Wider Applications Of Blockchain Technology
Understanding blockchain technology is becoming more vital as the phenomenon grows out of its infancy.
Blockchain tech has already been implemented into multiple industries – 2018 could be the year it goes mainstream. The brilliance of this innovation is the way it allows for decentralization, whilst remaining invulnerable to tampering or fake transactions. But how will the technology impact various industries?
Firstly, blockchain technology is already expected to cause substantial disruption to the banking industry, as banks are increasingly seeking the use of blockchain technology in order to transform sizable areas of their business. From payments, settlements and compliance or identification, to the accessibility to a decentralized finance platform by multiple parties at one time, cost-effectiveness and security benefits are winning legions of fans within the banking sector.
Some of the key advantages and usage to blockchain technology within banking are payments, trade finance, and identity detection and syndicated loans systems. The blockchain simplifies the process by enabling the access of the same information to numerous parties, at the same time, removing the need for unnecessary paperwork. All of the above can be subjected to automatized systems and eliminate risk, human error and extended waiting time for the transactions to be completed. Most importantly of all, an unchangeable by anyone ledger of anonymized transactions is exactly what the banking sector craves and needs to show trust.
Blockchain technology also promises to help the energy industry radically transform its processes and markets. Even though it is one of the slower industries to adopt the technology, for those who have, one of the many capabilities on offer is the adoption of a peer-to-peer trading model, which changes the way in which energy is bought and sold.
The rise of renewable energy sources that connect back to a wider grid, has helped convert energy consumers into producers, therefore letting them sell excess power back to the grid and cutting out the middleman. In short, it connects those who want green energy to the producers who can supply. The other common use within the energy industry lies in the development of cryptocurrencies for monetary payments – something only a handful of companies have begun to trial.
There are a few areas within the retail sphere in which blockchain currency can add value. The first is with trust and transparency. With the rise of online shopping, it is harder for retailers to earn trust from their customers, as the human element of a company is essentially being removed. Blockchain technology will help to support the transparency desired by consumers. Similar to banking, all parties involved – supplier, manufacturer, retailer and consumer – can all trace a products journey and history, therefore reaffirming the trust between retailer and consumer.
A second and obvious use for the technology is of course with payments in general. Blockchain promises a shared ledger where all financial transactions are recorded. Blockchain also permits retailers to bypass the fees of intermediaries with a currency such as Ethereum – this offers all the benefits of traditional currency, but with fees and reconciliation built in automatically via smart contract.
Probably one of the key spaces where blockchain can make the most improvement is the real estate market. It is safe to say that the housing market has fallen desperately behind when compared to other important markets. Considered archaic, broken, and geared exclusively towards traditional financial institutions, the real estate markets around the globe are designed to lock first-time buyers into long-term arrangements with just one single lender. With the increasing cost of the initial deposit largely outgrowing household incomes for the majority of first-time buyers, it makes it virtually impossible to get on the property ladder.
One of the solutions to the problem could be a decentralized real estate space served by an innovative, blockchain based, creative financial solution where banks are not the only available source of financing toward a property. By addressing that market issue, individual investors can fill the void left by traditional financial institutions and inject more life into the market, giving more buyers a chance to get on the property ladder. In the world where equity becomes a currency and debt levels become a choice, buyers, owners and investors can all benefit buyers, owners and investors can all benefit from a world in which equity is a currency, and debt levels become a choice. By being able to release equity to raise money without losing ownership, free of debt, a whole new capital market can emerge.
The upcoming platform HiP was designed with all those benefits in mind; especially for first time buyers, who can use an inbuilt calculator to enter the price of the property they want to purchase, as well as the down payment and monthly payments they can afford. This ultimately means that first time buyers have access to financing options that were once unattainable to them, with HiP being only one solution out of multiple possibilities which are now being developed. This means that a first-time buyer may only need to get a deposit and loan for a fraction of the property – 3rd party investors have shares in the rest to be bought back later. With other innovative minds considering multiple ways to utilize this technology, it is only a matter of time until the array of problems within the real estate markets all over the globe can be solved with this elegant solution.
