The Tech Behind Bitcoin and its use beyond Cryptocurrencies

Many people first learn of blockchain via Bitcoin, the world’s first and most popular cryptocurrency. Blockchain is the underlying technology behind Bitcoin (and thousands of other cryptocurrencies and tokens), but it’s the cryptocurrencies which tend to gain most of the media exposure. This isn’t surprising considering the billions of dollars in daily trading volume and the extreme price fluctuations which have made a lucky few extremely rich and, thanks to the current bear market, many more significantly poorer.

Blockchain is already transforming certain industries worldwide and as the technology advances it will impact all of our daily lives. In essence, blockchain delivers trust without the need for a trusted middleman, something society had been unable to solve with previous technologies.

Here’s five areas where blockchain has a use beyond cryptocurrencies to solve some real-world problems:

Supply Chain

Global supply chain networks are incredibly complex. Materials can be transferred through many different organisations and require hundreds of individual communications simply to move from A to B. Tracking back to the source can be incredibly bureaucratic and time-consuming. Companies such as Walmart, IBM, Maersk and British Airways are all storing supply chain information on the blockchain to allow for trustworthy monitoring, tracking and optimisation.

SophiaTX is a supply-chain tracking company using blockchain to improve lead times and secure critical deliveries in the automotive industry, drive productivity improvements in construction and enable potentially life-saving track and trace processes in pharmaceutical companies.

Smart Contracts

A smart contract is a self-executing program which triggers when the obligations of the participating parties have been met. This is a fascinating technological breakthrough when one considers most contract management requires lawyers, governments or other bodies to operate effectively. This injects both costs and bureaucratic delays into the process.

One popular metaphor for a smart contract is a vending machine, where the consumer inserts coins and the machine verifies if its pre-programmed conditions (i.e. the right amount of money has been deposited) have been met. If it has, the delivery of the right soft drink is automatically triggered.

Smart contracts will transform the way we transact across real estate (faster, cheaper settlements), government (more secure voting), finance (payment processing) and many other industries by removing the need for a middleman and enhancing safety, speed and accuracy.

Identity & Personal Data Protection

Many of us have joined consumer programs where we have chosen the easy option of registering using our Facebook or Google+ credentials instead of typing our personal information into the empty fields. The Cambridge-Analytica scandal unearthed what some had long warned of; the unbridled use of personal data by Facebook and Google to generate enormous profits in ways many found to be unconscionable. Much of society is now wondering which companies possess their personal data and how they are using it.

One key promise of blockchain is the potential to return control of personal data back to the consumer, or at least make it harder for companies to access it without the express permission of the owner.

A number of blockchain companies are working hard to develop tools which will allow consumers to safely store their data, with the option to choose who they share it with. This will allow for anything from faster vetting processes (banks could instantly access financial histories for loan approvals rather than having to request various paperwork) to easier registration processes (think ‘Login with Facebook’ without handing over permission for any personal data to be used, allowing for a safe, secure single password key for every online account).

Civic is a blockchain company specialising in identity theft protection. They provide ID theft monitoring, fraud support and even ID theft insurance.

Fraud Prevention

Counterfeiting of goods has been a problem since the dawn of consumerism. One early application of blockchain has been to support efforts to stamp this out by making authentic goods trackable, even when the product changes ownership.

One example is the Chai Wine Vault which ensures the value and protection of fine wine investments. The vault secures a fine wine’s provenance and authenticity in an immutable digital ledger on Everledger’s blockchain platform. Everledger’s raison d’être is to be a digital global ledger that tracks and protects items of value.

To authenticate a bottle, The Chai Method collects 90+ data points, high resolution photography and records of a bottle’s ownership and storage. Everledger uses this data to produce a unique, digital thumbprint of the bottle that is written permanently into Hyperledger. This digital proof travels with the wine as it moves between the different stakeholders in the wine supply chain, with ownership and storage records updated as the bottle changes hands.

Everledger have also developed a similar approach which allows for the trustworthy authentication of diamonds. With over 1,000,000 stones registered, this makes life much more difficult for those trying to illegally profit from diamonds to fund organised crime or global conflict.

Loyalty

Much of the focus for blockchain applications in the loyalty industry has involved companies utilising a cryptotoken to reward members as an alternative to points or miles. The really big innovation however is happening in the back-end. Major companies such as airlines, banks and card-schemes are implementing blockchain solutions to facilitate faster, safer, more efficient networking with retailers and other affiliated loyalty programs.

Singapore Airlines have recently launched a blockchain-enabled digital wallet app for its KrisFlyer loyalty program. The solution tokenises loyalty miles and allows them to be spent at a large network of participating merchants, giving much great flexibility on the redemption side

AMEX have launched a solution which allows merchants to easily create smart contracts to fulfil reward program offers. When offers are made to cardholders, the smart contract is triggered. It sends information about the transaction to AMEX and the private blockchain network anonymously so that it can’t be traced back to individual cardholders, while automatically providing the member with the cashback reward.

Loyyal are one company succeeding rapidly in this area, building a back-end blockchain layer across major airlines, banks, gift card providers and other companies to enable faster, more secure transactions and real-time reconciliations. They are even working with a major airline alliance on a back-end blockchain solution which will make points and miles much more liquid, improving member satisfaction and engagement.

Conclusion

Whether consumers are believers or detractors of cryptocurrencies, their lives will inevitably be impacted for the better by blockchain over the next few years. In many instances they will not even be aware that blockchain technology is behind the enhancement in their experience. Blockchain is a truly revolutionary advancement, something which will become more and more obvious as it permeates many aspects of our digital lives.


Philip Shelper is a loyalty management consultant based in Sydney, Australia who obsesses about everything to do with loyalty and rewards. His company Loyalty & Reward Co are a leading loyalty consulting firm.

Phil is the author of Blockchain Loyalty: Disrupting loyalty and reinventing marketing using cryptocurrencies. Buy the book.

www.blockchainloyalty.io is a global resource centre for everything blockchain loyalty.

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