Bitcoin was conceived as a new global monetary system, however, the blockchain technology underlying cryptocurrency is now being applied in many different areas. In this article, we will discuss five increasingly popular applications of blockchain.
Blockchain: from payment to revolution in various industries
Before discussing how blockchain has evolved into a multi-profile technology, it is worth remembering its history, in particular, when and where it originated and what its potential applications are.
Bitcoin was created in 2009 as a new monetary system managed by thousands of computers worldwide, which significantly reduced the dependence of money on central authorities. The network of computers manages a special type of database - the blockchain - using distributed ledger technology. Data is constantly added, which allows for verified registration of transactions protected by cryptography and a consensus mechanism of computers in the network, as well as other technologies.
The main task of the Bitcoin blockchain is to simplify the transfer of coins related to transactions in such a way that they cannot be changed or deleted in the future. Since the emergence of the Bitcoin blockchain, some developers have added new features and applications to the technology. In 2015, the Ethereum blockchain introduced smart contracts, which allow for programming contractual agreements in addition to payments. At this stage, other variants of blockchain developments also emerged, the possibilities of which depend on the user's or organization's needs.
Today, blockchain technologies allow for solving problems of various businesses, from the financial industry to agriculture. Thousands of blockchain platforms are currently operating worldwide. These are fully decentralized solutions, such as Bitcoin, as well as private and corporate developments controlled by a single company for specific purposes.
Blockchain is most often used in finance. Blockchain was developed as a technology for permanent registration of transactions, but it has already given rise to many crypto-financial services. These range from simple instant purchases using cryptocurrency to trading and more complex functions, such as decentralized finance (DeFi) loans, deposits, liquidity pools, and much more.
From a financial perspective, the task of cryptocurrency is to expand people's freedom in terms of earning and using money. Thus, blockchain opens up more opportunities for providing financial services to a greater number of people around the world, especially those who have little access to traditional systems. At the same time, over the past decade, cryptocurrencies have faced a number of issues, including regulation, scalability, and security, among others. However, blockchain technology continues to evolve and find new applications in various industries, promising a revolution in the way we think about and use money.
- Gaming
Immediately after cryptocurrencies found their application in the field of finance and payments, developers began creating blockchain games. With the help of this technology, they aimed to find solutions to numerous problems in the gaming industry, such as economic manipulations by gaming companies, payment difficulties, the possibility of disconnection, and game process imbalance. Blockchain creates a distributed and transparent network with open-source code for players and provides innovative solutions such as real asset ownership, consensus-based updates, decentralized marketplaces, optimized tokens, and more.
One of the early examples of real-world blockchain implementation is CryptoKitties - a game that allows people to collect and breed digital cats. All operations in it occur on the Ethereum blockchain. At a certain point, due to the excitement surrounding CryptoKitties, the game occupied a large part of the traffic on the Ethereum network. Interest in CryptoKitties waned, but developers managed to create new, more complex blockchain games, including Alien Worlds, Axie Infinity, Cartesi, The Sandbox, and others.
- Real Estate
Blockchain enhances the level of service in the real estate sector, which suffers from problems such as slow transactions, administrative lawsuits, and distrust between buyers, sellers, and intermediaries. The emergence of blockchain systems in real estate allows for the automation of routine tasks and agreements, ensuring transparency of listings and data tracking, as well as cost reduction.
In addition to higher-quality service, blockchain also offers innovative business models for the real estate market. For example, fractional ownership of assets (which otherwise would be challenging to divide), digital contracts to accelerate operations, crowdfunding of real estate through tokenization, and more.
- Insurance
The insurance industry is highly vulnerable to fraud. The document flow here is enormous, so blockchain has brought many advantages to the insurance industry, including strengthening fraud prevention, simplifying document flow, and reinsurance. Blockchain is also innovation in insurance business models, allowing insurance companies to offer more complex insurance and microinsurance products upon request.
The innovative potential of blockchain for solving insurance problems is so high that about 80% of insurance company executives have either already implemented blockchain technologies or plan to test them in their divisions.
- Security
Security is a broad topic that affects both individuals and entire countries, but blockchain offers solutions for every level. At the individual level, blockchain solutions in the security field include sovereign identity for full control of personal information, protection of data transmission and personal correspondence, as well as security elements for internet of things devices, including thermostats and routers.
At the organizational level, blockchain enables companies to conduct distributed document management, preventing DoS attacks on individual nodes and vulnerabilities such as websites. Governments of countries such as Australia, Malta, and China also use blockchain for security purposes.
- Art
NFTs, or non-fungible tokens, are a hot topic in the art world. Artworks based on this technology are sold at auctions for millions of dollars. The development of NFTs has opened up crypto-art and digital collections, allowing artists, musicians, and influencers to generate additional revenue from their unique works. NFTs can serve as proof of authenticity not only for digital art and music, but also for tangible assets such as paintings and jewelry.
