Andrey Sergeenkov

@sergeenkov

How blockchain will help business

According to Accenture’s forecast, blockchain will become mainstream in the world of finance by 2025, and will be used in practically every industry, opening up new opportunities for business. Here, we’ll tell you whose expenses this technology is going to cut down, and whose profits it is going to increase.

Source https://www.deviantart.com/biz20

What is blockchain?

Blockchain is a decentralized and unfalsifiable registry of information: in order to make changes to past transactions, it would be necessary to edit all the subsequent entries for all the system participants simultaneously, and the computational capacities possessed by mankind are currently not powerful enough to perform such an operation.

Blockchain allows for distributing, controlling, and storing transactions in a fully protected and transparent way with no intermediaries, such as governmental institutions or centralized organizations. Here are a few examples of how the blockchain can help businesses;

1. Stock market

A classic example of blockchain application is the securities market. An organization sells its shares, but instead of using intermediaries such as a stock exchange or national depositories, it sells them directly. This helps minimize the transaction costs, and the transfer of the shares to the new owner is done in a matter of seconds.

As of today, the barriers to entry into the investment business is $200–300 million, which is required for reporting to the regulators and maintaining the infrastructure for such reports. By cutting down these costs, blockchain lowers the barriers to entry and stimulates the emergence of new funds.

Another interesting example of the technology’s application is the alternative for IPO, Initial Coin Offering (ICO), where the investor is not the venture fund but the community. The ICO’s mode of operation is similar to crowdfunding platforms like Kickstarter. You publish your project and attract investors to it, who will not receive a share of the company but virtual currency.

2. Nano Payments

Currency transfers between countries are controlled by several regulators, which increases the costs. In those places where micropayments are the base of the business (the music and media industry, etc.), blockchain makes currency transfers easier, bypassing the existing financial system and actually reducing the transaction cost to zero.

This allows for making transactions with a value of a few cents: selling the rights to use of a musical composition fragment (and not the entire song or album), or establishing the tariffs based on the precise duration of listening or viewing. Online movie theaters or web resources with a fixed cost of subscription can introduce tariffication by minute or a fee for viewing only one episode of a series.

In London where the utilities are expensive, it is possible to pay the electricity bill by making several payments per month, thanks to blockchain.

3. Game industry

Source: https://www.deviantart.com/talik13

After the appearance of CryptoKitties, a blockchain-based game, we cannot help discussing the use of this technology in the gaming industry.

The British start-up Squid Networks is creating a blockchain-based gaming platform which will enable gamers to make money while playing and developers to reduce their expenses on publication and promotion of games. This approach will open the gate to a vast audience for small game developers that do not have large budgets like the market monopolists.

Independent game developers often have much less resources in order to reach their final consumers, let alone to make money against the industry giants. The Squid Networks platform will allow small developers to raise funds directly for development of their own projects from gamers who, in their turn, will be able to take direct part in creation of games they are interested in.

George Brookfield, CEO at Squid Networks, said:

Our aim at Squid Networks is to use the blockchain to revolutionize the gaming industry by making it possible to earn while gaming. Like most people, a lot of our team have played video games for most of their lives and want to be a part of the future of community-driven gaming.

Of course, there are also some other projects implementing blockchain solutions in the e-sport industry: some of them offer special tokens for exchanging in-game items while others focus on the gambling aspect of the industry and provide advanced options for betting.

4. Copyright protection

Blockchain can be considered the perfect technology for copyright protection: all the information about the product is registered (when, where, and who has created it, who they transferred it to, and how they used it), this data will never be deleted and is always available for dispute settlement.

The distributed register helps inventors, entrepreneurs and manufacturers secure the authorship, history of origin, or right of ownership. The subject matter of protection may be an expensive watch, 3D printing technologies, literary creations, photographs… in fact, anything.

5. Independent energetics

Source: https://www.deviantart.com/qubixdesign/art/Vertical-Farm-Section-192353264

Blockchain has a lot of potential in the field of energy sale and production: cutting the costs of the infrastructure and accounting, it minimizes the barriers to entry into this business and makes it possible to buy and sell even several Watts. Small companies and even private solar battery owners can sell energy directly. The first microsales of electricity have already taken place on the Transactive Grid stock exchange and some other experimental platforms.

Another interesting application for blockchain in the power industry is “filling” stations for electric cars. As the popularity of electromobiles grows, the demand for recharging receptacles grows as well, and it will probably be taken care of by the electromobile manufacturers (Nissan, in particular). But at the moment the market is relatively vacant, and a roadside shop owner can install a recharging point in his shop and sell energy generated by his own solar batteries via blockchain.

6. Insurance

Smart contracts using the Ethereum blockchain technology automate the entire process of insuring and make it easy to understand, from the conclusion of an agreement to receiving the insurance payments. When there is an insurable event, such a contract works automatically: the policy holder doesn’t have to contact the insurance underwriters and to fill numerous forms.

Due to cutting down on the operational costs, the transaction costs are reduced as well. This is important for insurance contracts with low marginality or mass payments (for example, in case of catastrophes or natural disasters). One of the world’s largest insurance companies, the German company Allianz, has already announced the transfer of a part of its contracts to blockchain, first of all those will be the emergency event insurances.

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