Blockchain applications: logistics, finance, tokenization, health, identity

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Blockchain Applications

Blockchain technology can be applied to anything that needs to be managed. Logistics in particular has so far established itself as a blockchain use case.

Bitcoin is probably the most well-known application (use case) for blockchain technology. The “digital coin” and the management of money is often more tangible and therefore easier to explain.

The glut of cryptocurrencies, which is in the thousands, also suggests connecting blockchain technology with money. Ultimately, however, there are many more uses for the technology – basically anything that can be managed.

Blockchain Applications

With the blockchain you can manage much more than just cryptocurrencies. Areas of application include logistics, financing, tokenization, health or identity data.

Logistics

After cryptocurrencies, logistics is the most important field for blockchain applications. Whenever it comes to the movement and tracking of objects, a decentralized and transparent storage of information is a good idea. So far, this has mainly been supported by large corporations – precisely because logistical tasks can be mastered by globally active companies.  

Blockchain in logistics

A frequently cited example of technology applications is the supply chain, or to be more precise, logistics. Because logistical processes can be automated and optimized by the technology. Taking over the organization promises to save time and reduce the costs of administrative processes.

Within the logistics division, supply chain management is the focus of blockchain applications. The blockchain can fully develop its potential, especially along global value chains. Corporations such as FedEx or IBM are already active in this area. The logistics division of Deutsche Bahn, DB Schenker, is also working on solutions together with the blockchain platform VeChain. 

Finance (venture capital)

The topic of financing is closely linked to the area of ​​application of cryptocurrencies. Initial coin offerings (ICOs)  have established themselves as a means of financing projects, especially in the second half of 2017. Countless new projects received funding amounts in the – mostly double-digit – millions during this period. Everyone can participate and invest without there being any major entry hurdles in the ICO market.  

Financing: venture capital

In the past, the possibility of generating digital coins via the blockchain has primarily motivated young companies to raise capital. With the so-called initial coin offerings, based on the traditional IPO (initial public offering), one could promote one’s own business idea. Other forms of collecting capital decentrally are Security Token Offerings (STO), Initial Exchange Offerings (IEO) or Initial Future Offerings (IFO).

This is how ICO has evolved as an equivalent to the traditional IPO. This is not without risk. The lack of restrictions and hurdles makes ICOs easier as a financing model than classic venture capital models. However, the resulting lowered standards also open the floodgates to possible cases of fraud. The result was many disappointed expectations and frustration on the part of investors.  

But the ICO concept was further developed and redirected to more serious paths. These include security token offerings , i.e. the creation of digital securities.

Tokenization

The blockchain not only has the potential to change various industries, but can sometimes also create completely new models. One of them is certainly the tokenization of assets (capital goods). This keyword describes ways of representing the value of an illiquid object in token form. Purchasing such an asset token enables potential investors to invest in this asset even with small amounts. Tokenization thus allows partial participation in assets such as real estate or ETFs.  

Tokenization: The art of dismembering assets

Tokenization has become a useful tool, especially in the area of ​​real estate investments. The ability to split properties makes it possible for people on a tighter budget to invest.

Like the area of ​​financing, the tokenization of real goods is also based on the use case of cryptocurrencies. In addition to being used for investment, the issued asset tokens are also traded on the crypto market like other cryptocurrencies. There are currently many different projects that are approaching the topic of tokenization in different ways.

Energy

The energy application field may seem surprising at first, as cryptocurrencies, as the largest blockchain application, are suspected of cannibalizing the energy balance through the  mining process. Nevertheless, the disruptive potential of blockchain technology also applies to a large extent to the energy industry. In particular, the decentralized nature of a  distributed ledger  opens up many possibilities – especially for a sustainable energy market. 

The energy transition, which Germany is currently in the midst of, will bring not only a shift to renewable energies but also increasing digitization. In order to harmonize the feed-in of photovoltaic and wind power plants with the energy demand, the use of digital technologies is necessary. The blockchain as a decentralized storage of values ​​offers a suitable instrument here.  

Blockchain applications offer the possibility of bypassing central players such as large producers, at least to some extent. Thanks to the decentralized structure, small, private producers could also offer their excess electricity directly without having to resort to the services of a middle-level entity. Energy deliveries and the financial settlement with the customer can be organized via the blockchain. Energy transfers become tamper-proof, transparent and have minimal transaction costs. 

Health

The healthcare industry is also undergoing a transformation, which should ultimately lead to greater digitization. From the point of view of many outsiders, it is still strange that medical research works with state-of-the-art technologies, while the administration in many places is still completely analog and often based on patient files. Another area where blockchain can help. 

Blockchain in the healthcare industry

Blockchain’s ability to transparently and immutably document data is creating a use case in the healthcare industry. Above all, the possibility of being able to check the authenticity of medicines proves to be an advantage here.

The technology opens up the possibility of cryptographically securing and updating patient data and placing it in the hands of the patient. The patient and not the treating doctor is therefore in possession of his own medical file. On the one hand, this has the effect that individuals are granted greater authority over the interpretation of the treatment process. On the other hand, all data collected is stored on the blockchain and can also be easily accessed across specialists and when changing doctors. What drug was prescribed when and by whom and how did it work? Everything recorded on the blockchain. 

The blockchain can also be used in the entire healthcare sector outside of medical practices. In the pharmaceutical industry, for example, it is used to prevent the manufacture of counterfeit medicines. By labeling said medicinal products to be counterfeit-proof, their path can be traced and their authenticity confirmed. Blockchain can also be used in hospital logistics to track supply chains and for quality assurance. 

Digital Identity

Digital identities have long since become a fixed factor in our everyday lives. Whether Facebook profile, Google search history or WhatsApp status: we constantly present parts of our identity online. In some places, our lives and our offline identity are even overshadowed and significantly influenced by our digital identity. The associated data is always in the hands of corporations. 

Digital identity on the blockchain

Instead of placing (profile) data about oneself in the hands of central corporations, it can be managed via blockchain solutions. This makes it possible to gain more control over how the data is used.

One way to regain at least partial control over one’s own digital identity is to decentralize it. There are already projects working on blockchain solutions for identity protection. The disposal data are here with the users. 

In other places, the blockchain can also be used to create a digital identity in the first place. The technology helps to collect and store identity data, especially in states and regions with insufficient state administration. A scan of the fingerprint or the iris is then sufficient for identification. Once the identity is matched to the data subject’s financial information, sometimes a blink of an eye is all it takes to complete a transaction.

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