Short on time? Read the key takeaways:
- Blockchain technology could help disrupt industries that traditionally rely on manual, analog processes, such as supply chain and identity management.
- Blockchain is a distributed database that, at its core, is shared among all the nodes and entities that are part of that network.
- Blockchain could help organizations boost visibility into their supply chains, which could become even more regulated as compliance requirements grow.
- Decentralized identity could put users in control of their own identity, including reducing their level of risk when the next mega-breach hits, releasing businesses from the burden of storing personal information and, as a result, improving compliance with privacy regulations.
While most of the world is falling head over heels in love with all things digital, some are holding out. Take organizations predominantly reliant on manual processes. Blockchain could reverse that reticence.
The beauty of blockchain is that it collects information together in groups — known as blocks — that hold sets of information. Because of this, it is extremely useful for applications that require decentralization, transparency, immutability and automation. For example, everything from supply chain systems, identity management, and financial transactions to immigration documentation are all ripe for disruption with blockchain.
Let’s explore two use cases to demonstrate the impact of blockchain technology and how it could revolutionize traditionally manual industries and processes.
Granting visibility into the supply chain
Before diving in, let’s take a closer look at the technology. Blockchain is like a distributed database at its core that is shared among all the nodes and entities that are part of that network. One key difference between a typical database and a blockchain is that the data is structured into groups that are interconnected by utilizing cryptography. It guarantees the fidelity and security of a data record and generates trust without the need for a trusted third party.
Supply chain management is one process that would benefit from blockchain but is not mainstream. Because a supply chain network typically consists of more than one entity, there is some inherent complexity in implementing blockchain to streamline processes. Each entity has its way of managing the data that moves through the supply chain, but they still must work together.
A blockchain supply chain can help participants record price, date, location, quality, certification and other relevant information to manage the supply chain more effectively. The availability of this information within the blockchain can increase material traceability, lower losses from the counterfeit and gray markets — an unofficial market for financial securities — and improve visibility and compliance over outsourced contract manufacturing.
Blockchain could help organizations boost visibility into their supply chains, which could become a more regulated requirement in the coming years. For example, in January 2023, the German Supply Chain Due Diligence Act is set to go into effect, requiring organizations to prove their supply chain confirms a set of defined environmental and social norms, including the prohibition of child labor and illegal logging.
Organizations will need to be able to see their entire supply chain from end-to-end to ensure they’re complying with this regulation. Blockchain can grant that visibility, and as similar legislation is expected to be adopted in other parts of Europe and worldwide, this potential blockchain use case could increase.
Bolstering identity management security
Another application that would benefit from blockchain is identity management. These systems need to be secure and reliable while addressing challenges including the evolving privacy and regulatory landscape, threats of identity theft, and limited visibility and control over the usage of personally identifiable information (PII) data and verifying the identity of the individual transacting an entity.
Decentralized identity management enabled by blockchain could put users in control of their own identity. It reduces their level of risk in the event of a data breach, releases businesses from the burden of storing personal information and, as a result, improves compliance with privacy regulations. In addition, having personal data owned by the individual reduces the burden and cost of managing this kind of data for organizations.
How blockchain could increase efficiency in the immigration processes
Let’s dive into an example. There is an opportunity to streamline the end-to-end immigration process using blockchain technology. For example, digitizing passports, visas and immigration documents could help streamline and simplify the issuing, renewing, revoking, verification and validation processes.
Using a solution based on a distributed ledger for storing and retrieving information can help countries prevent travelers with fake passports and unauthorized visas from entering their sovereign states. In addition, a blockchain-based distributed ledger implementation and repetitive data verification process can help solve issues found in paper-based and humanly subjective authentication processes, making the immigration process more efficient and secure.
With blockchain, officials validate submitted credentials via the issuing authority. So, for example, if a traveler is applying for a student visa, immigration officials can verify submitted documents with the issuing authority – in this case, the traveler’s school. Then, when that student travels, they can share those credentials with the passport officer, who will validate that person’s identity using fact-checked credentials from the issuing authority.
As a result, blockchain could make the immigration process more efficient while reducing fraud. In addition, governments can architect the distributed ledger to operate a single source of truth for travel-related documents, providing officials with accurate, validated information about those attempting to enter their countries.
Testing before revolutionizing
Digitizing traditionally manual processes has its benefits, ranging from increased efficiency, streamlined operations to a potential boost in revenue. As evidenced by these two use cases, industries that have been reticent to adopt this technology are starting to dip their toes into blockchain and see how it can help revolutionize those traditionally manual industries and processes.