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Blockchain For Business: How Are Companies Using Blockchain?

Recently, implementation projects using Blockchain and Distributed Ledger technologies have increased significantly. Historically associated with cryptocurrencies * and more generally with the exchange of value – the Internet of Value – today, these technologies find application in various sectors: from the financial world to the initiatives of governments and public administrations. Companies and public administrations are beginning to understand the benefits of these technologies and to work on developing concrete projects.

The Blockchain In The Company: 4 Types Of Use

Be that as it may, it isn’t generally clear how Blockchain can work on existing cycles, nor how this innovation can empower new open doors and action plans. In this article, we attempt to reveal insight into how Blockchain and Appropriated Record advancements can establish esteem in the business climate, with notable instances of the most engaging functional activities.

The Blockchain & Distributed Ledger Observatory, through an analysis of national and international news regarding Blockchain projects, surveyed over 1,242 announcements, experiments, and operational projects between 2016 and 2020. From this study, the Observatory analyzed 508 implementation projects, identifying the prominent use cases of Blockchain and Distributed Ledger technologies and dividing them into four main categories, depending on the objective they pursue: exchange of value, verifiability of data, coordination of data, and implementation of reliable processes.

Exchange Of Value 

These are applications that exploit crypto-assets enabled by Blockchain platforms to exchange money or other assets of weight and disintermediate safely. 13% of the projects surveyed use these tools to make the value exchanges between different actors more efficient by reducing or eliminating the need for intermediaries.

Verifiability Of Data

The applications in this category use the properties of immutability and transparency of the Blockchain technology by recording some characteristics of data or documenting it so that they are visible and verifiable by other actors of the ecosystem or third parties. 24% of the projects surveyed belong to this class. Within this category, there are applications commonly known as “notarization,” in which, for example, a document is timestamped * to make its creation date verifiable and the fact that it has not been modified over time. Many projects of this type have been developed in agrifood, aiming to offer more excellent guarantees to the final consumer on the traceability of products.

Data Coordination

Most of the use cases analyzed (59% of projects) implement Blockchain and Distributed Ledger technologies in data sharing processes, not only by notarizing information but also by exploiting intelligent contracts to bring data exchange on-chain, allowing more effective and efficient coordination between the different actors. These applications are developed mainly to enable the reconciliation of information maintained by different actors, avoiding the emergence of divergences and conflicts. 

Implementation Of Reliable Processes

This is the category in which the most ambitious projects fall, which aim to run entire business processes on Blockchain to ensure that every step is verifiable. The business process is encoded via smart contracts using a Blockchain platform in these projects. It is also the most complex and challenging application scenario to be implemented. In fact, to date, only 4% of the projects analyzed have this objective.

What Is Needed For Business Application Development?

To exploit the potential of these technologies and create innovative applications, however, some elements still need to be fully developed:

  1. The ecosystems underlying Blockchain projects must be able to welcome new participants within an application;
  2. Both permissionless and permissioned platforms must offer reliable performance in terms of scalability and security.
    1. Permissionless is continuing its development path to overcome these limitations. Some examples are layer two solutions * (such as lightning network and rollups *) and protocols such as Baseline on Ethereum * or the upcoming Taproot * upgrade on bitcoin, which also aim to increase privacy on these platforms.
    2. In the permissioned ones, on the other hand, the performance improvement is strongly contributing to the evolution of protocols, such as Corda * or the different versions of Hyperledger *;
  3. The applications must be able to integrate with the information systems currently used by companies;
  4. Applications must be able to rely on a regulatory framework that defines clear rules while leaving open the possibility of innovating;
  5. Applications must be able to take advantage of some enabling services, such as digital identity or “cash on a chain.”

Cash On A Chain As An Enabling Factor

The last point is one of the most relevant and debated, especially about the evolution of the phenomenon of Central Bank Digital Currency (CBDC) *. The cash on the chain, or the possibility of using the digital version of a fiat currency directly within a Blockchain platform, could be an enabling factor to bring some business processes entirely on Blockchain and thus start the creation of applications. Genuinely innovative and suitable for the category of projects that carry out “reliable processes.”

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