interesting blockchain applications

With the splurge in popularity of cryptocurrency and its potential future, I have had a strong curiosity to understand the nuances of the underlying technology and the problems it is trying to solve for. I came across an amazing book called ‘Bubble or Revolution’ authored by three young tech enthusiasts, which provides an impressively simplified explanation covering various aspects of cryptocurrency. Cryptocurrency is built on the back of a relatively nascent technology called blockchain and was incepted with the primary goal of creating a financial currency that is intangible to facilitate borderless transactions much like what credit cards offer but unlike credit cards is decentralized i.e. with no central authority having absolute control over the system. Blockchain in cryptocurrency involves decentralized storage of transaction data on multiple nodes or servers which can be viewed and accessed by anyone with the necessary software. New transactions are verified by any independent user (also called miners) rather than a central authority and they add a set of verified transactions known as a block to the blockchain. The benefit of blockchain is that the system is more secure and near tamper-proof as for one the data is decentralized making it less susceptible to data hijacking through targeted attacks at centralized nodes and second the process of adding new blocks to the chain follow a certain protocol making it very hard to hack or manipulate.

While I started reading ‘Bubble or Revolution?’ to get a deeper understanding of cryptocurrency, what really intrigued me was the other potential applications of blockchain technology outside of cryptocurrency. There have been very interesting use cases of blockchain technology by organizations to tackle for various operational inefficiencies. A few examples I found to be very notable include:

tracking supply chain of produce: after an e-coli contamination of produce from multi-billion dollar grocery chain Walmart, they had a difficult time tracking the source of the contamination due to inefficiencies of the existing supply chain tracking system and opaque record of how the different entities within the supply chain interacted with each other. A reform that Walmart undertook was to make all the suppliers log each movement of the produce onto a common blockchain much like how cryptocurrency transactions are recorded on the blockchain. The result was a digitized system of relevant standardized data across the entire supply chain that was decentralized, tamper-proof and transparent to both the suppliers and Walmart.

smart contracts for royalties: Microsoft-owned gaming company XBox worked a with a lot of complex royalty contracts to compensate the various contractors who were involved in the game development process. The royalty contracts required accountants to manually compute individual royalties based on complex rules across data from different sources which was extremely cumbersome and time-consuming. Xbox decided to adopt a blockchain based royalty settlement system where the royalty contracts were converted into automated smart contracts that operate on the blockchain. Smart contract is basically like a digital user with an address on the blockchain that can send or receive money much like a normal user on the blockchain who makes transactions using cryptocurrency. Smart contracts hold code that is a formulaic version of the legal terms of the contract that get automatically executed when the underlying objective conditions are met i.e. royalty payment goes through if the smart contract computes that the required conditions of the contract have been met.

online voting on blockchain: the current voting system requires physical presence of voters which is relatively backwards in a world where majority of daily processes have moved online. Estonia is a country that has adopted online voting but a key issue in adoption of online voting is susceptibility to hacks. Voting on the blockchain is a robust way to facilitate secure online voting. In blockchain voting the government would issue voting tokens to all eligible voters. A voting token is a digital version of a vote which can be transferred on the blockchain by the voter to the address of the candidate they wish to vote for much like transferring a cryptocurrency from one account to another. Hence, we have a near tamper-proof digital system that aptly collects and stores data of all the votes. However, a key issue with blockchain voting is maintaining anonymity since data of the votes are stored publicly on the blockchain and anyone can view the links between voting tokens (senders) and address of candidates (receivers). If the voting token can be linked to the corresponding voter ID, then we can easily know who voted for whom. A potential solution to tackling the anonymity issue is by encrypting the address of voting token. Blockchain voting is still in a testing phase at present where places like Zug, Switzerland and Colombia have run successful pilots.