- Blockchain is entering the 3.0 era. Utilization for non-financial fields begins
- The smart contract, traceability. Various blockchain utilization cases
- The essence of blockchain is the guarantee of “trust”
(Posted on July 16, 2019)
After the Lehman shock in 2008, the blockchain was born with cryptocurrencies and was said to be the next invention after the Internet. The distributed ledger system, which cannot rewrite data, has attracted attention as an entity that will transform the traditional centralized society. However, although it was expected to be used in various fields, it was not put into practical use for a long time, and the image of “cryptocurrency = blockchain” was deep-rooted.
About 10 years after its birth, blockchain utilization in each industry has finally begun. I would like to deepen my understanding of blockchain, which will be visible in the field of business in the future.
As a sequel to the [preserved version] super-easy-to-understand basic knowledge of blockchain that was posted on Future Stride in the past, we will introduce domestic and overseas cases that assume the business utilization of blockchain.
The dawn of the blockchain 3.0 era
Blockchain has undergone various technological updates in the 10 years since it was born in 2008. Although there are differences in interpretation in the detailed definition, it is possible to use it from blockchain 1.0, which was generally a technology for cryptocurrencies, to 2.0, which can be used for fintech, and for other than the fintech area. It is said that the present is 3.0.
Technological innovation has made it possible to run applications (decentralized applications: DApps) on the blockchain, which has dramatically expanded the range of applications. The platform that will be the basis for companies to utilize blockchain in practice is finally being set up.
A platformer that supports the foundation of the blockchain
When you think of “business with blockchain”, you may imagine building a blockchain mechanism from scratch, but in reality, it is a case of developing based on the basic technology provided by the blockchain platformer as open source. Will increase. The blockchain platformer provides an environment in which applications can operate, ensuring processing speed, scalability, and availability.
Next, we will introduce a typical blockchain platformer.
A blockchain platform was devised by Vitalik Buterin at the age of 19 in 2013. It is an open-source project that enables the construction of decentralized applications and smart contract * applications, and various services such as remittance, payment, and ID authentication are born from Ethereum.
* Smart contract: A mechanism for automating contracts and transactions
A blockchain platform that started in 2014 and was released in March 2015. It features security with a multi-sig contract * that requires signatures from multiple accounts.
* Multisig contract: A contract mechanism that requires multiple signatures. Enables strong security.
An open-source project aimed at promoting blockchain technology, in which IT companies from around the world, such as IBM and Intel, participate. Unlike other cryptocurrency-based blockchain platforms, it exists solely for the social implementation of blockchain technology. Multiple blockchain platform development projects specializing in various issues are underway at the same time.
Using DLT (Distributed Ledger Technology), which is different from blockchain, we will provide a payment platform that enables instant international remittance. It has strengths in the fintech field, and financial institutions in Japan and overseas have started payment services using Ripple.
Blockchain business use case
Until now, blockchain use cases have been mainly overseas. Since the legal stance and market regarding blockchain are different between Japan and overseas, overseas examples may not always be applicable in Japan. However, in recent years, efforts using blockchain have become active in Japan as well.
The following are typical use cases for blockchain utilization.
Distribution and management of original currency
The history of blockchain began with cryptocurrencies. Blockchain will replace the trust in currencies that have been guaranteed by the government, and P2P payments (Peer to Peer, equal payments between the parties) will be possible on the network. Local governments and businesses can issue their currency to revitalize the community. In some cases, it is used as a unique currency in online games.
“Cryptocurrency from city bank, coin” Mitsubishi UFJ Financial Group
According to Asahi Shimbun Digital (external link to Asahi Shimbun Digital), Mitsubishi UFJ Financial Group has decided to aim for the commercialization of the digital currency “coin”, which was called MUFG coin in the latter half of 2019. It is expected that coins can be exchanged for deposits in bank accounts on a smartphone app, remittances between individuals will be instant and low cost, and it will be a means of member store payments and IoT payments.
In practical use, price fluctuations are a concern for cryptocurrencies, but the coin is said to be stablecoin *, which is fixed at 1 yen = 1 coin.
* Stablecoin: A currency with stable prices without price fluctuations (volatility).
“Working on local financial difficulties with ICO *” Nishiawakura Village
Due to the concentration of population in cities, many local governments are becoming depopulated and are in financial difficulty. Nishiawakura Village, Aida District, Okayama Prefecture, with a population of about 1,500, decided to issue “Nishiawakura Village Coin” and raise funds by ICO in June 2018 (external link to Nishiawakura Coin). Along with that, the Nishiawakura Village Token Economy Association was established. The association will collaborate with Nishiawakura Village to allocate the funds raised to projects related to the revitalization of the village. There is a direction of ICO regulation by the Financial Services Agency, but Nishiawakura Village plans to implement ICO according to the regulation policy.
* ICO: Abbreviation for Initial Coin Offering. Issuing your cryptocurrency tokens to raise funds.
Smart contract (automatic execution of the contract)
By programming the transaction details on the blockchain, it is possible to automatically conclude a contract without an intermediary. For example, it is difficult to tamper with the contract details, so you can buy and sell products without worrying about going through a retailer. Transaction records are stored online and can be viewed by anyone. The selling price can be lowered because the commission of the middleman is not required.
“Real estate digital platform utilizing blockchain technology” GA technologies
GA Technologies, a domestic real estate tech company, announced that it has started building a real estate digital platform that utilizes blockchain technology. It is said that it will implement smart contracts and digitize contracts, registrations, settlement of accounts, and asset transfers.
Reference: Started construction of a real estate digital platform utilizing blockchain technology (external link to PR TIMES)
Traceability (tracking of product information)
By utilizing the transaction history of the blockchain network, it is possible to perform tracking of product information at a high level. It is also possible to bring food safety by managing the production areas, raw materials, expiration dates, etc. of foods, where the problem of disguise has frequently occurred, with a blockchain that cannot be tampered with. Consumers can shop with peace of mind by being able to easily track product information by accessing it from the NFC tag or QR code attached to the product.
“Utilization of blockchain in the retail industry to ensure food safety” Wal-Mart
Wal-Mart (US) has partnered with IBM to build a traceable platform to access information throughout the supply chain as an initiative to ensure food safety and transparency. It was put into practical use in October 2018. The service provided by IBM aims to realize “food traceability” across the industry as “IBM FOOD TRUST”.
“Prove the authenticity of luxury brand products with blockchain” LVMH
LVMH (France) announced the construction of a blockchain platform “AURA” that utilizes Ethereum technology. It will be introduced from “Louis Vuitton” and “Dior” and will be gradually expanded to other brands. In the future, it intends to involve other brands as well. Consumers can trace the supply chain from the QR code attached to the product and can prove the authenticity of the product because the record remains even during secondary distribution.
“Achieving power traceability with blockchain” Everyone power
After the liberalization of electric power, the entry of private electric power retailers has become active. Minna Denryoku uses NEM’s blockchain to realize the traceability of electric power to provide electric power that can be seen by the producer, not just vegetables that can be seen by the producer. The user can select the power plant to be supplied from among the producers of clean energy with which it is affiliated.
Management of rights and assets
Until now, proof of possession of things or rights has been made by the fact that they have them or by the approval of governments, municipalities, and industry groups. In many industries, these controls were not sufficient, but blockchain has made it possible to manage rights and assets quickly and transparently. In the secondary distribution, new ownership can be established, such as a mechanism to return to the original owner or copyright holder.
“Infrastructure for distribution and evaluation of artworks utilizing blockchain” Startburn
StartBahn operates “startbahn.org”, a service for registering and selling artworks that can issue work certificates and history certificates by blockchain. Rights can be transferred outside the service and can be used for copyright management and proof of authenticity during secondary distribution. The company’s art blockchain network aims to collaborate with players in various art industries such as art-related services, galleries, museums, etc. to manage the works and history of artworks around the world.
Reference: Start Burn (external link to Start Burn)
“Information processing of copyrighted works by blockchain” Sony / Sony Music Entertainment / Sony Global Education
In today’s world, huge amounts of content are being uploaded online, but copyright is still managed by industry groups and individual authors. By utilizing the blockchain and proving the creator of the content, it enables quick and transparent copyright management on the online system. It will be introduced from educational content such as digital textbooks and will be gradually expanded to music, movies, VR, e-books, etc.
Reference: Developed a digital content rights information processing system utilizing the blockchain platform (external link to Sony)
Identity verification / identification
There are various ID authentications (identifications) from nationally managed My Numbers and family registers to Web service member information. By managing with the blockchain, a specific ID administrator becomes unnecessary, and the risk of personal information leakage can be avoided. On the contrary, by selecting information that can be disclosed and sharing them on the network, it is possible to perform various authentications with one ID.
“Provide ID to everyone” ID2020
It is said that there are 1.1 billion people in the world who do not have IDs. Accenture has developed a digital ID that utilizes blockchain and biometrics as part of the UN project “ID2020”, which aims to give those people legal IDs. The goal is to popularize secure and durable digital IDs by 2030.
Reference: ID2020 (external link to ID2020)
“Global digital ID information management/authentication system by telecommunications carriers” Softbank
Softbank and TBCASoft, a blockchain technology development company, have established a working group to promote ID information management and authentication by blockchain in the global blockchain consortium “Carrier Blockchain Study Group” of telecommunications carriers.
Based on the application framework platform “Cross-Carrier Identification System” built by TBCASoft, each carrier can manage and authenticate digital IDs. If this initiative becomes widespread, companies and users will be provided with digital ID authentication services through carriers around the world.
Reference: Softbank, TBCASoft, and CBSG launch a working group to promote ID information management and authentication by blockchain.
Why blockchain can change society
The essence of blockchain lies in the guarantee of “trust” by not being rewritten. Distributed ledger technology makes it impossible to fraud or tampers with, eliminating the need for an administrator to secure the trust that was essential to traditional business. The change in the industrial structure caused by this is the true nature of the social change brought about by blockchain.
The advent of blockchain may update “contracts”, “transactions”, “management”, “certification”, etc., and make the administrator unnecessary. Imagine a manager who guarantees the trust of all industries. You can imagine the impact of blockchain.
Power is born in a place where trust is gathered. It includes banks, governments, and international platformers GAFA (Google, Amazon, Facebook, Apple). The existence of blockchain may attribute the power of managers, whose power has been concentrated so far, to individuals, which is the ideal decentralized society of blockchain.
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