The news is almost surreal these days. Cryptocurrencies have tripled in value in just one year, and NFTs of childish pixelated images are selling for practically unbelievable sums. While someone buying a simplistic image of the Dogecoin mascot for $69,000 or a pixelated image of sunglasses for over $26,000 is certainly attention-grabbing, stories like these can easily overshadow the backbone on which all these transactions are based: blockchain. In fact, with all the attention bitcoin gets in the media, it’s easy to see why some people think that cryptocurrency and blockchain are synonymous. But the applications for blockchain go far beyond supporting digital currencies, as some major global initiatives are starting to prove.
Despite the hoopla surrounding blockchain-based investments, the goal of the technology is quite simple: to provide a secure record of transactions. Blockchains are basically super-secure ledgers that store encrypted sets of letters and numbers known as hashes in a chain of other transactions. The transactions are validated by all other computers involved with the chain, are time-stamped, and are virtually incorruptible due to the fact that the hashes from one block are contained in the previous block, which is linked to the block before it, and so on.
Those characteristics certainly make blockchain ideal for financial transactions, and banks could employ the system to bring greater speed, security and transparency to their operations. But banks have been slow to take up blockchain — instead, the technology is emerging in other, somewhat surprising industries.
Beyond Banking
One of the most timely uses of blockchain tech is its use in fighting fake COVID-19 vaccines. Both South Africa and China saw the proliferation of fake vaccine rings in their countries earlier this year. Asia-based healthcare provider Zuellig Pharma, along with consulting firm Accenture, has taken on the fight against bad vaccines using a blockchain-based solution called eZVax.
The platform, which was developed with Microsoft technology, allows governments and healthcare organizations to track vaccine movements throughout the entire supply chain. At the core of the system is Zuellig Pharma’s eZTracker solution, which has already been deployed in Hong Kong, Thailand and the Philippines. eZTracker pegs all vaccine movements to a blockchain so that at any point, someone can scan a barcode on a vial to verify its movement history and authenticity.
Another use of blockchain securing the supply chain has been developed by IBM, whose Food Trust, a system of tracing food from farm to supermarket, has been adopted by major merchants such as Walmart, Dole and Nestlé.
Smarter Contracts
Blockchain technology can also be employed in the execution of what are known as smart contracts, basically “if/then” statements stored on a blockchain that execute when certain conditions are met by both parties involved in the transaction. Mediachain, which was acquired by Spotify in 2017, uses this aspect of blockchain technology to help artists attach themselves to their music for royalty purposes. Real estate firm Propy is using smart contracts in an attempt to automate the home-buying process. And BurstIQ, which has also developed its own COVID-19 vaccine-tracking solution, uses the tech to enable the transfer of medical data between patients and healthcare professionals.
Money on the Chain
So when will blockchain take its place at the banking table? That’s still to be seen, as the potential of the technology is truly just beginning to unfold. Although if ever there was a segment that could benefit from it, it’s finance. Allowing self-executing contracts and secure blockchain processing could go a long way toward enabling real-time payments, quicker settlements and instant loan and credit approvals. Its decentralized nature can also go a long way toward simplifying cross-border payments and building a greater level of trust in these transactions. IBM already offers its own off-the-shelf blockchain solution for enabling global payments, and CB Insights reports that “90 percent of members of the European Payments Council believe blockchain technology will fundamentally change the industry by 2025.”
In fact, from where the industry sits at this point, it seems like either big banks will get on board with embracing the blockchain or they’ll get replaced by other payment solutions that use it to their advantage.
