The first use case of blockchain technology was cryptocurrencies. However, since the introduction of smart contract functionality following Ethereum’s launch in 2015, there has been extensive experimentation in the use of blockchain technology. Thanks to ongoing developments in areas such as privacy, scalability, and regulatory compliance, many real-world applications of blockchain are still emerging.
It’s worth noting that the word blockchain is used to apply to broader distributed ledger technology (DLT) systems that do not necessarily meet the strict definition of a blockchain. Blockchains are characterized by features such as open access without permissions and the use of open-source programming, while other DLT iterations may be permissioned and based on proprietary code.
This article covers industries and applications using both public and permissioned iterations of blockchain and distributed ledger technologies and may use the terms interchangeably.
Finance
In the financial sector, blockchain’s transparency and peer-to-peer transaction capabilities offer the opportunity to overcome several legacy challenges. These include slow settlement times (particularly for cross-border payments,) information asymmetry, and a heavy dependence on intermediaries.
JPMorgan was among the first major banks to make a foray into blockchain and launched its own permissioned implementation in 2019. The bank has since used the platform for multinational settlements and for experimenting with various types of tokenized assets.
Thanks to its early efforts, the bank has also become a key player in Project Guardian, a multiyear global collaborative experiment between more than twenty central banks and financial institutions, spearheaded by the Monetary Authority of Singapore.
Many different initiatives are now included in the project, which focuses on using blockchain in the tokenization of financial products, such as tokenized money market funds issued by asset manager Franklin Templeton. It also includes experiments in cross-border payments and foreign exchange settlements led by names like BNY Mellon and Ant International.
Central bank digital currencies (CBDCs) are another financial use case of blockchain. Although some countries such as Nigeria, have adopted centralized database architecture for their CBDC, others such as Cambodia and several Caribbean nations, have launched theirs based on permissioned distributed ledgers. The Bank of France is among those researching the use of DLT as a platform for future CBDC issuance.
Supply chain management and trade commerce
Three primary use cases for blockchain in supply chain management and trade commerce have emerged as the field has developed.
Blockchain enables the creation of an immutable record of the movement of goods between parties in a supply chain, offering enhanced traceability compared to legacy solutions. This can help to reduce wastage and resolve disputes. IBM Food Trust is one example of a DLT platform used in supply chain traceability, used by firms including supermarket chain Carrefour and manufacturer Nestlé. Coca-Cola has also developed a blockchain solution for supply chain traceability.
Authentication of goods is another use case since a blockchain ledger can demonstrate the provenance of ingredients or parts used in manufacturing. Luxury companies, including LVMH and Mercedes-Benz, have collaborated on the development of Aura, a permissioned blockchain for the luxury industry that offers digital authenticity services for high-end goods.
Finally, blockchain-based records can introduce significant efficiencies into the trade finance process, where shipments and payments can often be slow and dependent on the movements of paper documents. Komgo is a blockchain-based trade finance platform developed as a collaborative effort by banks and corporations, including ING, Santander, Shell, and Consensys.
Energy markets
Crypto is often criticized for its impact on the environment, but blockchain is being put to use for beneficial purposes in the energy sector. The need for more sustainable energy sources, together with changing consumer demands, such as the increase in electric vehicles, is driving innovation.
One blockchain-based development is in peer-to-peer (P2P) energy trading. Since energy distribution infrastructure is set up under a centralized model, implementing this in practice means setting up self-sufficient microgrids, where households and enterprises can participate in the network as consumers, producers, or both.
P2P energy grids are in use in several places, including the Port of Rotterdam and various locations across San Diego. Australian company PowerLedger has also had global success with its blockchain energy platform, having been involved in many microgrid initiatives across Europe, the US, and the Asia Pacific region.
Data transparency is also an opportunity for blockchain in the energy sector since energy usage data is becoming increasingly critical and can be subject to manipulation. Chile's national energy regulator has implemented a blockchain-based solution for energy data tracking.
Healthcare and medicine
Blockchain has the potential to address many challenges in the healthcare and medical sectors; however, due to the sensitive nature of these industries, along with the requirement for extensive and prolonged testing, adoption rates are slow compared to other sectors.
One area of opportunity is in patient healthcare records, where blockchain could give patients control over their own records, enabling easier sharing between different healthcare providers without compromising privacy.
Another use case is in clinical trials, where drug approval is dependent upon rigorous and extensive testing records that must be maintained with a high degree of accuracy. Blockchain-based record-keeping systems could better maintain the integrity and security of such data, and zero-knowledge privacy protocols could facilitate selective data sharing between researchers.
Finally, the use of blockchain in pharmaceutical supply chains could help to prevent them being used in the manufacture and distribution of counterfeit drugs.
Entertainment and media
NFTs have already created a significant amount of buzz in the art and entertainment sector. Although the market hype around NFT art appears to have subsided, there are more sustainable use cases for blockchain in entertainment and media. For example, several artists, such as Deadmau5 and Kings of Leon, have taken the opportunity to issue their work as NFTs, leveraging a new way of monetizing digital content that can be delivered directly to fans.
A further step in the development of blockchain for the entertainment sector is in the protection of intellectual property and enforcement of royalty payments. The programmable nature of digital assets means that it’s possible to write executable rules regarding the use of content and allocate a percentage of sale proceeds to the creator each time the item changes hands or is used in a particular way.
The proliferation of AI-based tools and the fact that they rely heavily on original work has led to a renewed interest in ways of protecting digital IP and creator’s rights, which could lead to accelerated innovation in blockchain-based IP protection.
Outlook
These are only a selection of the industries where blockchain is creating impact so far. Plenty of other areas are still under experimentation and development, such as real estate, governments, IT infrastructure and communications, and more.
While not all experiments and ventures are successful, the broader trend over more than a decade shows sufficient interest and return on investment in real-world blockchain applications to maintain an ongoing shift toward adoption. However, high-performing, reliable technology with sustainable solutions for legacy issues such as privacy, scalability, and governance will be crucial for future success.