Behind cryptocurrencies and ICOs is a technology that could have a more profound and fundamental impact on business, industry and society itself – blockchain. Blockchain is a distributed ledger system that creates immutable, permanent transaction records in real time, without the need for third-party verification. Its main attributes are that it promises to make any kind of digital exchange between two parties more efficient, more transparent and more secure than ever previously possible.
Built on the principles of peer-to-peer networks, advanced private-key cryptography and decentralised exchange protocols, blockchain works on the principle that the part and the whole of the ledger system are inseparable. To help illustrate the breadth of opportunities blockchain has to offer, in this article we highlight five examples of blockchain being used by established enterprises and industry sectors to drive value, transparency and security in their operations. Many of the same case studies and companies featured will be speaking at the Blockchain for Business Summit, part of TechXLR8 at London Tech Week this June.
Reliance General Insurance
Part of the Reliance Group, Reliance General Insurance is one of India’s leading insurance providers, and has been at the forefront of exploring the application of blockchain in the insurance industry.
The company is using blockchain technology in its claims management processes, both to automate handling and to tackle fraud. Validation is one of blockchain’s strongest suits – any kind of transaction is only approved by consensus, and once approved, transaction records cannot be altered.
In practice, RGI uses this to guard against multiple claims for the same incident – once a first claim is processed, it is impossible for another one to succeed, as the record of the first will prevent any other being verified. Blockchain also gives the company a highly reliable historical record of claims details, which can be used to identify patterns of fraud.
In terms of automating claims handling, RGI makes use of so-called smart contracts. Smart contracts are agreements between two parties registered on the distributed ledger. In the same way that the ledger can be used to authorise and trigger payments, smart contracts use the technology to trigger agreed actions when certain conditions are met. So in the case of an insurance policy, claims, payments and reimbursements can be automated as soon as certain conditions of verification are met, such as a police report being filed for a traffic accident or incident of theft, or a physician’s statement supporting a medical claim.
Global banking and financial services giant HSBC has been investing heavily in blockchain for a number of years. Dora Matheidesz, Senior Innovation Manager in the corporation’s Trade Finance division, said: “We are utilising blockchain technology across the entire bank – be it trade finance, syndicated lending, foreign exchange or securities settlement.”
Specific use cases include the world’s first use of a distributed ledger to verify a trade finance deal. In international transactions involving the movement of goods in particular, banks such as HSBC still play an important third-party role, issuing letters of credit on the buyer’s behalf to guarantee payment will be released to the seller as soon as goods are received. Involved in around 13 per cent of all merchandise trade transactions worldwide and worth $2.5bn a year to HSBC alone, this lucrative area of operation is still largely carried out using paper documentation and is notoriously slow and inefficient.
IBM Food Trust
IBM Food Trust is a major global initiative which uses blockchain to improve safety, transparency, efficiency and sustainability across the food supply chain. Spearheaded by IT giant IBM, a host of leading food brands and grocery retailers have already signed up to the scheme, including the likes of Walmart, Carrefour, Unilever, Nestlé and many more.
The Food Trust uses blockchain to log transactions at each stage of the food supply chain, from producer through to supermarket shelves. The purpose is to use the transparency and security of distributed ledger technology to provide full visibility of the food ecosystem from field to fork, helping to guarantee provenance, tackle food safety risks and reduce waste. The approach works through a series of modules for data management, traceability and certification.
It promises a wide range of benefits. For retailers and their customers, access to provenance data via the blockchain helps to guarantee that products are from where they are supposed to be from, contain the ingredients they claim to contain and were produced using the stated methods. This not only cuts down on incidents of food fraud and errors with labelling, it boosts food safety and, in the case of fresh goods, allows for a more accurate judgement of shelf life.
Outside its native use cases in cryptocurrencies and tokens, examples of how blockchain is being used in broader business contexts are setting the trend for future possibilities. Combining the key attributes of watertight data security and complete transparency, and the supreme efficiencies of automation with peer-to-peer participation, blockchain is already demonstrating the extensive value it can offer across industries.