their funds are being stored. While for regulators, blockchain can provide better record keeping, trust and security.
Finally, for the world’s unbanked population, blockchain can create greater flexibility in terms of identification, residency requirements, and deposit minimums. Blockchain is the ideal infrastructure for places that do not have a system in place to provide low-cost banking for developing regions.
Two examples of companies currently working on blockchain solutions are BitPay and TenX. BitPay is a Bitcoin payment service provider that lets merchants accept Bitcoin payments, bypassing banks altogether and cutting into banks’ share of the lucrative online payments industry. TenX has created a platform offering real-world services including a wallet, physical debit card, bank account, ATM access, with free spending and exchange fees, cutting into banks’ massive service fees.
Together, these are just two examples of the ways innovation is disrupting the way banks have always done business – in ways that will ultimately benefit us all.
Real Estate
One of the most exciting influences of blockchain is the way it’s transforming the real estate landscape. Buying, selling and investing in real estate are all fraught with problems today, ranging from a lack of transparency, the prevalence of fraud, such as fraudulent property listings, slow and complicated processes due to antiquated systems, and a whole range of costly intermediaries for any given transaction, including brokers, title companies, inspectors, escrow companies, and notaries public.
Beyond all that, though… it’s 2019. That means buyers want to buy and sell real estate the way they buy & sell everything else – online. Investors, too, want to use the kind of apps and platforms that are available in other spheres, and they’re also eager to invest in properties globally rather than being restricted to a limited number of local markets. Finally, owners are looking for more flexible ways than a traditional mortgage to leverage their assets
Blockchain technology is poised to streamline almost every real estate process. Owners, prospective investors/buyers, and tenants benefit by being able to define, manage, and automate their business relations independent of third parties (like agents, marketing personnel, and administrative overhead). In terms of regulation, blockchain can make the ownership transfer process seamless and transparent to all parties. Fraud will be reduced, while buyers and sellers will no longer have to wait for verification and background checks, which can take days or even weeks. And everybody saves by cutting out expensive intermediaries – the blockchain itself provides the trust relationship necessary along with automated escrow through smart contracts.
At the cutting edge of streamlining the real estate investment sector through blockchain is SolidBlock, a data-driven digital securities issuance and trading platform. SolidBlock’s platform lets real estate developers & fund managers attract investors by letting them trade fractional asset ownership using data-driven metrics. Through tokenization, owners convert the rights to a specific real-estate asset are into digital tokens, a type of digital security.
Digital securities provide efficient fundraising, built-in compliance, regulatory visibility, programmable incentives, automatic dividends, and easy transferability. Like other types of securities, they can then also be traded on secondary markets.
SolidBlock piloted its innovative model through the tokenization of the St Regis Aspen Resort in 2018, raising $18 million from qualified investors through the popular crowdfunding platform Indiegogo. This model is sure to have even more impact in the future as companies like SolidBlock pioneer the use of the blockchain to make real estate buying, selling, and investment more flexible and democratic than ever before.
We also spent time discussing applications for blockchain in two other industries: internet of things (IoT) and clean tech. Both have incredible potential to change not only the way we conduct financial transactions but actually the way we live our lives day to day.
Looking through all these industries, what’s exciting here isn’t the promise of blockchain but how inspiring the reality has become. Sure, some companies are full of talk with no results to speak of yet, but the companies mentioned here are trailblazers who are actually walking the walk.
For anyone considering getting involved with blockchain, as this group of entrepreneurs is, it’s essential to be aware not only of what is possible, but what is actually being trialed and rolled out right now as well as in the immediate future. From this quick roundup, it’s clear that the landscape is already impressive and only going to become more so as the technology matures over the next few years.