When the crypto revolution first swept through the world a decade ago, the groundbreaking technology at the heart of it was somewhat overshadowed by the introduction of the novel currency. Though blockchains are used almost synonymously with cryptocurrencies like Bitcoin, their applications are far more reaching.
As an alternative to traditional databases, blockchain technology is a game changer in industries like infrastructure, transportation, and supply chain management. In fact, blockchain and its potential to completely transform the way society stores, transfers and records data, has been compared to the internet at the onset of the digitization age, which has piqued the interest of a wide array of investors, keen on joining the movement early.
The great promise for blockchains rests on three specific benefits that the technology offers: transparency, security, and efficiency.
Blockchains are essentially databases that store information in a digital format. Unlike traditional databases that structure data points into a table, blockchains group information into chunks (blocks), that are then strung together to form a chain, where each new data point that’s added is time-stamped within the wider network. The goal of this grouping is to allow digital information to be recorded and distributed, but not edited. Blockchains are then records of transactions that can’t be altered, deleted, or destroyed, thereby ensuring transparency and security.
In a world where blockchains are widely used, every agreement, task and payment would have a digital record that could be easily identified, validated, and stored. It would also eliminate the need for intermediaries like lawyers, brokers, and bankers, and maximize efficiency for industries particularly hindered by long processing times.
Blockchains have real life applications in many prominent industries, some of which are already in practice.
In infrastructure, as more power plants and transportation devices are equipped with interconnected sensors, there’s a heightened risk of security breaches. Blockchain technology could eliminate the need for a central hub that’s vulnerable to attacks by becoming a public ledger for a massive number of devices. Companies like Xage are employing blockchain’s tamper-proof ledgers to secure data across industrial device networks.
In aerospace and defense, over 50% of companies are working with blockchain or distributed ledger solutions. The technology is mainly used to streamline inventory and authenticate parts.
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In automotive, a consortium of automakers like Ford, BMW, Honda, and GM have been working on the Mobility Open Blockchain Initiative (MOBI), which grants vehicles “birth certificates”, enabling network participants to track maintenance history and vehicle registration in a shared ledger. Meanwhile UPS and FedEx are just two of the 200+ big names in an alliance exploring blockchains in freight transport.
In insurance, it was estimated that the reinsurance industry can save up to $10B with blockchain technology. Applications in the sector include enhancing risk analytics, automating processes, and speeding up claims settlements.
Perhaps one of the most wide-reaching (and timely) areas for blockchain technology to be implemented is in supply chain management, which is still suffering from lingering effects of the pandemic and the supply shortages brought on by the Ukrainian war. Authors of a study conducted by the Harvard Business Review analyzed seven large U.S. corporations and found that implementing blockchain technology in their supply chain operations would enable faster, more cost-efficient delivery of products, enhance product traceability and improve coordination between businesses.
Skeptics of a future run by blockchains point out that mass adoption of the new technology won’t be efficient enough to sustain large industries. But prominent studies and experts have challenged this belief.
An IFC study analyzed both the potential and perils of blockchain and concluded that, in the long term, blockchains could be valuable in improving productivity while also promoting financial inclusion. Meanwhile, some experts argue that blockchains are a foundational technology that stand to remake economic and social networks, similar to the impact of the internet in the ‘90s, which inevitably comes with some growing pains.
Global business leaders such as MasterCard’s Vice President, Harold Bosse and CEO of Goldman Sachs, David Solomon have also voiced bullish sentiment on blockchain technology in the future, setting the stage for more integration.
Yieldstreet is looking into the space, as it believes the technology is likely to be widely adopted in the near future. More specifically, there are several venture capital firms in the space looking to support companies active in the development of blockchain – rather than one of blockchain’s most well-known products, cryptocurrencies. For the time being, Yieldstreet is partnering with Osprey to offer its investors access to crypto.
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