Top Use Cases of Blockchain Technology
The term blockchain technology has been around for some years now and it has called the attention of investors from all over the world. However, it is not so clear which are the top use cases of blockchain technology.
This is why we have created a cryptopedia guide that would allow you to know the most important blockchain use cases. Let’s go with the list!
- Processing Payments
- Supply Chain Management
- Smart Contracts
- Digital Identity
Blockchain technology has been used by different protocols, including Bitcoin (BTC), to perform payments. Bitcoin is the most popular cryptocurrency in the world and it is backed by blockchain technology. Every single transaction that takes place on the Bitcoin network is registered on a public blockchain. This public blockchain is a ledger that registers all the transactions that take place in the network. The main benefit of blockchain technology is that it allows for greater levels of decentralization. All the transactions processed on the Bitcoin network are decentralized, meaning there is no centralized authority controlling each transaction. Furthermore, there are companies such as JP Morgan that are using private blockchain ecosystems. These networks are used to perform internal transactions between companies and other parties.
Currently, there are hundreds of blockchain networks that allow users to process payments. The most popular include Bitcoin, Ethereum, Ripple and Litecoin, among others. Each of them has different characteristics and features.
Supply Chain Management
Blockchain technology, or decentralized ledger technology, can be easily used for the management of supply chains. That means that companies can create private blockchain networks (or use other blockchain solutions) to control the supply chain. For example, Walmart China is using VeChain’s blockchain technology in order to improve product traceability. This would allow companies involved in the supply chain process to track information without being modified by third parties.
At the same time, there are different blockchain networks that are allowing companies to track information about products purchased and sent abroad. This would have a positive impact on food quality considering it can be used to detect bad quality products.
Smart contracts are one of the best solutions implemented by blockchain technology. The most popular network working with smart contracts is Ethereum. These smart contracts allow firms, individuals and developers to create codes that can be executed automatically when key conditions are met.
This can be used to perform payments, gamble, run supply-chain networks, improve processes and many other things. These smart contracts are a key part of blockchain networks. Nowadays, these smart contracts are also used to exchange cryptocurrencies and for traders to profit from price fluctuations.
The decentralized finance (DeFi) market and decentralized applications (dApps) are based on blockchain smart contracts.
Due to the immutable and secure features of blockchain networks, it is possible for governments, institutions and organizations to issue digital identities on the blockchain. That means that it is possible to create companies’ and individuals’ profiles using distributed ledger technology. These profiles will have valuable information about the person or firm and would be publicly accessible – if the network is open to the community – or privately – if this is built for a private company or organization. Finally, firms and governments can also use blockchain technology to store documents and other valuable data. This can have a positive impact on government transparency and information available to the public.
There are different blockchain networks using these services. However, there is still a lot of potential for this industry to continue growing in the coming years. Other use cases could appear, pushing demand for distributed ledger technology even higher.
Why is Blockchain Superior?
Blockchain has many advantages compared to traditional databases. There are many reasons why companies are considering to use or already implementing blockchain solutions. The first thing to take into account is the fact that it reduces human error to the minimum.
While large databases can be modified, changed, or even lost, blockchain technology provides an immutable database. That means that the information that has been added to the blockchain cannot be changed or modified by network participants. Thus, the information is going to be accurate despite the efforts of malicious entities to change the database. This shows blockchain networks are safe and reliable for those using them.
Another positive thing to mention about blockchain technology is the possibility that it offers to decentralize processes. That means that it is possible for organizations and companies to decentralize their operations and reduce their dependence on a centralized party. Data is correlated and managed through smart contracts and a consensus algorithm that is established by the creator of the network.
Blockchain technology offers similar solutions to databases but enhanced and improved. Participants in the network can have a higher degree of trust in a blockchain network than in a traditional database. This is due to the architecture of distributed ledger technology and how it has been built.
Finally, blockchain technology keeps all the information, new and old, saved and stored. That makes it easy for network participants to understand the changes that take place and movements of information. The larger the database, the better it would be to implement a blockchain solution to keep track of all the information and make it immutable.