In the era of digital transformation, blockchain is considered the “golden key”, opening up solutions to support individuals and businesses in many fields such as finance, insurance, health…
However, there are still many conflicting views about the applications of blockchain in everyday life. So, what other applications does blockchain technology have? What are its potential benefits and challenges?
Application of Blockchain
According to VnExpress, many countries around the world (including Vietnam) have recognized the development potential of blockchain and its applications across various sectors, with notable examples including finance, supply chain management, education, healthcare, and gaming
Blockchain Applications in the Financial System
Every day, the global financial system serves billions of users and trillions in cash flow (according to the Eurochambres 2023 global economic survey (here), the financial system accounts for about 70% of the world’s total GDP).
However, the involvement of multiple intermediaries like auditors and accountants has led this sector to face challenges that directly impact the user experience, including high costs, slow transaction processing times, and third-party access to users’ personal information.
Therefore, the potential for using blockchain in finance has increased, thanks to the benefits it offers compared to the traditional model.
Cost Savings in Payments
By applying blockchain technology, payment processing becomes faster and more cost-effective while ensuring security by eliminating intermediaries. In the 2008 research paper “Big-Crypto: Big Data, Blockchain and Cryptocurrency” (here), it was found that blockchain technology can reduce costs in the transaction process by 30%, equivalent to 8-12 billion USD per year compared to the centralized finance model.
International Money Transfers and Payments
Blockchain makes the process of transferring money between users more reliable, helping to mitigate legal issues such as AML (Anti-Money Laundering) and corruption.
Specifically, transactions conducted on the blockchain utilize two types of keys: private keys and public keys. While the public key acts as the wallet address and can be shared publicly to verify information such as assets, balances, and transactions, the private key must be kept secret to grant access and control over those assets. Therefore, blockchain ensures the transparency and public verifiability of transactions.
The application of blockchain also facilitates cross-border money transfers more easily and cost-effectively.
Example: Trang is Vietnamese and uses VND as her currency. She needs to send money to her family in Australia, who use AUD.
With the traditional model, Trang needs to go to a bank to exchange VND to AUD. Then, she would use the bank’s services to carry out an international money transfer. In this case, it would take Trang at least one day to complete the transaction, with expensive service fees.
If she uses blockchain technology, Trang can perform these actions without relying on a bank. Instead, she can use a blockchain wallet like Coin98 Wallet or MetaMask.
Lending Activities
Traditional lending activities face challenges such as cumbersome loan origination processes and weak loan information verification capabilities. Therefore, considering the application of blockchain in lending activities could potentially increase efficiency by making the borrowing and lending process simpler and faster.
In Vietnam, on September 11, 2020, BIDV bank announced the application of blockchain in its lending activities to facilitate the borrowing and lending process (source: Vietnamplus).
Blockchain in Supply Chain Management
Currently, the supply chain field is becoming increasingly complex with more participants, leading to obstacles such as high costs, long shipping times, and limitations in tracking information and origins.
This problem is even more pronounced in the case of transporting critical goods, such as pharmaceuticals and luxury goods, across borders.
Therefore, applying blockchain technology to the supply chain is a solution to overcome these obstacles. Specifically:
Easy information retrieval: Transactions and important information related to costs, production locations, suppliers, etc., are all stored on the blockchain. This allows consumers to fully verify and authenticate product data, limiting issues like poor quality or price manipulation.
Saving time and operating costs: Blockchain enables individuals and organizations to create and execute smart contracts easily and quickly (the traditional model relies on third parties). This minimizes commission fees for intermediaries and speeds up the shipping process
Blockchain technology applied in education
Blockchain Applications in Education
Following the COVID-19 pandemic, the education sector has witnessed significant changes, from traditional classrooms to online learning. Blockchain has been keeping pace with these developments by successfully implementing applications such as:
- Optimizing the teaching process: Applying smart contracts allows teachers and instructors to automate the delivery of materials like lectures and videos, while also being able to track students’ learning progress.
- Securing student records: All student data stored on the blockchain is based on distributed ledger technology, making it easily verifiable and tamper-proof.
- Awarding NFTs: Blockchain enables schools and institutions to issue certifications and diplomas in the form of NFTs.
Blockchain in the medical field
The healthcare industry faces numerous challenges, from complex care processes to slow record processing times. Among these, the biggest issues are the risk of data breaches and limitations in information verification processes.
Blockchain technology can enhance the efficiency of healthcare delivery (source) by minimizing wait times and reducing costs through recording all transactions in a decentralized ledger (according to the Ho Chi Minh City Department of Health).
Some potential applications of blockchain in healthcare include:
- Efficient medical record management: Medical information such as patient history, test results, and treatment processes can be recorded on the blockchain, optimizing information sharing between hospitals and patients.
- Information verification: Blockchain enhances the process of verifying patient information, drug components and origins, and healthcare worker credentials. Stored data becomes immutable and tamper-proof, mitigating issues like counterfeit medications, identity fraud, and unauthorized access to medical records.
Example:
With the traditional model:
Alice sees a doctor at facility A, so her medical records are stored at hospital A. If Alice then seeks treatment at hospital B, hospital B cannot independently access Alice’s records from the previous hospital. This can lead to Alice wasting time transferring records, or potentially inaccurate diagnoses from doctors at the two hospitals due to incomplete information.
When applying blockchain:
If Alice grants permission, doctors at any hospital can access her medical records. All access is recorded, ensuring security and transparency. At the same time, the information cannot be modified by any individual or organization and is permanently stored.
Applying Blockchain in Gaming
The gaming industry mostly relies on the traditional centralized network model with one server and multiple clients. Therefore, incidents such as network issues or server attacks can lead to the loss of player data, even though this is a rapidly growing industry (according to Vneconomy: Vietnam is among the top 10 countries globally in game downloads).
However, blockchain technology can address this issue through:
- Decentralized model: Eliminating intermediaries and allowing players to have full control over their data.
- Blockchain storage: Enabling users to easily and transparently track their transactions and assets.
Furthermore, with blockchain, users can also earn real-world profits by buying, selling, and trading in-game assets through the Play-to-Earn model.
Opportunities and challenges when applying Blockchain technology
Blockchain technology not only presents potential opportunities for various sectors globally but also faces significant challenges.
Opportunities with Blockchain Application
With its transparency and openness, blockchain creates opportunities to foster a seamless transaction environment where everyone can view and verify information.
Furthermore, blockchain helps reduce transaction processing time and costs, as participants can interact and transact directly and automatically with each other without third-party intervention.
Besides the sectors mentioned above, blockchain technology holds much potential for exploration and utilization in various industries, from insurance and entertainment to real estate.
Challenges in Applying Blockchain
Currently, blockchain still faces significant challenges, such as regulatory frameworks, privacy concerns, and scalability issues.
Regulatory Frameworks: As blockchain is a new and evolving technology, its legal status is not yet recognized in many countries. Moreover, many governments lack specific regulations to protect crypto market participants in case of hacking or asset theft.
Privacy Concerns: While blockchain offers transparency, it also raises privacy concerns for users, as all information is stored publicly and immutably.
Scalability Issues: Compared to traditional transaction platforms, the scalability of current blockchain technology remains quite limited. For instance, while Visa can process 24,000 transactions per second, BNB Chain reaches 2,000 transactions per second, and Ethereum only achieves 20 transactions per second.
Conclusion
Applying blockchain technology in everyday life is a potential solution to help businesses address existing problems. However, instead of rigid implementation, businesses should be flexible in the transition process to maximize the benefits of blockchain.
Read more Blockchain history: The formation and development process
