Blockchain — the popular Bitcoin wallet service — released a couple of blockchain reports focusing on developments in the cryptocurrency realm. One of the reports, named “The Future is Decentralized” from the company’s research initiative emphasizes how blockchain technology is can be implemented and improve efficiencies.
Practical applications of blockchain are hard to come by in its early stages, with most working blockchain solutions within the financial realm at this point. Performed in conjunction with the UN Refugee Agency (UNHCR), UN Development Program (UNDP), and the World Economic Forum (WEF), the report highlights several opportunities in various sectors including decentralized identity, aid effectiveness, and supply chain management.
Development Aid Effectiveness
Outside of providing a brief introduction to what blockchain technology and how it works, the report dives into how it can effectively augment the sustainable developments goals laid out by the UN. These include initiatives to reduce poverty, enhance global education standards, and improve environmental sustainability.
The first area that the report identifies as a target for blockchain technology is improving the efficiency of aid effectiveness in the developing world. The verifiability and transparency of blockchains afford greater opportunity for effective aid. Despite NGOs and other institutions providing aid around the globe, it is often mired in inefficiencies and corruption that substantially reduce its impact.
There is no standardized data infrastructure for fundraising or tracking aid dispersion. This leads to fragmented data and subsequently increased corruption where much of the financing is funneled through opaque private sector channels. Blockchains provide accountability through their immutability and transparency in a standardized format that can curb many of the frictions in the aid industry.
The case study referenced by the report details how cumbersome the current ECD subsidy system has become. Substituting the current model for a public blockchain digital identity and transaction system provided by the startup Amply and funded by UNICEF could potentially save billions in capital. Global aid development reached a peak in 2016 of $142.6 billion, with more than 30 percent never making it to its destination.
The report concludes that integrating a public blockchain infrastructure could vastly improve transparency and efficiency, where even a 3 percent improvement in efficiency would lead to billions in capital saved.
Supply Chain Management
Another high-profile case study in the report centers on the supply chain industry, which has been a target of several cryptocurrency platforms. The emergence of technologies like RFID tags and the Internet of Things (IoT) expand the capacity of blockchains to make a positive impact in the supply chain industry.
Small increases in efficiency can lead to massive effects on prices and profits, making blockchains a suitable infrastructure selection for these global logistics networks. The global transport and logistics market was valued at $3.17 trillion in 2016. However, the growing complexity of global distribution has been compounded by sophisticated delivery channels and an increasing burden of disparate regulatory scrutiny.
The opportunity for blockchains to make a meaningful impact on supply chain management is demonstrated in the case study of the tuna industry. The end-product value of the tuna fishing industry is roughly $40 billion. However, as apex predators, tuna’s survival is vital to the ocean’s ecosystem and 5 out of 8 tuna species are considered at risk by the International Union for the Conservation of Nature.
According to the report:
“It is estimated that 20% of all seafood entering mainstream markets is caught illegally or in a way that is unreported or unregulated. Of the various initiatives to address IUU tuna fishing, improving traceability and transparency shows the greatest promise for scalability into mainstream commercial activities.”
Tracking tuna products from vessel to final point of sale across different jurisdictions is exceptionally challenging. Blockchains can provide a transparent medium for effectively monitoring and quantifying the tuna fishing supply chain. Provenance — a London-based firm — launched a blockchain study to evaluate the undocumented “first mile” of tuna fishing. Fishermen from separate supply chains would register their catches via SMS messaging which would be assigned immutable and unique identifiers on the blockchain.
The unique identifications were subsequently shared with local NGOs and certification organizations to check against violations and track the fish from catch to market. While only implemented at a small-scale, the concept can be extended to global markets as the technology and its understanding progress.
Another example of using blockchain in the supply chain is demonstrated by a startup called Everledger, who is examining the role that blockchain can play in stifling the market for counterfeit diamonds.
Understanding the Future Applications of Blockchain Technology
There is still much research and experimentation to be done with blockchain technology across various industries for practical use cases to emerge. Some case studies outlined by the UN and Blockchain have shown promising potential, but these systems have only been implemented on a small scale so far.
Projects promise blockchain technology as the solution to a multitude of problems across sectors. However, it is likely that blockchain’s impact will not be measurable in many of these industries for several years. Understanding how to incorporate the technology with legacy systems is still in its early stages, and many projects have not ironed out the incentive structures for their blockchain ecosystems.
Blockchain’s report highlights the potential applications of the technology and industry opportunities where inefficiency has led to extraordinary levels of waste and corruption. Blockchain is not a cure-all solution but it offers the immutable and transparent infrastructure that is necessary for numerous global industries.