As a distributed ledger technology that allows data to be stored on servers in a decentralized manner, blockchain has seen a massive rise in interest across the industries, most prominently, financial operations. Although prompted by a surge in Bitcoin in 2020, blockchain applications over the past 12 months have transcended powering cryptocurrencies to a range of other financial services and the early adopters stand to reap substantial benefits ahead of their competition.
According to a MarketWatch report, the blockchain financial market is projected to reach $10.36 billion by 2025. Considering the market size of $3.1 billion in 2019, this indicates a 34.9% CAGR (Compound Annual Growth Rate) for 2020 – 2025, in terms of revenue. This estimate stems from the increasing interest in blockchain applications by several actors in the finance sector. Some have projects in the works; others have already begun implementation. Here are 15 blockchain use case examples around the world organized under pertinent sections:
Remittance and Cross-Border Payments
MTO model companies like Moneygram and Western Union have long been the dominant entities in cross-border remittances. Banks were less keen to provide these services due to the inherent issues of establishing safe and secure partners to facilitate receipt of remitted funds. Nowadays, blockchain technology enables banks and other financial institutions to offer these services and at reduced rates.
- Participants: Visa, Coinbase, Fold
(Foster City, California)
One of the top card payment services in the world, Visa, announced its integration with the USDC stable coin in December of last year. With over 61 million merchant points across nearly 30 countries, the financial services behemoth wishes to safely promote the flow of digital coins to support new forms of e-commerce. Visa is working with Coinbase and Fold and has applied for 159 blockchain-related patents to achieve this. In addition to facilitating transactions, it’s also applying blockchain technology for ID verification using biometrics.
- Participants: Microsoft, Ernst & Young LLP
(Redmond, Washington)
Late last year, Microsoft announced it would be expanding its blockchain platform for gaming rights, which was established in collaboration with Ernst & Young LLP (EY). The multinational technology company, through this move, plans to include payment solutions for its Xbox gaming partners to track and manage payments and royalty contracts automatically. The company stated that it would be combining blockchain with artificial intelligence for smart contracts. Where traditional processing times could extend up to 45 days, being able to handle two million transactions per day, this new solution would significantly cut down the wait time.
- Participants: Coinbase, Bitcoin, Ethereum, Litecoin, etc.
(San Francisco, California)
The Coinbase card, which lets customers spend their digital tokens anywhere Visa is allowed, was rolled out in 29 European countries in 2020. It is presently being made available to customers in the US. The card will enable online banking transactions using cryptocurrencies. It will also allow users to convert their crypto assets to cash at the ATM. The cryptocurrency exchange company hopes that the Coinbase Card’s introduction will bolster ongoing efforts to create mainstream usage of crypto as a genuine utility.
- Participants: State Farm Insurance, USAA
(Bloomington, Illinois)
In 2018, State Farm insurance company and USAA had begun testing the feasibility of blockchain applications in auto insurance claim subrogation. Manual reconciliations of these insurance claims can take months and would usually see insurers sending up to 200 checks back and forth each day. However, with the launch of the Subrogation Net Settlement blockchain last year, there has been a drastic change in the number of checks exchanged – an 80% drop, to be precise.
Trade Finance
Logistics use cases are some of the most impressive applications of blockchain technology in the world today. The shipping industry has over 500,000 companies in the US alone. With such a crowded space, communication and transparency of processes have been blurred, resulting in the ineffective flow of information. With blockchain technology, however, digital ledger records reveal a single source of truth in the supply chain, thereby allowing greater trust between parties and increased transaction speed, which promotes cost savings in the long run.
- Participants: Maersk TradeLens, IBM Blockchain
(Copenhagen, Denmark)
A.P Moller-Maersk, the international Danish shipping company, launched TradeLens together with IBM in 2018 in the bid to digitalize supply chain information. In a news report by Maersk, the goal is facilitating a digital process where documents for import and export customs clearance move back and forth seamlessly between involved parties.
According to the results in 2020, the digital shipping platform processed more than double of the transactions for the previous year totaling 1 billion shipments, 30 million containers, and 14 million documents.
- Participants: CONA Services, Baseline
(Atlanta, Georgia)
One of the leading companies in Coca-Cola’s supply chain, Coke One North America (CONA), is applying the enterprise Ethereum Baseline Protocol to expand its services. CONA Services aims to optimize the supply chain through this platform. By moving orders and shipments between Coca-Cola bottlers to the blockchain, the company would promote transparency and minimize friction during transactions. This open ledger monitoring would hopefully include external suppliers of aluminum cans and other raw materials.
Digital Identity and Internet of Things (IoT)
The concept of IoT is plagued by cybersecurity concerns since having more things stored on the internet will only mean hackers have one more piece of data to steal from you. However, if digital identities are recorded on the blockchain, users are able to keep things smart. Simultaneously, the high levels of blockchain security eliminate the chances of data breaches by providing virtual incorruptibility.
- Participants: NBA, Dapper Labs
(New York, New York)
The NBA’s partnership with Dapper Labs to make memorabilia in the form of a collectible digital asset has proven to be a very successful venture, raising more than $230 million in gross sales. The Candian-based Dapper Labs, who was previously notable as the creator of the CryptoKitties game, launched NBA Top Shot together with America’s national basketball team. The goal was not only to sell packs of these ‘next level collectibles,’ but through blockchain, each piece of merchandise gets a unique and non-hackable certificate of authenticity.
Smart Contracts
This area has seen one of the biggest transformations in the way processes are carried out. Unlike regular contracts, smart contracts are enforced in real-time on the blockchain. The decentralized nature of this technology also eliminates the need for a middleman, and with one less party involved, transactions are speedier. In addition to time savings, it saves money since keeping track of paper trails is half the cost of any exchange. It also promotes greater accountability on the side of both parties.
- Participants: BHP Group, MineHub
(Melbourne, Australia)
Australian mining giant BHP Group began using blockchain processes to digitalize trade processes in a sector still abound with paper documentation.
In June 2020, through the MineHub platform, the company completed its first iron ore trade with China-based Baoshan Iron & Steel Co Ltd in a transaction worth $14 million dollars. The platform facilitated contract processing, exchange of digital documents and offered real-time cargo visibility.
- Participants: Ant Financial OpenChain
(Hangzhou, China)
The Ant Group launched the OpenChain application in 2020 to help SMEs tap into the group’s proprietary consortium of blockchain technologies to facilitate smart contracts and decentralized apps (DApps). The OpenChain platform provides dozens of available modules that can be used in areas such as digital invoices, supply chain finance, digital provenance, and more. The goal is to lower costs while promoting efficiency. Over 6,000 users have hopped on, currently facilitating 400 million transactions with 100,000 smart contracts.
- Participants: CME Group, Ethereum, Bitcoin
(Chicago, Illinois)
CME Group launched the Ether Futures contracts in February of this year as a follow-up to the addition of more options for its Bitcoin futures the month before. The Chicago-based company is the world’s leading marketplace for crypto-based derivatives, with over 6000 accounts currently trading on the exchange platform. The Ether futures contract will further create new opportunities for a broader range of clients willing to access cryptocurrencies.
- Participants: Paxos Settlement Service, Enterprise Ethereum
(Zurich, Switzerland)
The first live blockchain-based settlement of US equities, Paxos Settlement Service, was launched to facilitate stock trades between Credit Suisse and Nomura’s broker-dealer, Instinet. The Paxos platform allows the simultaneous exchange of cash between traders without the need for intermediaries. This cuts down the usual two-day transaction processing time to same-day settlement.
Smart Assets
Performing transactions, collecting and sharing, and sharing documents and records keeping within and outside an organization with multiple parties and multiple processes when done in real-time on a shared ledger is what we refer to as smart assets. The system records all necessary information about the asset, including who it is coming from, where it is going, its relationship with other assets in the chain, and more. Blockchain technology enables the recording of transactions with a precise date and time stamp, and in the financial sector, this creates a better experience for customers and other stakeholders.
- Participants: HSBC
(London, United Kingdom)
Following London-based HSBC bank’s announcement about migrating to the blockchain, the move which came in March 2020 saw the banking giant begin tracking $10 billion in assets through the decentralized ledger system. The Digital Vault platform replaces paper records with digitized ones. In line with the usual benefits achieved from blockchain technology, the platform cuts down the time to search, check and verify transactions. It also enables real-time processes for clients.
- Participants: Cargill, Quorum Blockchain, ConsenSys
(Wayzata, Minnesota)
Cargill launched the Covantis blockchain initiative using the Ethereum-based Quorum blockchain, to modernize global trade operations, connecting the agri-industry via an independent, trusted digital platform. In January 2020, it also partnered with ConsenSys, another Ethereum based blockchain company, to further develop its transformative platform.
Ultimately, it aims to bring about post-trade efficiency while saving costs for companies in the international supply chain.
- Participants: Depository Trust & Clearing Corporation, Corda, Axcore, Ethereum
(New York, New York)
Working to enhance trade processes, DTCC proposes Project Ion and Project Whitney as its latest efforts to explore further digitalization in the public and private markets. While the former aims to optimize the settlement process in public markets, the latter is geared towards creating further digitalization opportunities in the private markets. The clearing giant performs $2.2 quadrillion worth of transactions in annual trades, and these proposals seek to explore whether new technologies like the blockchain can strengthen post-trade processes. The endgame – to reduce risks and costs.
- Participants: CCB, BCTrade 2.0
(Beijing, China)
China Construction Bank (CCB) has launched BCTrade 2.0, the second version of its original blockchain platform that had already attained a $50 billion transaction volume.
This updated version aims to digitize trade and promote real-time monitoring of various financial activities between 54 domestic and overseas CCB branches. The scope of the BCTrade 2.0 also extends to 40 external organizations and state-owned and foreign banks. To date, it has facilitated loans for 5,800 users amounting to a whopping $134 billion.
- Participants: JP Morgan Chase
(New York, New York)
The latest news by the financial services conglomerate, JP Morgan, is the launch of a new unit of blockchain projects that could bring about the technology’s successful commercialization. The company’s digital currency, JPMCoin, was also recently used by a large technology client to send payments worldwide.
With up to 425 banks signed on to its Link blockchain platform to facilitate interbank transfers, JPM has long been a leading name in the cryptocurrency market, which has so far attracted billions of dollars in investments. However, these new developments are aimed at going past investments to achieve tangible results.