These 6 Industries Are Using Blockchain to Gain a Competitive Advantage Real estate. Law firms. Information services. Banking: Where else will this technology raise its profile?
Opinions expressed by Entrepreneur contributors are their own.
While people debate the benefits and pitfalls of cryptocurrency, the blockchain technology that underlies these currencies is taking the main stage.
That's understandable, as blockchain is a must-have in and of itself for creating competitive advantage.
For some companies, blockchain-based security applications are enticing; others are simply excited about blockchain's potential for helping them create transparent marketplaces for their customers.
Whatever the motive, the immutable and transparent nature of the blockchain is what has so many people racing to incorporate it into their IT strategies. Joe Lubin, co-founder of Ethereum, interviewed by Newsweek explained why more and more companies are taking note: "There won't ever be a single powerful entity that controls the system or controls gatekeeping into the system the way blockchain does," Lubin said.
As a decentralized platform for innovation, blockchain technology, over time, will revolutionize virtually every industry. First movers will have the distinct advantage of figuring out how blockchain can get their business to the next level. They'll also figure out earlier than their competition does the challenges that come with any new IT integration.
Following are examples of industries that are already adopting blockchain solutions with a great degree of success.
The challenges associated with fund administration are extensive. Currently, most companies rely on outdated software or ungainly paper processes. Gary Markham, CEO of aXpire a blockchain-based solution for expenditure management, described the traditional challenges in this company white paper. "Normally," he wrote, "businesses have to spend a lot of time sorting through paper, PDFs and spreadsheets to process documents by hand.
"Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes."
One of the biggest challenges in fund administration is tracking and managing expenditures. Blockchain solutions could solve that issue completely by reducing data inaccuracies, improving interoperability of various enterprise applications and creating more transparent expenditure tracking.
Continued Markham: "For fund managers, financial industry leaders or any regulated group, the ability to show a regulator a report of [expenditures] in real time, having spent far less time and money gathering that data relative to legacy solutions, is immensely powerful."
As the internet has become inseparable from everyday life and been transferred to our mobile phones whose access is at our fingertips, users have sought instant access to their favorite websites. According to this report by Shopify, page-load speed is one of the most important factors for consumers buying something online.
Even Google decided to incorporate website speed into its algorithm ranking factors as explained by TechCrunch. The world's most popular search engine considers a page to be "slow" if it takes longer than 1.5 seconds to load!
"The problems of latency, low internet availability and sluggish pace of digital-content progress due to high content delivery costs will soon be over," Zhicheng wrote. "NOIA Network is solving them by creating a widely dispersed and decentralized content delivery network. This network is formed by household computers and data centers around the globe."
Participants can share their idle bandwidth and storage resources in exchange for NOIA tokens," Zhicheng wrote, claiming that, "Every single transaction is automated and seamless only because of smart contracts enabled by blockchain technology."
Other technology experts, too, believe that blockchain will power us into Web 3.0, by offering the fast speed and decentralization they say should have been developed at the beginning of the internet age.
Real estate is an incredibly complex industry with a lot of moving parts. The participation of buyers, sellers, agents and brokers, and the processes of title and escrow make real estate transactions slow and potentially risky.
Blockchain can reduce that risk and increase trust in a number of ways. With home purchases, most people rely on title companies to verify real estate transactions and ownership. There has been much debate about how blockchain could solve this problem, but a recent Newsweek report detailing the example of a home title being issued on the Ethereum blockchain showed a solution: It's only a matter of time, the article said, before government agencies start embracing blockchain as a valid alternative to existing title processes.
The technology can also be used to conduct transactions using various cryptocurrencies. Recent reports, including this Los Angeles Times article, have detailed how all types of homes being placed on the market for cryptocurrency rather than fiat currencies. This demonstrates a demand for the option to buy homes with digital assets over traditional ones.
At this point, banks that remain somewhat skeptical about the new technology are only slowly changing their tune regarding cryptocurrencies and blockchain. Barclays, J.P. MorganChase, Goldman Sachs and other big players are investigating potential applications.
In Europe, the banking industry is shifting from closed unilateral systems to a more decentralized "bank as a platform" approach. The process, Open Banking, is explained in this Medium article. Recent legislation has forced banks to allow third-parties access to client data via APIs.
Different banks, deposit and insurance accounts, crypto holdings and exchanges can now be reached using a single interface. From the consumer's perspective, this degree of access decentralizes banking services, in a secure and user-friendly manner.
While other platforms suggest direct blockchain usage, ORCA, a customizable open-banking platform connecting crypto and fiat services, reverses things, aggregating only third-party services, but storing no data. "It's the first time in history when open banking allows [us] to combine traditional banking and cryptocurrency services, " Natan Avidan, CEO of the ORCA Alliance, told Medium.
Blockchain can also make escrow a thing of the past, not just for real estate, but for all industries that work with any kind of escrow middle man.
New York City Department of Education attorney Tsui S. Ng recently explained the benefits to the American Bar Association. "In securities trading," he said, "it currently takes several days to transfer assets, thereby increasing counterparty risk. Smart contracts that use blockchain technology could shorten settlement times and mitigate such risk."
By creating an automated, incorruptible and instantaneous contract, blockchain solutions will be able to eliminate costly intermediaries and the risks associated with drawn-out transactions.
Businesses are getting more comfortable with the idea of digitally secure contracts, to facilitate deals in real time. This means law firms will need to become intimately acquainted with the technology to advise clients on the best ways to structure various transactions on the blockchain.
That's precisely why the Enterprise Ethereum Alliance has worked so hard to get law firms invested in the technology. To date, the alliance has added over 14 firms as members, according to this Coin Telegraph article, to help drive development and adoption of blockchain solutions for the legal industry.
As Aaron Wright, chair of the alliance's Legal Industry Working Group, told Coin Telegraph, "Lawyers are poised to serve as the catalysts for blockchain technology, and the Legal Working Group will serve as a neutral space to explore blockchain-based legal technology, develop standards for 'smart' legal agreements, support emerging enterprise use cases, and tackle important policy issues raised by this new, impactful technology."
What business owners should know
Business owners in any of these industries need to start incorporating blockchain into their strategies so as not to fall behind. One of the best ways is to hire a firm that has blockchain built into every aspect of its service offering. Just make sure the company knows the technology through and through. Larger companies might consider hiring a chief blockchain officer or placing a blockchain director under the CTO.
They should ensure that blockchain development is an integral advantage for their businesses -- not just a cool-sounding tech phrase.
Whatever strategy you deploy, you can be sure that tbeing a first mover on blockchain in your industry will give you an edge over your competition.