Blockchain applications have gained surprising momentum in the financial services industry.
Major banks and financial institutions worldwide have invested in blockchain startups or formed group efforts to test the technology collaboratively. Yet the newsworthy events coming out of the financial industry can sometimes mask blockchain’s potential in other industries that may not be making splashy headlines.
By Sid Kalla
Change is slow, but blockchain technology is picking up steam in several other sectors of the economy far away from financial services – and some researchers are looking to explore applications beyond finance as well.
The Centre for Cryptocurrency Research and Engineering, a research effort established last fall at Imperial College London, was awarded a grant last February by the Engineering and Physical Sciences Research Council, a government entity that provides public funding for research.
Dubbed Cryptocurrency Effects in Digital Transformations, or CREDIT, the grant will support research into distributed ledger technologies in industries other than financial services.
Dr. Catherine Mulligan, the project’s chief investigator, believes in the disruptive potential of distributed ledger technologies. She has previously worked on initiatives research at the intersection of digital tech, connected devices and urban living areas.
Describing the project, Mulligan outlined the research goals, telling CoinDesk:
“We’re looking at how we can apply distributed ledgers or cryptocurrencies outside of financial services. So we’re looking specifically at the disruptive effects of distributed ledgers in a variety of industries like energy, insurance, healthcare.”
The research, expected to last until July 2017, hopes to establish a methodology for evaluating the impact of blockchains on a variety industries, from music production to the car leasing sector, looking at the question from the angles of both startups and existing market players.
In addition, the project’s investigators aim to craft policy proposals for lawmakers and government agencies.
Public vs private
The financial industry has shown a clear preference to build their applications on top of private, distributed ledgers as opposed to a public blockchain like bitcoin. This reduces regulatory concern, and allows closer monitoring of data, information and access privileges among the participants.
However, for other industries, that privacy-oriented direction isn’t such an obvious choice.
There are many uses of public blockchains when there is a lack of trust among participants, especially ones that involve an end consumer.
A private blockchain is only as trustworthy as the members who are privileged to update and validate information. In the absence of natural trust or trust from external sources, public blockchains may be more suitable.
Dr. Mulligan thinks there is still a place for public permissionless blockchains and they can be specially suited for industries outside of finance.
The idea isn’t new, but is finding renewed academic and industry interest. One startup, Chronicled, already raised $3.4 million and is exploring blockchain technology for use in collectible sneakers. Chronicled hasn’t yet settled on what blockchain to use, but is running tests on the bitcoin and Ethereum blockchains.
Internet of Things and blockchain
Companies like IBM have been on the forefront of combining the two major emerging trends of Internet of Things (IoT) and blockchain. IBM has already released a proof of concept for merging IoT with blockchain. Speaking about the shared benefits, Dr. Mulligan describes this as having a lot of potential in the future.
“I think both of these technologies will benefit from one another. I definitely see a lot of potential on the cross-over between IoT and distributed ledgers, including IoT used in industrial structures, as well,” she said.
As a concrete example, Mulligan points out the ability of such a system to form an early-warning system against tampering of IoT devices, which could potentially lead to harmful real-world effects.
Mulligan told CoinDesk:
“Blockchain technology can help protect critical infrastructure in urban environments. If you put your IoT devices into the urban infrastructure, you’re effectively opening up your structure to hacking. Blockchains can help with getting an early warning on any changes that may have been made on your system.”
It is too early to predict the exact impact of this technology on a variety of industries. However, academic activity in collaboration with industry players may point to where the potential effect of this technology may be felt first.