As part two of our three part series on blockchain technology, we will provide an overview of the many different applications of blockchain and how it will change a variety of industries. As discussed in our first article, blockchain technology moves far beyond its implementation in Bitcoin digital currency and has the potential to remove middlemen, reduce transaction costs, and make the analysis of data more efficient across a wide variety of industries and applications.
Entertainment and Intellectual Property
Blockchain technology has the potential to revolutionize the way artists get paid and intellectual property is enforced in the entertainment industry. The consumption of media, from television shows to video games and music, can be embedded with blockchain technology so content creators are paid, advertisers have accurate consumption information, and piracy is eliminated. Entertainment executives, along with several artists, such as Imogen Heap, which recently released the first song with blockchain technology built-in, imagine a blockchain system where digital rights are centrally maintained, where creative works can be stored, and consumption tracked. The building blocks for such a system already exists as more and more entertainment is consumed digitally, and artist societies such as ASCAP, SACEM, and PRS have recently begun blockchain initiatives to improve data accuracy for creative rightsholders.
Blockchain technology has the potential to further upend energy markets, as smaller, green energy projects, such as roof-mounted solar panels or small wind farms, aim to use blockchain sell energy to their neighbors without going through a middleman-power company. Companies such as Electron in the United Kingdom and Power Ledger in Australia are working to implement peer-to-peer energy trading markets, underpinned with blockchain technology, where individuals can buy and sell centricity within “microgrids,” or specific geographic regions. This development could be revolutionary as large, capital intensive electric utilities the world-over are already suffering from the democratization of energy generation through home solar installations. Allowing the efficient tracking of consumption, and efficient transfer of energy on a peer-to-peer level could completely change the way electricity is generated and consumed.
Retail and Inventory Tracking
Walmart and other large retailers are working to deploy blockchain to manage their international procurement inventory operations. Blockchain can be used to create a centralized digital ledger to track a product from the moment its manufactured overseas, to its shipping, warehousing, stocking on a store shelf, and ultimate sale. Such a system has the potential to reduce costs for cross-border transactions, and could eliminate the use of letters of credit and other trade financing instruments. Moreover, just-in-time manufacturing will only be made more efficient, as manufacturers will have access to troves of new data about the transfer of goods through supply channels.
Maintenance Schedules of Automobiles, Other Machinery
Blockchain technology may eventually be embedded in every automobile or other large piece of machinery that is ever manufactured to track maintenance schedules and performance. For example, proponents of the technology envision an era where automobile maintenance is tracked in a centralized ledger, and each automobile automatically updates the blockchain upon every oil change, part replacement, or error code that is generated. Automobile manufacturers will be able to track in real time the performance of their products, finance companies will be able to verify if their collateral is being appropriately maintained, and buyers of used automobiles will be able to know with 100% certainty the history of the vehicle they are buying.
Luxury Goods and Collectibles
As global counterfeiting runs rampant, luxury goods companies are beginning to explore using blockchain technology to reassure customers they are getting the real thing (while protecting companies’ valuable brand equity). Purveyors of luxury goods are establishing centralized ledgers to track the manufacture, sale and ownership of luxury goods. Companies are exploring different ways that blockchain could be embedded in items, such as a Gucci purse or a piece of fine art, that would allow someone to verify its authenticity. Such transparency could invigorate secondary markets for such goods, as buyer will be able to trust the authenticity of otherwise questionable goods they are purchasing.
Finance and Lending
As you can see, there are an endless number of ways blockchain can be implemented across a vast number of industries. Despite the potentially disruptive applications discussed above, the finance industry faces the biggest revolution as a result of the implementation of blockchain technology. As we will discuss more in depth in our part three of this series of articles, the financial industry, from borrowing money to raising capital, and any legal documentation relating to the same, will be irreversibly impacted by blockchain technology.
By Wesley King
Associate at Frandzel Robins Bloom & Csato, L.C.