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ICO research:Five industries blockchain is surprisingly revolutionizing

 

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Blockchain technology! You’ve probably come across this buzzword in the news, often related to the infamous Bitcoin or an altcoin like Ethereum. But lately, blockchain has been associated with a whole host of news pieces with the latest trend being “blockchain is going to revolutionize the ….. sector”, and most likely whatever industry sector you name in that blank has figured out some application for the technology.

During its inception, blockchain was meant to facilitate the creation of a new financial ecosystem that enables direct peer-to-peer transactions without the need for financial intermediaries like banks. Taking into consideration the success of cryptocurrencies, it’s safe to say the technology has to a certain degree achieved its initial goal but it has also permeated into other industry sectors which is not directly related to the financial ecosystem.

Sixty-two! That’s the number of industry sectors aiming to employ blockchain technology to mitigate its problems and this number is only likely to increase in the future (source). In this article, I’ll explain the various applications of blockchain in industry sectors that are outside the financial ecosystem, while also mentioning the leading startups in each sector in terms of funds raised.

But before we dive into the applications of blockchain technology, it’s important to understand blockchain technology and its characteristics.

 

Understanding blockchain

 

Blockchain is a decentralized and distributed digital ledger of economic transactions that are secured using cryptographic techniques. Blockchain is called so because of the way information is stored. Digital information is stored as ‘blocks’ of encrypted data on a public database or the ‘chain’ but what does the Jargon terms used here mean?

Decentralized- A blockchain network is not governed by a single authority or entity, instead each computer or node on a blockchain network holds the power.

Distributed- It is distributed because of how tasks are completed on a network. Tasks are completed by a network of computers or nodes as opposed to the traditional method of a centralized system.

Cryptography- Techniques that enable secure communications in the presence of a third party are simply known as cryptographic techniques. Similar to how WhatsApp enables secure end-to-end communication on its platform. 

The benefits that blockchain brings to the table can be summed up by understanding these three jargon terms. It’s important to note that, it’s very difficult to change data stored on a blockchain network owing to these virtues explained earlier. A near perfect analogy to explain how blockchain works is by imagining it to be a digital spreadsheet that is copied thousands of times across a network of nodes. And because these nodes are programmed to be constantly communicating with each other, data manipulation is difficult. Any changes in the data is easily picked up by the other nodes that possess the original data, hence cross-verification becomes easy. On top of this, data stored on a blockchain network is significantly more secure because of its decentralized nature and the cryptographic techniques employed.

Blockchain brings to the table the benefits of increased transparency, enhanced security, improved traceability and efficiency while also helping to bring down accounting and overhead costs. These benefits could potentially impact almost every industry sector imaginable but let’s look at some surprise sectors like Oil and gas, Artificial Intelligence, Healthcare, Gaming and Real estate. These sectors are unlikely beneficiaries of blockchain technology and hence demand special attention.

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In Terms of funds raised the Gaming sector is leading having attracted a whopping $589 million, closely followed by the Energy industry or Oil and Gas industry. Niche sectors such as Artificial Intelligence have also attracted $437 million in funds, surprising considering the fact that AI hasn’t become fully fledged enough to make an impact yet.

 

# 1 Oil and gas industry

 

Blockchain technology could help the Oil and Gas industry increase profits by cutting down on overhead costs, on top of this, the technology could also increase transparency and reduce fraudulent activity. So much is the potential that industry giants like ExxonMobil, Chevron among others have agreed to form a consortium that aims to explore the potential use-cases for the technology.

The Oil and Gas industry is faced with many back-office challenges, here are some of the major ones-

  • For industry behemoths like ExxonMobil making sure all the documentation is in proper order while making an energy transaction is a time-consuming process that is susceptible to human error. Documentation alone is costing companies millions.

  • As these companies operate on a global scale, their supply chain network is quite complex and involves various parties such as shippers, suppliers among others.

  • Again due to the global scale of the operations of these companies, it is often required to make cross-border payments, which is cumbersome and unreliable.

Let’s check out the possible use cases of blockchain in the OIl and Gas industry sector-

 

  • Blockchain technology embeds trust into the very essence of economic transactions and in the Oil and Gas industry, it would be beneficial to use a private distributed network of computers to keep track of the economic transactions. A private blockchain network will allow only invited parties to access the data stored on the network, which is different from a public blockchain network.

  • Energy transactions can be digitized- economic transactions between parties for example of crude oil can be digitized, which ensures enhanced security and transparency between parties while also increasing efficiency.

  • Improved trust among parties- Blockchain could help securely store important information such as track record of employee and contractor certifications such as H2S training.

  • Enhanced compliance- The Oil and gas industry is among the most heavily regulated ones in the world, often having to ensure compliance with various protocols from environmental to taxes.

  • Improved land record management- For Oil corporations properly managing land sales records is incredibly important as they are investments worth billions of dollars. Traditionally these records are often maintained manually and are often vulnerable to fraudulent activity. Transferring these records to a blockchain network creates an irrefutable record of land ownership, transfer and the value. In countries such as Georgia and Ghana, where fraudulent activity in land deals are at high levels, blockchain technology is being explored as a viable alternative.

#2: Artificial Intelligence 

 

Artificial Intelligence is a buzzword that is on par with blockchain in two parameters. One- popularity- both terms are used a lot in media channels without fully comprehending the concept. Two- in terms of potential. The reason these two terms are thrown around a lot is because of its vast potential for creating an impact on the world. 

What is fueling the rise of artificial intelligence is the growing need to analyse vast amounts of data and generate insights that could potentially help bring in healthier profits. The Terabytes of disorganized data available is far too chaotic for a human mind to understand which is where AI steps in. 

Blockchain-AI startups have witnessed an unprecedented increase in numbers over the past few years, collectively being able to raise a whopping $700 billion. 

As Artificial Intelligence requires an inordinate amount of data to train itself to become smart enough to analyse fresh data and pull market insights, the challenge becomes how to store this data? You’re probably familiar with the dozens of data scandals and hacks that occur, what is to stop a potential hacker from accessing this data.

This is where blockchain technology steps in, as it can securely store this data on a decentralized network which makes it incredibly difficult for hackers to manipulate the data. The cryptographic techniques employed also ensures that the data is secure. The same can’t be said about the centralized way of data storage which is often at risk of cyber attacks. For example in November of 2018, the Marriot hotel group revealed that the personal data of as much as 500 million of its guests were stolen by hackers.

Interestingly though. Similar to how blockchain technology can help artificial intelligent systems which data storage, AI systems can help us humans better manage blockchain networks. For example, currently sending a Bitcoin to another peer on the same network takes upwards of several days. This is largely because of an unprecedented increase in the number of Bitcoin transactions. AI systems can help cut down on the transaction time by reducing the computational power needed to confirm these transactions. Currently, hashing algorithms that are used to confirm transactions on a blockchain network often employ a ‘brute force’ approach to validate transactions which leads to the increase in delay. An AI system that is trained with the right data could validate transactions at a much faster pace by developing an intuition for solving these algorithms. AI systems get better each time it solves an algorithm.

 

#3: Healthcare

 

Technology behemoths like IBM partnering with healthcare industry giants like Aetna among others to form the consortium Health Utility Network. The goal of Health Utility Network is to enable healthcare companies to build and deploy solutions that could fuel a new era of digital transformation in the space.

Despite the incredible modernization phase the healthcare industry has gone through by adopting advanced robotics and biomedical engineering. The industry has been slow towards the digitization of their data, which is inadvertently costing the industry millions. The industry is also lacking interoperability transparency among various players which is leading to highly inefficient operating procedures which is estimated to cost as much as 50 cents on the dollar. The industry can tackle this, it could seriously boost the profitability of healthcare organizations.

Blockchain could help mitigate these issues and is this is exactly what companies like IBM are trying to do. Although IBM is not the only one to realize this potential, several startups have popped up that aim to leverage blockchain technology and have managed to raise a staggering $246 million to date. Let’s breakdown of the top players in the space to get a clearer picture-

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Shivvom.io and solve.care are two startups that aim to leverage blockchain technology to mitigate the problems in the healthcare industry. These two startups alone have managed to attract as much as 27% of the total funds invested in the niche space. 

Now what are the use cases of blockchain technology in healthcare?

  • Patient data management is an obvious use case for the technology where the entire medical record of the patient can be digitized and stored on a private blockchain. Which is much more secure than traditional centralized methods due to the decentralized nature of blockchain and also because of the cryptographic techniques being employed.

  • Clinical trials are often the most critical step towards assessing the effectiveness of a medical product but because of this same reason a lot of fraudulent actors are prevalent in the space who aim to sabotage the trials for the benefit of others. On top of this, clinical trials often involve a vast amount of data accumulated over several years to properly gauge the tolerance. The long time period and vast amounts of data means that there is a high risk of human error to take place.

  • Drawing insights from patient data is another application where blockchain technology can be used. Machine learning algorithms can be used draw insight from the vast amount of patient data available but the challenge is the safe storage of this data. Blockchain networks can be used to store data as it’s incredibly difficult for hackers to steal or manipulate data on it.

#4: Gaming

 

The gaming sector is expected to grow from a whopping $108 billion in 2017 to a staggering $128 billion by 2020. With higher levels of internet penetration and gaming hardware becoming consistently cheaper these numbers are only likely to increase in the future.

The gaming space is sprawling right now with communities exchanging digital assets being traded online using digital currencies. Most games also have in-game purchases and rare items that can be bought and attributed to the player. This has led to gamers being one of the first adopters of cryptocurrencies as they are already familiar with the concept of an in-game virtual currency. So what are the benefits that blockchain can offer the gaming industry?

  • Blockchain networks enable peer-to-peer transactions which can enable decentralized trade of digital assets while at the same time enabling a more secure way of doing so.

  • But perhaps the most important development is the implementation is non-fungible assets. These assets can represent anything from costumes to virtual cards, the authenticity of such as asset would be verified using smart contracts.

  • In the gaming industry, a common problem plaguing it is the inability to prove the origin of certain virtual items which often leads to fraud. Smart contracts can enable users to receive authentic items since they are attached to the blockchain. As these virtual assets are quite literally digital information, the data stored on a blockchain would increase traceability and eliminate the risk of data manipulation.

  • An apparent benefit of blockchain would be in making in-game payments would allow users to make direct transactions over a peer-to-peer network. Game developers can also create in-game cryptocurrencies that gamers can use and if this crypto token is traded on an exchange it can drive up the price of their virtual assets over time.

#5: Real Estate

 

Blockchain could enable the direct transfer of assets between two parties without the need for a trusted intermediary which is critical to mitigating some of the problems being faced by the real estate industry. Currently, the real estate market is overcrowded with middlemen and trusted intermediaries that take a share of the profits, which makes real estate transactions more expensive. On top of this, the legal work associated with buying, selling or even transferring real estate property is so complex and cumbersome that often brokers take advantage of it for personal profits. 

Real estate is also a traditionally low liquidity asset with the liquidity risk being high. But what is liquidity? It is the loss the seller would have to endure to liquify their asset. Blockchain could also potentially revolutionize rental property payments by increasing cost-efficiency and enabling better decision making in leasing transactions. By eliminating the need for a trusted intermediary and by facilitating a platform for direct transactions between buyer and seller blockchain is revamp real estate.

The increasing popularity of security tokens could also be greatly influential in the revamping real estate sector. The number of STOs in Q4 2018, observed a 185% increase when compared to Q1 2018. Security tokens are digital tokens that represent real-world assets like real estate and this could mean real estate assets could be tokenized and sold digitally. Smart contracts can be programmed to take of all the paperwork associated with the transactions which eliminate the need for a trusted intermediary. 

A good example of this would be that of New York City Real Estate Coin (NYCREC), which is a tokenized property fund. The company aims to provide a diverse portfolio of New York city’s real estate assets by allowing virtually anyone to invest in property. This low-barrier of entry is sure to revitalize the real estate sector as investors from all over the globe can now buy property in New York without much hassle.