Many people may be familiar with some smart contract use cases. Technological advances such as these have always disrupted different industries and lead to a reshaping of the workforce and its expectations. Throughout history, whenever innovation has answered the needs of businesses, it has led to an outcry from some and rejoice from others.
However, the march of progress cannot be hindered and in the end, more often than not, these advances in technology improve life for most people within their industry. Blockchain is no exception and there are some interesting ways that this technology, especially regarding smart contracts, is changing certain industries. To examine the ways that some businesses will utilize these technologies we must first gain a better understanding of these digital tools.
What is the Blockchain?
The blockchain is the immutable ledger that forms the backbone of all cryptocurrencies, although its potential extends well beyond Bitcoin. The blockchain is an ever-growing ledger of transactions that are linked through cryptography and distributed across a peer-to-peer network. There are many different protocols used in conjunction with the blockchain, but at its core are the traits of difficulty in creating new blocks and ease in verifying existing blocks. It is through these characteristics that the power of the blockchain is realized.
How Do Smart Contracts Work?
Another technology that has incredible potential across many industries is the ‘smart contract.’ Nick Szabo, a computer scientist and cryptographer, first coined the term in the 1990s in reference to agreements between two or more parties expressed in code and stored on the blockchain. Smart contracts are self-executing and most often organized as complex if/then statements, whereby the terms set out, will only be satisfied when the established conditions are met. Thanks to the immutable nature of the blockchain, a smart contract between two people, properly organized and implemented, leaves little room for corruption and eliminates the need for third-party authentication.
Bitcoin first utilized these protocols, in a limited way, as a means to transfer funds between parties, utilizing smart contracts to enact escrows, time locks and other basic features on payments. Ethereum, on the other hand, was built specifically with smart contracts in mind. Ethereum has become the leader in smart contract innovation on the blockchain due to its ability to let users design their own smart contracts to fulfill a limitless range of needs and use cases. While Ethereum is the leader in the field, they are not the only ones looking to smart contracts for new and innovative uses: in fact, there are many who believe that smart contracts could replace humans in a wide variety of industries and are working to further develop these technologies. These are a few smart contract use cases that are planned or currently in place today.
Real-World Examples Of Smart Contracts
Blockchain In The Banking Sector
Some of the more obvious industries that can benefit from utilizing the blockchain and smart contracts are the banking and financial sectors. Beyond the obvious benefit of utilizing the blockchain to keep financial information on and immutable record, there are many other ways that these technologies can streamline processes that normally require large scale allocations of time and energy.
Clearing and settling transactions is one process that could benefit greatly from utilizing smart contracts. When clearing and settling transactions banks must register multiple parties’ commitment to take part in an exchange of funds, and ensure that once the terms of the commitment are met that these funds are transferred. Smart contracts are well suited for this type of interaction: by only becoming actionable once all terms and conditions of an agreement are met, smart contracts ensure that all parties fulfill their duties before any funds are transferred. This level of automation also has the potential to greatly reduce the risk of human error in these long, tedious verification procedures.
Another interesting opportunity for blockchain and smart contracts to enter the industry is through the growing compliance requirements for these financial institutions. Since the Global Financial Crisis new regulations regarding KYC protocols and anti-money laundering have proven burdensome to these businesses, despite the fact that these regulations have a positive, overall effect on the industry. By utilizing a decentralized ledger for identification, as well as smart contracts for executing these protocols, banks are reducing the need for expensive, hands-on intermediaries.
Blockchain Implementation Examples In Banking
There are many banks that are leading the way in the implementation of these exciting new technologies. Citigroup (US), as well as France’s Credit Agricole and Australia’s Computershare, have joined others investing in the London-based SETL payment and settlement platform utilizing the blockchain. They plan to use this permissioned platform to improve the process of matching transactions and payments as well as reducing the resources required to complete these actions.
HSBC Bank of Australia has also joined in by implementing the Australian fintech startup Moneycatcha’s new regulatory compliance tool, Regchain. This tool will allow the bank to compile regulatory data into an unalterable record that is easily reviewed and updated. Regchain could potentially save them millions in labor costs while at the same time ensuring they are abreast of, and in compliance with, the growing regulatory framework for the financial industry.
While banks and financial institutions are obvious choices for industries jumping on the crypto wagon, there are many other businesses looking to these technologies to innovate.
Application Of Blockchain And Smart Contracts In Healthcare
Reliable, easy-to-access records are an absolute necessity in healthcare industries and the blockchain and smart contracts are being utilized to this end as well as for a number of other purposes. Professionals and patients alike are beginning to see the benefits of these technologies’ implementation. From accessing patient health histories to tracking pharmaceuticals, more use cases are being discovered every day. The role these technologies can play in healthcare is just beginning to become evident.
The most obvious use for the blockchain is managing and accessing patient data. One patient’s lifelong medical history can often be split between a number of different health providers, making access problematic. The Ethereum based MedRec, developed in conjunction with the MIT Media Lab, intends to create a permanent database for patients’ entire medical history—illness, allergies, previous procedures etc.—utilizing the blockchain, and all accessible from a single location. This makes life easier for healthcare professionals as well as helping to ensure that patients’ conditions don’t go unnoticed due to fragmented record keeping.
Tracking Data On-Chain
It is estimated that tens of thousands of people die every year due to counterfeit prescription drugs. One project built on the Liquid platform that focuses on addressing this life or death situation is FarmaTrust. Utilizing a four-tiered approach, FarmaTrust works to ensure that patients receive their intended medication and reduces the risk of counterfeit drugs making it onto the market. From the first step of pharmaceutical regulatory compliance, through the management of the supply during shipping, the documentation of alterations to medicine, and finally providing the patient with the entire life-cycle of their prescription, FarmaTrust ensures a safe and tamper-proof system for providing patients with the medicine they need.
How Blockchain Is Changing Real Estate
Another business sector that has traditionally been overrun with third parties and intermediaries is the real estate industry, and wherever third parties are involved, the blockchain can take hold. While it is still in its early stages of implementation, one project with plans to revolutionize the global real estate market is California’s Propy.
Through a three-tiered process Propy aims to integrate the blockchain into the current real estate market model, with plans to eventually shift the entire system onto the decentralized ledger. The first component of Propy’s project is the listing platform, where sellers can list property information and buyers and agents can search for properties. The next piece is the transaction platform where users can send paperwork, records and payments, all using the blockchain. Finally, at the core of the platform is the Registry. The Registry is where all documents and land records are stored, using smart contracts to manage this data.
More Blockchain Applications In Real Estate
Propy’s goal is to use this multilevel platform to reduce the number of go-betweens involved in the transfer of property. Each step of the process can utilize the blockchain: Users can search for appropriate property listings and use the tailored smart contracts to create purchase agreements and verify ownership. Payment forms can be generated and after the process is complete all documents and associated data will be stored on the blockchain.
Currently, Propy’s main hurdle involves the limited recognition that many governments give to crypto-related projects. While almost all of the steps in Propy’s process utilize the blockchain in some way, only fiat currencies are accepted as valid payment. It is also worth noting that even though a digital e-deed is stored on the blockchain this is not legally enforceable and the physical deed must be signed and transferred for the process to be completed. However, all other documents on the platform are legally enforceable based on their digital expression.
Along with the digitization of this process there are also many other applications in the real estate sector. As the blockchain becomes more prevalent across the globe and governments are forced to qualify it in one way or another, expect its implementation to grow. From obvious uses like increasing title transparency to completely tokenizing properties, making fractional ownership on the blockchain a reality, the future for these technologies is exciting and diverse.
Blockchain And Smart Contract Uses In Education
As important as the financial sector and healthcare is the realm of education, and there are many in the crypto sphere looking to use the blockchain to revolutionize how people learn. The market for educational technology is a rapidly growing industry, with some estimating as much as $93.76 growth by 2020.
One area that has gained attention in regards to crypto is security. With digital records becoming the norm for educational institutions the security of this private student data is more important than ever. Behind only the health care and financial sectors, education experienced the most security breaches by cyberattacks, making up 13% of all violations. As cyber-attacks continue to rise these records become valuable assets. The area of record-keeping and the way blockchain can improve on current models goes beyond security.
How Blockchain Can Improve Education
One interesting potential is the ability to organize and verify diplomas on the blockchain. Some argue that the blockchain could completely eliminate diploma fraud, a very real problem in many parts of the world. Generally, universities have administrators that are either completely or partially dedicated to addressing employers’ queries about prospective employees’ qualifications. By using the blockchain these administrators would no longer need to spend time on these interactions, as every diploma would be available in an unalterable form on the blockchain.
Immutable storage for accreditations can be invaluable in certain instances of instability such as natural disasters and war. There are many cases of important documents being lost or destroyed in Louisiana after Hurricane Katrina, leaving some people with little to no recourse in recovering their hard-earned certifications. Nations experiencing instability due to war are another case where decentralized, digital storage of important documents could profoundly help people putting the pieces of their lives back together after tragedy.
The Endless Possibilities Of Smart Contracts
Bitcoin introduced the world to the blockchain; however, it simply planted the seed. Its use as a currency, while innovative, barely scratched the surface of the possibilities this technology is capable of. With the development of Ethereum, and their platform for creating unique and novel smart contracts, the doors were thrown open.
As blockchain technology continues to gain recognition and becomes more mainstream, we will continue to see innovation in all forms and across many industries. Endless adaptability is perhaps these technologies’ greatest asset: wherever there is a use case, and someone bright enough to recognize the potential for implementation, the blockchain and smart contracts will flourish. Hopefully to everyone’s benefit.
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