It was the rise of Bitcoin that propelled blockchain to fame but now the distributed ledger technology is maturing beyond digital currencies. John Shipman explains how blockchain is finding a path outside of financial services.
Few digital developments have sent ripples across the financial sector quite like blockchain. The shared ledger technology, which updates transactions, contracts and agreements in real-time and underpins cryptocurrencies such as Bitcoin, has the power to ease regulatory issues, improve security and accuracy while reducing costs.
According to PwC’s 2017 report on fintech, Redrawing the Lines, 55% of surveyed businesses, across the financial services and fintech industries, are planning to incorporate the technology as part of their production processes by 2018.
But although blockchain’s most obvious applications can seem limited to finance, new research suggests that this might be starting to shift. According to the same report, which analysed statistics from the company’s DeNovo platform, funding in blockchain companies has increased 79% to US$450 million in 2016.
Clearly, blockchain’s ability to disrupt age-old notions of currency, authority and ownership — via a decentralised system that cuts out the middleman — has the potential to reach far and wide. Here are five ways that blockchain can solve industry-specific challenges while turning business paradigms on their head.
Timing has always mattered in the agricultural industry. Around Australia, farmers might grapple with seasonal demands and the impact of weather on their harvest but slow transactions across a complex distribution network can land traders in fiscal trouble.
According to the Victorian Farmers Federation Grains Group, grain trade insolvencies cost Victorian farmers AU$50 million in 2014 alone.
In December, a software company executed the world’s first real-time settlement of a physical commodity on a blockchain. The transaction saw a grower from New South Wales, Australia, deliver 23 metric tonnes of wheat to an export company¹. There are multiple companies operating in the market, including PwC, that are exploring the role of blockchain in agribusiness, signalling the possibility of a future in which agricultural commodities can be traded more quickly and securely.
Pharmaceuticals and healthcare
In healthcare, maintaining secure medical records are an ongoing obstacle. In both developing and developed countries, patient data is often recorded on paper or on disparate digital systems, making verification or transmission difficult.
Factom is one of a range of companies working in this area. The Austin-based company recently received funding from the Bill and Melinda Gates Foundation to develop a medical record system, supported by blockchain technology, that enables secure access to globally distributed patient records, from any location, via a smartphone. This is particularly significant in developing countries, where technological resources may be lacking.
Along with The Linklab and Chronicled, California-based companies that are using blockchain in a pilot to track the movement of prescription drugs through the United States, Factom’s project nods to the technology’s ability to address security issues that have plagued the healthcare industry for decades.
Property and real estate
In the real-estate sector, property managers have always depended on a network of third parties — whether they’re processing a rental application, transferring a property title or selling a house.
By co-ordinating disparate third parties through ‘smart’ contracts, blockchain can cut red tape and eliminate the risk of fraud. In essence, a smart contract is able to self-execute according to immutable code, which reduces human intervention and creates a new trust system.
Cook County in Illinois recently partnered with California startup Velox.re to pilot the application of blockchain in transferring real-estate property titles. There are compelling reasons to pursue this. For example, to safeguard elderly homeowners who are targets of real-estate fraud in which criminals forge ownership documents in order to sell a property.
Since the dawn of file-sharing software such as Napster, the music industry has grappled with the challenge of discouraging illegal downloads while ensuring artists are paid for their work.
By allowing original music to be published on a ledger with an original ID and time stamp and storing metadata relating to ownership and rights information, blockchain could revolutionise the way music is monetised, make record companies redundant and empower musicians in the process.
PeerTracks is among a raft of companies experimenting with this new model. The music startup, which is powered by the MUSE blockchain — a ledger designed specifically for the music industry — helps artists independently manage their royalties and revenue. It is claimed that the PeerTracks system will allow artists to claim 90% of their sales income, instead of the 15% they collect at present².
From helping pharmaceutical companies verify patient records to equipping musicians with the tools to control their earnings, blockchain’s capacity for disruption isn’t exclusive to the financial sector alone.
To find out more about blockchain’s potential applications, download PwC’s Global FinTech Report 2017.