What Is Blockchain Used For? Blockchain is usually considered just like the technology behind cryptos. This doesn’t help understand the complexity of this technology and how it can be useful for purposes that go beyond cryptos themselves.
So, what is blockchain used for? In this article, we will give you the basics of blockchain and show you how many real-world use cases it can have.
You will be surprised to discover how many industries are already using blockchains, and this is only the starting point of this amazing revolution.
What is blockchain?
Blockchain is literally a chain of blocks made up of transactions. It works as a ledger based on cryptography. But what does it mean?
To provide you with an easy-to-understand example, we will consider the analogy with Google Docs that William Mougayar, author of The Business Blockchain, uses to explain the functioning of blockchains.
If you share documents with Google Docs, you know that every person who has access to that particular document can view it simultaneously. Everyone will have the same version of that document, will be able to see what’s going on, and decide to approve it.
The same happens with blockchain: everyone can get access to the same version of this ledger simultaneously – in the case of public blockchains – and those who have enough computational resources can decide to work as validators to approve transactions, but they cannot modify them.
It’s like when you work in a team and the creator of the document that needs to be shared allows the other members to be only viewers or commenters.
In the case of blockchain and cryptos, the creator is the person who sends a transaction, while team members are validators.
The transaction reaches the right receiver thanks to encryption and decryption mechanisms that allow making transactions public without disclosing sensitive details.
Moreover, since there is a network that works to validate transactions, and since blockchains work as ledgers, blockchain technology creates a tamper-evident system.
Cryptocurrencies are just means which make it possible for people – and businesses – to get access to this technology.
All these characteristics make blockchains the perfect solution for many real-life problems related to businesses, and that’s why it would be extremely reductive to define blockchains just as the technology behind cryptos.
Blockchain Use Cases
As we said, blockchain is much more than you might think. Actually, part of the value of cryptos relies on the real-life problems they can solve.
To mention just some of the ways businesses can use blockchains, we are creating a list of the most common industries that are using blockchain and including it with their systems.
Finance is, of course, the first use case of blockchain.
The fact that this technology allows for the creation of digital currencies – coins and tokens – opened the way to a totally new financial system.
The most important innovation introduced by crypto finance is decentralization – or distribution: thanks to blockchain, the financial system built on top of blockchains doesn’t need intermediaries, and this results in a higher degree of financial freedom for people and businesses because we have an alternative that doesn’t require trust.
Law and Administration
The first project that really allowed the use of blockchain for legal and administrative matters is Ethereum.
This use is possible thanks to smart contracts, peer-to-peer contracts that automatically enforce points agreed by parties before the creation of the contract. The result is that people don’t need lawyers to enforce a contract, since the parties who sign it can’t avoid respecting the contract – everything is automatic.
Smart contracts are the core of decentralized finance – while centralized exchanges like Binance still have a central authority, decentralized exchanges (DEX) don’t need it because people can create contracts and trade independently.
Food – Supply Chain
Blockchain technology is innovating the way businesses consider the supply chain.
Being a public technology, where innovative solutions find their place, businesses like Walmart are using it to track the supply chain and optimize the segments where they find problems.
This implies lower costs for businesses and, consequently, for customers.
A good example of crypto that is trying to optimize supply chains is VET (VeChain), whose goal is exactly to guarantee transparency during the whole process of the creation and distribution of a product.
Gaming and Art
In both cases, cryptos – especially ETH – are used to mint NFT.
NFT stands for Non Fungible Tokens, and represents any kinds of tokens that can be used to prove the ownership of something, or to tokenize anything we can imagine.
With the surge of virtual worlds, people started using NFTs to create their own avatars, or just items for their avatars. NFTs are used especially by gamers and artists – the latter can use them to create unique pieces of digital art – but now that we are better understanding the impact of NFTs, we are using them to create new markets: today, you can even decide to tokenize your house and to sell or lend your tokens, to get liquidity from a market that has always been illiquid!
Healthcare – Supply Chain
In the healthcare industry blockchain can find many use cases.
One of these, also for this industry, is the supply chain: by using blockchain technology the origin of drugs would always be secure.
Moreover, by using blockchain people would be able to share their medical history without disclosing sensitive data – basically, blockchains solve the privacy issue. Think of how it could have been useful if used during the worst times of the Covid-19 pandemic!
As you can see, blockchain can be used in several industries and for many reasons. With this article, we wanted to show you that blockchain technology has a lot of value because it can solve many real-life problems that traditional firms have never been able to solve.
This may result in widespread adoption of blockchains and cryptos: we’re just at the first stage of this revolution, and maybe we will find solutions that we can’t even imagine right now. Also, Crypto can come with some danger.