Published by European Union’s Science Hub, the “Blockchain Now and Tomorrow” report on the state of distributed ledger technology (DLT) outlines various use cases and aims to provide an understanding of the technology beyond the hype, supporting the European policymaking process.
Seen by EU as “one of the breakthrough technologies with a huge potential impact for other sectors”, blockchain can enable parties with no particular trust in each other to exchange digital data on a peer-to-peer basis with fewer or no third parties or intermediaries. Data could correspond, for instance, to money, insurance policies, contracts, land titles, medical and educational records, birth and marriage certificates, buying and selling goods and services, or any transaction or asset that can be translated into a digital form. The potential of blockchain to engender wide-ranging changes in the economy, industry and society – both now and tomorrow – is currently being explored across sectors and by a variety of organisations.
The report “Blockchain Now and Tomorrow” (available here) brings together research from different units and disciplinary fields of the Joint Research Centre (JRC), the European Commission’s science and knowledge service. It provides multidimensional insights into the state of blockchain technology by identifying ongoing and upcoming transformations in a range of sectors and setting out an anticipatory approach for further exploration. A crucial part of the report is the confirmation that European policymakers are actively working on blockchain solutions. The European Commission (EC) is “supporting multi-stakeholder [DLT] initiatives that gather industry, startups, governments, international organisations and civil society.” These initiatives cover a wide range of applications, such as accessing regulated data, real-time reporting, identity management, and supply chain. Suggestions for blockchain transformation in the public sector are also outlined, with benefits described as “tailored services for specific citizens, greater trust in governments and improved automation, transparency and auditability.”
Blockchain, a technology with profound impact
Now, blockchain is one of the technologies which is anticipated to have a profound impact over the next 10-15 years, backed in the short term by upward forecasts for investment. This is visible, for instance, on how the attention of investors worldwide has shifted to blockchain companies since 2009. The rise of blockchain is witnessed by both the sharp growth in blockchain start-ups and the volume of their funding. Massive funding started in 2014 with EUR 450 million and rapidly increased to EUR 3.9 billion in 2017and over EUR 7.4 billion in 2018. In 2017, the amount of invested capital grew at an unprecedented scale due to the explosion of ICOs and venture capital investments which continued at a high level in 2018.
There is strong competition from the USA and China, as they now appear to lead in terms of blockchain start-ups. The UK has a key-role in Europe both in terms of numbers of blockchain start-ups (hosting almost half of them), and in funding (attracting about 70 % of EU investments). A broader look at international players shows Switzerland and Singapore displaying particular dynamism, followed by Japan and South Korea.
Transforming financial systems
Traditional financial intermediaries have shown great interest in this technology. Blockchain and DLTs are promising to lower the costs associated with the entire life cycle of a financial instrument (issuance, trading, settlement, etc.) while simplifying the process of issuing and significantly reducing the clearing and settlement time. Other successful implementations include a substantial reduction in payment systems’ transaction costs. For instance, effective benefits in cross-border payments are related to real-time reporting and the update of positions, liquidity management, the complete traceability of transactions, and simplified reconciliation across accounts.
Transforming trade and markets
Blockchain technology is expected to bring a series of benefits to a number of industrial sectors, firms and businesses already experimenting with the technology, or which may soon see their sector or activities impacted by its existence. For instance, blockchain-based systems could facilitate interactions in global and distributed supply chains between untrusting actors, including producers, retailers, distributors, transporters, suppliers and consumers. Traceability and quality control covering how products are grown, stored, inspected and transported (from the farm to fork) could enhance accountability for all those involved. Proof of origin and compliance with environmental rules, organic labelling, fair trade and other characteristics could help consumers to make informed decisions and steer companies towards more sustainable business models.
In additive and subtractive manufacturing, a blockchain could also serve as a tamper- resistant record of digital file ownership, and help to prevent unauthorised use, theft and infringements. In the creative industries, it also has the potential to implement fairer ways of compensating owners and creators through pay-per-usage, micropayments or automatic payment distributions. In energy communities and peer-to-peer energy trading and pilots, smart contracts are automatically managing supply-and-demand flows towards the optimal use of available energy. Microgrid energy markets could be supported whereby individual customers trade locally produced renewable energy directly with others in their communities with (near) real-time pricing. It is also foreseen that ways of creating value and conducting transactions will be improved by faster, cheaper and more reliable mechanisms enabled by blockchain across industries and businesses.
Transforming government and the public sector
The benefits of blockchain technology for the public sector are the ability to provide tailored services for specific citizens, greater trust in governments and improved automation, transparency and auditability. Significant incremental benefits can be achieved in some areas by using blockchain technology for the provision of public services. This can range from more security (enhancement of data integrity, tamper-resistant, consistency between organisations), to efficiency gains (lower operational costs, reduced processing time, less paper and human-labour intensive processes).
For instance, a government-issued identity on a blockchain can generate time and cost savings for citizens, businesses and public administration in terms of setting up, managing and accessing identities for specific services. Allocation of public benefits, such as pensions, grants, subsidies or other funds, can benefit from a decentralised network supported by blockchain to manage transactions without relying on additional third parties or intermediaries. In education, blockchain can be used to register digital credentials, thereby enabling the immediate verification and validation of these credentials and, at the same time, reducing bureaucratic procedures for education institutions, employers, graduates and jobseekers.
Healthcare is one of the world’s largest industries, consuming between 10% and 20% of gross domestic product (GDP) of the most developed nations. In this complex system of interconnected entities and heavy regulatory boundaries, patient data is highly fragmented. Moreover, the cost of healthcare delivery is continuously rising due to inefficiencies in the system and dependence on intermediaries. With these drawbacks in mind, the need for a technology system that can remove the middlemen and cut costs while maintaining trust and transparency becomes obvious. Enter blockchain and Modex BCDB, which have the power to reshape healthcare.
Education is one of the building blocks which helps lay the foundation of modern human organization. It is an ongoing process that accompanies us since we are born, and as a second shadow, it follows us all throughout our lives. As infants, we absorb the information that surrounds us, which in turn helps us develop and become members of our community, enabling us to interact with each other. From early childhood, we pass a certain threshold where education takes a more formal and structured approach, where control is handed to well-defined institutions such as kindergarten, grade school, high school, university, whose sole purpose is to help individuals find their path and place in the ever-changing social, political and economic structure. Thanks to its characteristics, blockchain has the power to reshape education for a better tomorrow and you can read here how.
Transforming the automotive industry
Today’s vehicles are evolving from a mode of transport to also serve as a new kind of moving data center with on-board sensors and computers that capture information about the vehicle. The advantages blockchain can bring to the automotive ecosystem, both in facilitating collaboration among participants and enabling capabilities for new mobility business models, have gotten the attention of automotive executives. Though blockchain use is in its infancy in the automotive arena, a handful of companies are pioneering its adoption. To avoid being left behind, other automotive companies can take lessons from these Auto Pioneers and quickly assess their own blockchain opportunities. See how blockchain can take the auto industry into a higher gear.