Blockchain technology is the backbone of cryptocurrency, but there are plenty of other uses for blockchain as well. Blockchain technology is being hailed as a way for businesses and other organizations to collaborate on a scale that’s unheard of. From faster delivery of goods and services, to better communication with business partners and customers, to better security, blockchain collaboration has the potential to change how industries currently operate.
How Does Blockchain Facilitate Collaboration?
Automation for Faster Communication
The use of smart contracts in blockchain technology allows automation to happen seamlessly. Basically, smart contracts execute by themselves according to the terms written directly into the smart contract’s code. This is a way to make sure that all parties in the smart contract carry out their obligations.
For example, say you’re delivering a product to a customer, but they decide not to pay for the product at the last minute. The smart contract will automatically execute and return the product to you. This means you don’t need to track the product manually, and you don’t need to hire a middleman to settle the dispute. This saves you time and money.
Smart contracts and blockchain technology have other use cases, too. A study called “Blockchain for Collaborative Businesses” looked at a case where an energy company could utilize blockchain technology to reach their customers faster and prevent energy disconnections.
A Blockchain Collaboration Case Study
This energy company would theoretically use automation to expedite the speed at which those in need received financial aid. When a customer fails to pay their utility bill for a certain number of months in a row, their blockchain platform automatically lets customers know that financial aid is available. All a customer needed to do was to accept or deny the aid.
In contrast, doing this manually requires someone to track customer accounts, dig through paperwork to pinpoint when exactly a customer was unable to pay, and it requires a staff member to send multiple warnings. Those warnings also need to be tracked, in order to ensure that a customer is receiving them.
Blockchain technology makes this entire process much faster. This increases customer satisfaction, too, since the process is more efficient and less prone to error. This makes it easier for the business, financial aid supplier, and customer to work together.
Multiple Businesses Can Help One Customer
Sometimes, multiple businesses will share a pool of customers. For example, utility companies will often share customers, even if they provide different types of utilities.
At present, a customer needs to contact each utility company separately if they want to get their services. This requires a customer to do their research on each utility company, schedule services manually, and track utility payments separately.
By using a blockchain platform, all this information can be securely stored in one place. This makes it easier for customers to keep track of their accounts, making the process more seamless. Companies can also partner up and track customer information as needed. This makes it easier for companies to provide services and aid when required.
These businesses can also keep track of services rendered by other companies on the same blockchain platform, making it easier to diagnose an issue that a customer may be having.
Increased Transparency and Security
When information is hidden, hard to track, or altered by malicious actors, it becomes difficult for businesses to collaborate. With blockchain technology, information becomes harder to fake. Once processed by the blockchain, the data is unchangeable. This makes it safer for businesses to trust the information they see in a blockchain.
Being able to trust this information eliminates the need for someone to manually verify and track the information in a blockchain. As an extra security net, almost anyone on the network can go through and explore each block if they want to do so. They’ll be able to access this data, and how it connects to the data on the other blocks in the chain.
Blockchain in Action
Blockchain allows companies to communicate faster with one another. It also allows businesses to share information in a way that is transparent and secure. It’s no wonder that multiple businesses are now taking advantage of this new technology. Here are just a few that are breaking new ground with blockchain technology.
De Beers, the Diamond Industry, and Social Justice
De Beers Group is a large corporation that has a global grip on the diamond industry. They have production and purchase agreements with major diamond-producing countries all around the world and own 70% of the industry as a result.
This also means that De Beers is an important player when it comes to setting ethical standards for the diamond industry. The diamond industry faces two major issues:
- Conflict diamonds: Conflict diamonds are rough diamonds sold for the purpose of financing illegal activities. These activities are usually carried out by rebel elements, hoping to undermine government bodies. Angola and Sierra Leone are just two of the countries that face this issue.
- Tracking: The diamond industry needs to find better ways to track diamonds in order to ensure their value.
In response to growing consumer demand for conflict-free diamonds, De Beers launched Tracr, a blockchain platform that they hope will one day track every diamond. Tracr will track diamonds from the moment they’re discovered in the mine, to the moment it reaches the hands of the customer.
In 2018, Tracr’s pilot program successfully tracked 200 diamonds through the entire supply chain. It does so by first scanning every diamond at the mine. Every time the diamond is cut or is passed on to the next part of the supply chain, the data is updated and entered into the platform.
Issues with Blockchain Collaboration Through Tracr
Of course, the glaring issue is that this process isn’t 100% fraud-proof. Malicious actors along the supply chain can purposely enter in incorrect information, or find other ways to muddle information.
However, blockchain makes this much more difficult. When data is entered into a new block in a blockchain, the block connects to all the other blocks before it. If someone tries to go in and tamper with one part of the block, that information is verified with all the other blocks on the chain. If the information doesn’t match up, the block won’t make it into the chain.
In effect, diamond information can only be faked if nearly everyone on the supply chain agrees to commit fraud. Everyone would also need to agree to fake information in a way that makes sense in the blockchain and will need to do so consistently.
This means that blockchain technology is allowing industry leaders like De Beers to hold the industry to a higher ethical standard. Blockchain enables different players in the diamond industry to collaborate and hold each other accountable. In this case, blockchain increases collaboration by also allowing other companies to build on the app, improving its capabilities further.
BMW: Working Towards a Transparent Supply Chain
BMW is a member of the Mobile Open Blockchain Initiative (MOBI), a consortium of automobile manufacturers. Their next step was to develop a blockchain initiative called PartChain. BMW plans to use blockchain technology to track materials, parts, and components across its entire supply chain.
Traditionally, the supply chain for automobiles was murky. There are many steps along the supply chain, and the stops along the supply chain can change at the drop of the hat. The availability of raw materials for making parts, sourcing parts from different factories, and demand for certain vehicles made it extremely difficult to track where the parts for vehicles came from.
As a result, the members of the supply chain tracked their own information. As you can imagine, tracing a part back to its place of origin was costly and time-consuming.
BMW hopes to change that with blockchain technology. In 2019, they started the pilot program for PartChain. At the time, PartChain only tracked front lights. BMW hoped to expand their tracking capabilities all the way down to their raw materials. They’ve since launched it with 10 of their suppliers, and hope to increase transparency through the entire supply chain.
This makes collaboration across the entire supply chain much more seamless. This is especially important in a supply chain that’s fluid and constantly changing. Blockchain will allow automobile companies like BMW to track all the moving parts in the supply chain, increasing transparency for both themselves and their consumers.
Citigroup and Goldman Sachs: Financial Blockchain Collaboration
In 2020, Citigroup and Goldman Sachs used blockchain technology to conduct an equity swap.
Equity swaps traditionally involve continually updating information on the equity swap. Variable interest rates, the market price at the end of the day, and other company actions can affect its value. Blockchain technology automatically updates and accounts for all this information.
Millions of dollars are at stake with equity swaps. As a result, Citigroup and Goldman Sachs hire people who reference and cross-reference every bit of information manually during every step of the equity swap process. Just one error or mismatch between the two banks can result in days of lost hours, and millions of lost dollars.
The use of blockchain technology reduces the chances of these errors or mismatches happening. On top of that, both parties in the swap have instant access to information regarding the swap. This makes the process faster, and ensures that both parties are using the exact same information, increasing consistency across the board.
Citigroup hopes to take this a step further in the future. By integrating regulation compliance directly into the network, it saves hours of work just on compliance paperwork alone. This also means that, if regulations need to be updated, the changes can also be directly integrated into the network. This cuts down on the amount of time training staff on new regulations and processes.
At least 13 other parties are hoping to use Citigroup’s new blockchain technology.
Dole Foods: More Information for Customers
Dole Foods is one of the world’s largest fruit and vegetable distributors. It plans to introduce blockchain technology into its supply chain by 2025.
They’re aiming to improve their supply chain in several ways. By tracing their food with blockchain technology, Dole wants to ensure food quality and safety. This is especially important as Dole encountered food safety issues in the past, and is looking to prevent issues in the future.
Blockchain technology allows Dole to minimize food safety issues. It will also allow them to reduce the amount of time spent on food safety investigations. This allows Dole to work more closely with their retailers, and give customers some peace of mind.
Customers gain other benefits, too. Dole eventually wants to use blockchain technology to allow customers the ability to see where their food is coming from by scanning a tag on the package. Blockchain technology can allow customers to ensure that their food is being produced in an ethical and sustainable way.
Working Together Through Blockchain
Blockchain technology facilitates better collaboration. It enables faster communication, the sharing of information, and increased security.
Industry giants like De Beers currently use blockchain technology to ensure compliance throughout their supply chain. BMW and Dole are also using blockchain collaboration to increase supply chain transparency. Financial institutions like Citigroup and Goldman Sachs are beginning to use blockchain technology to cut down on operating costs. They’ve further cut down on the number of hours needed to complete financial transactions as well.
While blockchain technology and cryptocurrency go hand-in-hand, it’s clear that businesses that aren’t ready to adopt cryptocurrency can still make use of the technology behind it. Blockchain technology may one day allow businesses to deliver their services to customers in a way that is seamless and convenient. This increases the standards of living worldwide.
The implications of blockchain technology and cryptocurrency can be hard to understand, especially since the concepts and technology are so new. At unBanked, we provide information on cryptocurrency and blockchain technology that is easy to understand, and will help you keep up with this emerging field.