Skip to 0 minutes and 12 seconds This session aims to look at the application side of Blockchain for businesses. How can Blockchain technology help us to do business? What opportunities can Blockchain offer? How shall I think of Blockchain when looking for application areas? We – ESMT Berlin and Dena, the German Energy Agency, wondered whether Blockchain would play an important role in the energy sector and if yes, what kind of applications market participants are thinking of. We ran a study and asked German energy executives about these topics. Let us try to use the insight we gained to categorize application areas across industries.
Skip to 1 minute and 0 seconds In our study, respondents came up with 107 ideas for use cases. When analyzing them we could identify two types of applications. The first type, with fifty-five use cases, was related to processes.
Skip to 1 minute and 19 seconds Thus, the simple question we can ask ourselves is: Can Blockchain Technology help us to reduce process costs? Let me give you three examples of this type. Abra is providing remittance payments based on a Blockchain solution. Thus, when transferring money from say Europe to India, you do not have to pay fees to the bank sending the money, nor to the bank receiving the money. With a Blockchain solution, you totally bypass these costs. Abra advertises its services for 2% while conventional offers according to Abra charge 7%. In addition, the process is digital instead of paper-based and lasts one hour instead of one week. Abra also offers hedging to avoid currency risks.
Skip to 2 minutes and 13 seconds Banks, as competitors of Abra, do not want to leave such markets to new competitors. Many banks such as Santander, UBS, UniCredit have joined Ripple to being able to offer global financial settlement solutions based on Blockchain with the cryptocurrency Ripple. According to Ripple, process cost reductions range from 23% for treasury, 60% for reconciliation, to up to 81% for payment processing. A third example is Bankymoon, which offers via a Blockchain based app, Bitcoin based pre-payments of smart meters to e.g. kindergartens in South Africa.
Skip to 2 minutes and 59 seconds The second type of applications, with fifty-seven use cases, was related to networks.
Skip to 3 minutes and 6 seconds The question we can ask is: How can we use Blockchain technology to create networks/platforms for services?
Skip to 3 minutes and 17 seconds At ESMT Berlin we had a start up competition on Blockchain business models.
Skip to 3 minutes and 22 seconds The winner of the award was Arcade City asking the question: What if riders and drivers were free to connect peer-to-peer with no middleman? This business application puts pressure on Uber, which has a company valuation of about 70 bn USD, and - so to say - offers a redistribution of value generated to drivers and riders. Of course, the success of the endeavor depends on riders and drivers having enough incentive to join the network. Yet at least in principle, this kind of alternatives for information aggregators of the Internet already exists.
Skip to 4 minutes and 6 seconds In energy markets, the Energy Web Foundation from the Rocky Mountain Institute and Grid Singularity, aims to establish a platform for Blockchain-based energy services. When connecting generation assets and consumers of energy with smart gateways, you can create a platform where services can be booked like an app. One service might be due diligence where based on the transparency of Blockchain recorded data, one would save auditing costs. In addition, one could imagine an ICO to refinance generation assets allowing investors to access real time information on the utilization of assets. Other services might be P2P trading or balancing demand and supply. In these platforms, Blockchain technology offers the opportunity to own ones data and to release parts of it.
Skip to 5 minutes and 5 seconds Thus, new business models taking into account incentives for providing information can be developed. While platforms are easier to disseminate in a consortia allowing for a higher momentum, one can also think of these platforms as a means to reduce service costs for small customers of a single company.
Skip to 5 minutes and 29 seconds Beyond these two types, there is still an extra dimension to Blockchain applications. We can think of Blockchain as the means to unfold the potential of Industry 4.0. Blockchain, with its transparency and data traceability, can provide the platform to include artificial intelligence for smart contracts optimizing the value of physical assets. A drone could be independently taking the best orders, self-deciding when to go for repair and fly at the end of its life to a recycling place.
Skip to 6 minutes and 8 seconds The respective question we can ask is: How can we derive more value from assets by combining Blockchain, Artificial Intelligence via the usage of big data?
Skip to 6 minutes and 22 seconds Which sectors will be influenced most by Blockchain? Sectors that can benefit the most from the above mentioned aspects. Reducing process costs is becoming easier with the usage of common databases, and the avoidance of redundant administrative tasks across the company, the industry respectively.
Skip to 6 minutes and 45 seconds Platforms provide more value the more entities are more connected and the more customer focused applications are. The potential of the combination of Industry 4.0, Blockchain, Artificial intelligence with big data especially, can help to reduce risks and tailor e.g. insurance or maintenance contracts.
Skip to 7 minutes and 11 seconds When discussing the speed of dissemination of Blockchain applications, three major hurdles enter the picture. First, the scalability and security of solutions that can be assumed to be solved in the near future, as many players are working on this. Second, and more importantly, the adaptability of players to test and scale Blockchain solutions, as this may offset current employees, products and services.
Skip to 7 minutes and 42 seconds Third, the quality standards of a society. As public notaries and banking services function well in developed countries, the lack or low quality of such services in developing countries increase the willingness to test and build Blockchain applications. In the future Blockchain applications will gain prominence, and it will be important for the whole management board – not only finance and IT functions - to understand their potential benefit.
How does a business benefit from blockchain technology?
Blockchain technology brings a wide range of value propositions for businesses.
Watch this video to discover which sectors will be influenced the most by blockchain technology, and why this technology should not be ignored by any sector.
A lesson from Christoph Burger, Senior Lecturer at ESMT
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