Blockchain technology and its use in other fields

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Surely you’ve consistently come across the term “blockchain” over the last few years, probably in reference to cryptocurrencies like bitcoin. In fact, this technology is also used by entities not related to digital currencies, but operating in the digital world. You will learn about them and potential implications related to the implementation of this technology in this article!

How does blockchain technology work?

In recent years, you may have noticed that many companies around the world are integrating Blockchain technology. But how exactly does Blockchain technology work? Is it a significant change or just an addition? The development of Blockchain technology is still young and may become revolutionary in the future; so let’s start demystifying this technology.

Blockchain is a combination of three leading technologies: cryptographic keys, peer-to-peer networks and computing means.

Cryptographic keys consist of two keys – a private key and a public key. These help in carrying out successful transactions between two parties. Each person has these two keys which they use to create a secure reference to their digital identity. This secured identity is the most important aspect of blockchain technology. In the world of cryptocurrencies, this identity is called a “digital signature” and is used to authorize and control transactions.

The digital signature is linked to a peer-to-peer network; a large number of people who act as authorities use the digital signature to achieve consensus on transactions, among other things. When they authorize a transaction, it is confirmed by mathematical verification, which results in a successful secured transaction between two parties connected to the network. In conclusion, Blockchain users use cryptographic keys to perform various types of digital interactions on a peer-to-peer network.

There are four different types of blockchains.

Private Blockchain networks

Private blockchains operate over closed networks and tend to work well for private companies and organizations. Businesses can use private blockchains to customize their accessibility and authorization preferences, network parameters, and other important security options. Only one authority manages the private blockchain network.

Public Blockchain networks

Bitcoin and other cryptocurrencies originated from public blockchains, which also played a role in popularizing distributed ledger technology (DLT). Public blockchains also help to overcome some challenges and problems, such as security vulnerabilities and centralization. With DLT, data is distributed over a peer-to-peer network rather than stored in one place. A consensus algorithm is used to verify the authenticity of the information; Proof of Stake (PoS) and Proof of Work (PoW) are two commonly used consensus methods.

Blockchain networks allowed

Sometimes known as hybrid blockchains, permitted blockchain networks are private blockchains that allow special access by authorized individuals. Organizations typically build these types of blockchains to get the best of both worlds, and it allows for better structure in allocating who can participate in the network and in what transactions.

Blockchain consortium

Similar to licensed blockchains, consortium blockchains have both public and private components, except that many organizations will manage a single syndicated blockchain network. While these types of blockchains may be more complicated to set up initially, they can offer better security once they’re up and running. In addition, consortium blockchains are optimal for working with multiple organizations.

Blockchain technology in business – in which industries is it used?

Medical industry

Blockchain and the medical industry have much more in common than you might initially think.

One of the pressing problems in the case of medicine is the lack of a universal system of patient identification and documentation management. As many as half of a patient’s medical records are inconsistent when transferring data between healthcare systems.

It is estimated that over 176 million patient records were exposed to data breaches between 2009 and 2018. It includes both banking information and genomic test records. It is worrying that in October 2019 there was a 44.44% (month to month) increase in the number of medical data breaches. This means that more than 600,000 medical records have been reported as unauthorized disclosure, disclosure or theft under these breaches. Keeping paper records would be safer, but the sheer amount of data generated daily makes it almost impossible to manage.

According to a BIS Research report, blockchain technology could save the healthcare industry up to $100 billion annually by 2025. These savings come from reductions in data breach costs, IT costs, operational costs, support functions and personnel costs, counterfeit fraud and insurance fraud.

Blockchain technology enables pharmaceutical companies to track drugs throughout the supply chain, making theft more difficult and allowing irregularities to be detected quickly. It keeps our data more secure, provides information transparency, and enables us to have real-time up-to-date information. Thanks to this, it is possible to identify fraud faster and minimize insurance fraud.

Insurance industry

The insurance ecosystem is developing dynamically, but with this development new problems appear. Blockchain can be a great solution for the insurance sector and help detect fraud, reduce underwriting or improve insurance policies in the field of cybersecurity.

Cyber insurance policies are a relatively new product. Cyber insurance is designed to protect the insured against the costs associated with hacking, cyberattacks and breaches of stored digital information.

Blockchain technology can help to better understand financial and price risk, enabling faster and more secure storage and sharing of information between entities in the insurance ecosystem. It creates a layer of trust that adds security and the ability to establish trust between entities. In this way, with the support of blockchain tools, insurance companies can build products better suited to the market.

The insurance market is very competitive and customers expect the best value for money. Blockchain technology can bring significant gains in efficiency, cost savings, transparency, faster payouts, and security in asset management.

A very important advantage of implementing blockchain solutions is reducing fraud while allowing real-time data to be shared between different parties in a trusted and traceable way.

Supply chain management

Supply chain management is data-intensive and complex. Much of this is due to the fact that paper-based record keeping is still very common, especially in the maritime sector, which is a large part of the international supply chain. The supply chain management industry still requires significant investments in digital transformation.

The recent supply chain disruption caused by the COVID-19 pandemic has caused huge losses for companies in this sector.

We are talking about the use of smart contracts, for example. This would bring greater automation, transparency, security and efficiency to supply chain operations.

Blockchain would be useful in improving information sharing and security. Storing data on blockchain-based solutions would provide easy access while maintaining a high level of security, because data manipulation would be impossible without tagging.

At the same time, the technology could significantly improve the traceability of shipments as well as the required transport documentation (such as waybills or bills of lading), which would reduce fraud, delays, corruption and the resulting costs.

What are the implications of implementing blockchain technology?

The concept of trust is important in the case of blockchain, especially in the sphere of international transactions. Previously, lawyers were hired to bridge the trust gap between two different parties, but this cost extra time and money. Nevertheless, cryptocurrencies eliminate the need for third-party interference. Many organizations are located in areas where resources are scarce and corruption is common. In such cases, blockchain provides a significant advantage to affected individuals and organizations by allowing them to avoid the tricks of unreliable third-party intermediaries.

The new reality of the Internet of Things (IoT) is already teeming with smart devices that — turn on washing machines; drive cars instead of drivers; manage road safety. In all these cases (and not only), the use of blockchain technology by creating smart contracts will enable any entity to streamline operations and keep more accurate records.

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