Wide-Use of Blockchain Technology in Various Industries

Mar 30, 2018

Why did Google, Samsung, and Alibaba jump into blockchain business? Answer is simple.
They believe that blockchain technology can impact paradigm of their managements on top of changes that it will bring to relevant industries.
Many countries especially are pushing for blockchain-based technologies to introduce IoT (Internet of Things) to enhance competitive edge of their manufacturing industries.
IoT has emerged as an innovative platform that maximizes efficiency of operation and reduces cost by connecting every object, person, and data. Blockchain technology can become a medium that can implement IoT and its characteristic is its ability to store ledgers separately. Distributed ledger indicates distributed digital ledger that makes information public to every participant of a transaction rather than a current method that records and stores data into centralized ledgers. Cryptocurrency cannot be ignored to understand blockchain technology easily.
◊Blockchain: Synergy That Will Be Created When Reflected on Industries
Let’s take Bitcoin, which is still a popular trend, as an example.
Bitcoin is P2P (Peer to Peer)-based cryptocurrency that does not have a centralized control agency and is mentioned as a word related to blockchain.
In the past, it was difficult to introduce Bitcoin for electronic transactions due to double-spending problem. For example, let’s assume that a man purchased $94 (100,000 KRW) cloth online. He has only $94 in his account. To manipulate the transaction, he transfers $94 to a seller and immediately transfers $94 to a different account that is under his name afterwards. He targeted the fact that computer network could not figure out which transaction to record into a distributed ledger.
For some, a transaction between a seller and a buyer is recognized first while it is the opposite for others. Because there was no procedure for agreements between people in the past, it could not be decided on which transaction to recognize first officially. As a result, a seller is left with a situation when he or she does not receive payments even when he or she sends the cloth.
However, blockchain allows agreements on an order of transactions between people to take place. As a result, it can prevent double-spending problem. Principle of how blockchain technology is applied is simple. A buyer requests a seller about transferring $94. This transaction along with many other transactions are stored into a new block and is sent to network. However, participants start carrying out a verification process on the corresponding block. If the block is approved, it is combined with blockchain of a distributed ledger and completes wire transfer.
In case of Bitcoin, which is the most widely known example that is applied to blockchain, it is designed so that blocks are created and approved every 10 minutes. Transactions are considered to be done safely once 6 additional blocks are combined after transactions are approved. Possibility of modification becomes lower as more blocks are added after transactions. Possibility of double-spending falls below 0.1% after 6 blocks are combined to a block.
If blockchain is used for supply chain management, it can drastically improve transparency of money. It is possible to understand information on raw materials that make up manufacturers and their products if blockchain is used for industries. Also, data that occurs from entire processes such as production, distribution, and sales of products is provided to every participant from an initial producer to a final consumer.
As a result, producers can trace history of products from every point of a supply chain and understand about consumers’ tendencies on what they like to purchase. Because personal information that is shared through blockchain is remained anonymous, it is possible to establish personalized marketing for consumers even without having to worry about personal information being leaked.
This is the reason why large global businesses such as Google, Samsung, IBM, and Siemens jumped into blockchain business.
◊Competitions between Governments for Upper Hands in Blockchain Industry
Even governments are working with businesses to grab upper hands in blockchain business for public services. They are expecting that blockchain technology will bring huge changes to public services. Many countries started applying blockchain technology to various public services such as land, vehicle management, election management, and medical information. From their perspectives, they can secure transparency of their budgets and trigger effect of ‘open government’ image by sharing their information with their citizens.
British Government is looking to apply blockchain technology for various public services on top of regular administrative work. It started developing a system that manages records and public work such as collection of utility bills and fines, tax payment, civil administration, issue of passports, and breakdown of land registry. It is also going to manage medical service information such as records on medical treatment together.
Honduras Government is looking to introduce a system that will manage public records through blockchain technology. Honduras, which is a small island in South America with 8 million people, has a high crime rate due to poverty and corruption. It was placed on 104th place in 2016 based on global index of corruption. In Honduras, warlords, local powers, and even government officials steal lands from farmers by manipulating land registers or hack into government materials.
As a result, Honduras Government is looking to apply blockchain technology that is difficult to hack into. By changing its land register management from a simple computerized database method to a method based on blockchain, it is going to provide safe mortgage loans, contracts, and mineral rights.
Development of a relevant system is in charge by an American blockchain developer called Factom.
Estonia also started various experiments to apply blockchain technology to its public services since many years ago.
Estonian Government applied ‘KSI (Keyless Signature Infrastructure’, which was designed by Guardtime, to all of its national services.
Through KSI, Estonian citizens can check whether their personal information is entered correctly into database managed by Estonian Government. KSI also prevents anyone who has access to personal information from infiltrating into government network illegally. Estonian citizens can utilize digital services such as registration of e-commerce and electronic tax calculator.
Besides these countries, Russia, U.S., and Canada applied blockchain technology for prevention of ballot stuffing, postal service and record of medical information, and stock exchange respectively.
◊Businesses Focus on Grabbing Upper Hands in Blockchain Industry
Blockchain technology is now used privately and publicly and it is a technology that will arrive in near future. It is being used in entire societies such as manufacturing and public services on top of financial services.
This indicates that tsunami of changes based on blockchain technology has started as blockchain technology now affects even societies and daily lives of people.
Companies can now survive by developing their business capabilities by applying advanced blockchain technologies or they may fall behind otherwise.
Many businesses are creating new blockchain ecosystems not to lose upper hands in this industry. Many foreign businesses established consortiums to introduce and apply blockchain technology to their respective businesses. Global financial companies and IT Companies especially formed open consortiums and they are bringing in various startup companies to their consortiums. South Korean manufacturers such as Samsung and others are also participating in global consortiums and they are expanding scope of their businesses. However, their preparations are relatively weak compared to foreign businesses. At this point, there can be businesses that may monopolize blockchain industry depending on which of them dominate blockchain platforms. It seems that it will be difficult for businesses that fall behind to earn profit in the future.
South Korean Government needs to support formation of blockchain ecosystems and support and invest into public fields so that collaborations between businesses can take place autonomously. It needs to modify its systems especially so that there is minimal uncertainty for a business due to regulations. Simple deregulation is not a solution. It needs to approach blockchain through clear legal interpretations and preparation of detailed systems.
South Korean businesses also need to work on building alliances between them so that they can establish blockchain systems and exercise their influence on standardization process. Large corporations that are already participating in global consortiums must lead other small and medium companies. They can fall into a deep pit if they think that blockchain is like an IT technology that can be introduced whenever it is necessary.
Staff Reporter Gil, Jaeshik | osolgil@etnews.com

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