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Businesses Finding More Uses for Blockchain

Businesses across a wide range of industries are exploring uses that go beyond cryptocurrency.
6 minute Read

In the growing digital economy, businesses across a wide range of industries are exploring uses for blockchain technology that go well beyond cryptocurrency.

In fact, a decade after Bitcoin was unveiled as the first product of blockchain, digital currency has not gained much traction as a form of payment. But major corporations are finding ways to utilize the underlying technology.

Earlier this year, a handful of the world’s largest automakers, including BMW, General Motors, Ford and Renault, formed the Mobility Open Blockchain Initiative (MOBI) to collaborate on investigating uses for blockchain. The blockchain and cryptocurrency news site CoinDesk.com reported that BMW is also working with a blockchain startup called DOVU on a pilot program that will track the mileage in leased vehicles. As an incentive, drivers who opt to participate in the program will earn blockchain tokens that they can spend on services or items such as replacement tires.

The retail, financial, legal and health care sectors are also turning to blockchain for supply chain management and to securely store records of business transactions.

The technology offers two significant benefits: It is decentralized and difficult to tamper with.

The 2016 book Blockchain Revolution described the technology as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

“Blockchain takes a record and spreads it across a network of computers, You don’t have to go to a central computer that manages everything. The information is shared among a lot of computers.”  - Mark Jamison

“Blockchain takes a record and spreads it across a network of computers,” said Mark Jamison, a professor at the University of Florida Warrington College of Business and visiting scholar at the public policy research group the American Enterprise Institute. “You don’t have to go to a central computer that manages everything. The information is shared among a lot of computers. Second, hashing technology links every transaction to the previous one as a timestamped block. That allows you to follow money clear back to the starting point. It also makes it extremely difficult and expensive to tamper with the ledger, because over half the computers on the network have to agree that a change or transaction is legitimate.”

Car wash operators, particularly the larger chains, may want to take a look at implementing the technology. Here are some potential uses.

Customer Loyalty Programs

In a recent analysis, Kaleido Insights, a San Francisco-based technology research and advisory firm, noted that a growing list of businesses have announced plans to launch blockchain-based loyalty rewards programs. The American restaurant holding group Chanticleer, which includes brands such as Hooters, Little Big Burger and Just Fresh, Singapore Airlines and Japanese e-commerce leader Rakuten were among them.

But Kaleido Insights co-founder and industry analyst Jessica Groopman also noted that, as of late October, only the Singapore Airlines program was up and running.

“It is still very early for blockchain-based loyalty programs,” Groopman said.” There are very few that have been deployed with any scale. While there have been plenty of announcements, there is not yet anything large in the U.S.”

Groopman said businesses and customers alike could benefit from the flexibility of a loyalty program built around blockchain.

“If you think of our loyalty programs today they’re super siloed,” she said. “You can’t use airline points to buy groceries or rewards from a fitness app to buy salads at a local eatery. There’s not this exchange between providers.” According to Groopman, blockchain introduces a way to share these accounts across different providers and add in smart contracts that allow you to earn points you can use at a set of businesses. “That differs from our current model where, on the business side, there is limited value provided by simply offering a loyalty program for your own products and services. So, flexibility in terms of redemption options is good for businesses and customers.”

That flexibility could also allow small businesses, such as the local car wash, to join with a group of businesses in a shared customer loyalty program.

The digital ledger also protects against fraud by offering a shared but tamper-resistant record of who is enrolled and what has been redeemed. Groopman said larger companies with sizable loyalty programs would be able track their liability more accurately than under the current system, which often suffers from uncertainty over how many unredeemed reward vouchers might be floating around out there.

But there are obstacles to overcome for blockchain-based programs to take off. Groopman said the newness of the idea and the commitment to share customer information and work together on a value proposition are both challenges.

“That is not a standard practice for most businesses,” she said “In general, the culture is very proprietary, very closed. It’s ‘our customers, our product, our brand, no one else.’ So, there’s a huge cultural barrier to implementing this.”

Supply Chain Management

The industry news site SuppyChain247.com sees blockchain as a potential “game changer” because it can quickly, securely and transparently track transactions. For product supply chain, that means a permanent record of every link in merchandise’s journey from manufacture to sale. That can reduce time, costs and the chance for human error.

“It’s a good technology for retailers who need to trace a product back to the manufacturer and the exact plant it was manufactured at for quality control,” Jamison said. “It allows you to do that because if anybody tries to tamper with the record, it messes with all the other transactions through the hash technology. It changes all of them and then the computers don’t accept it anymore because it is wrong.”

Because of those benefits, Walmart, Nestle, Kroger and other large companies partnered with IBM to experiment with using blockchain to track their supply chain. Financial news website The Motley Fool reported that Walmart decided after its pilot program to continue with the shift to blockchain. The retail giant is requiring certain suppliers to use the IBM Food Trust platform, which can quickly track food items sold at the retail giant back to the source.

Besides supply chain, businesses are using blockchain to record real estate transactions, sale agreements, contracts and other documents. But any business mulling blockchain has to determine if the need for security and the volume of records are worth it, or if a simple spreadsheet will do.

“It’s a good technology for retailers who need to trace a product back to the manufacturer and the exact plant it was manufactured at for quality control,”  - Mark Jamison

Accepting Cryptocurrency as Payment

At this point, there are e-commerce businesses, including Overstock.com and some hotels, restaurants and bricks-and-mortar retailers that accept Bitcoin and other cryptocurrencies.

A limited number of car washes have also taken the plunge. For example, in late 2017, Canadian car wash company SUDS Full Service Car Wash announced it was accepting Bitcoin, Ethereum and Litecoin as payment.

For businesses, the volatile fluctuations in bitcoin value, the fact that consumers see cryptocurrency as an investment more than currency and the expense of transaction fees are a few obstacles to more widespread adoption.

Jamison said businesses that accept digital currency have a few options for what to do with it. They can use it to buy goods and services from another company that accepts cryptocurrency, exchange it for another currency, such as U.S. dollars, on a crypto-
currency exchange, or hold it as an investment.

The Future of Blockchain

The cryptocurrency Bitcoin may be the most well-known product of blockchain technology, but it is just the tip of the iceberg.

As blockchain continues to evolve, there are some unique and inventive uses emerging.

For instance, in Canada, blockchain has gone to pot. The Canadian company DMG Blockchain announced in October that it was developing a platform to keep track of the supply chain for the country’s newly minted legal cannabis industry.

“The first use of blockchain was bitcoin, but the perfect use is supply chain management for controlled products such as cannabis,” CEO Dan Reitzik said in a press release.

Global art business Christie’s has shifted to using blockchain to create a secure and encrypted record of art transactions. Far away from the stuffy image of art auction houses, technology news site Engadget.com reported that the digital art for blockchain-based digital card games also fetches a hefty price at auction. The site said a rare card for the popular game Gods Unchained sold for $54,000 worth of cryptocurrency. In fact, there are a slew of avenues available to publish and sell digital art on blockchain.

Engineers at Vanderbilt University have also developed a blockchain system to securely share patient medical records, a move that could improve diagnosis, treatment and research.

 


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