December 24, 2018
The holiday season is here and people around the world are celebrating… so how could blockchain make the holidays even better!? Here we will look at four of the key industries impacted by blockchain and see how the disruptions will improve the future of the holiday season in the ways we send and buy presents, transfer money around the world, and give to charities.
Oh, the tech out there is frightful,
But blockchain is so delightful,
And since it’s the future we know,
Let it grow, let it grow, let it grow!
Blockchain will make Santa’s job easy! Whether you are sending presents to loved ones abroad or you plan to do all of your holiday shipping online, a future where the supply line and logistics industries are powered by blockchain could dramatically benefit every aspect to sending and receiving holiday cheer.
The current basis of supply chain and logistics industries stems back one hundred years when industry and commerce were local and shipping was easy. With the rise of globalization, this outdated model has become highly impractical. Despite innovations to freight and the expansion of air shipments and maritime transport, there have been no significant changes in the way we process transactions and share data. This has caused complications that increase costs and shipping times while undermining transparency for customers and stakeholders.
The use of a decentralized ledger has many applications in the supply line and logistics industries as it can be used safely and securely for any type of transaction. Blockchain creates a new type of database that maintains records and authenticates data all without intermediaries. By using smart contracts based on a single ledger, companies are able to automate transactions, thus cutting time, costs, and the need for intermediaries. Products are assigned unique identifications that allow their entire histories and current progress to be traced as it is transported to the customer. Stakeholders validate this information in real time and everyone involved will know if a record has been altered or erased. On top of streamlining the shipping process, this creates a system of security and immutability.
Anyone involved in the process can track the item from its place of origin, identify, its place of storage, verify its authenticity, and check the item’s record. All of this information is instant and accessible to handlers, shippers, carriers, and Customs officials. Thus, shippers and carriers are held accountable through increased transparency. Cargo theft and human error are undermined because of stringent authentication standards and enhanced tracking methods. And, customers are held to the terms they agreed upon through smart contracts.
When blockchain is fully adopted, consumers should expect to pay significantly less for shipping than current standards with the added benefit of complete traceability and security.
Within the scope of our mission to empower Vietnam through our mega-project, Vietnam Blockchain Country, we have created Fruitchain. Fruitchain is IBL’s revolutionary blockchain-based traceability solution and pioneer in solving product transparency and immutability issues. Fruitchain provides real-time product information to parties in all steps of the supply chain process. For now, Fruitchain handles Vietnam-based agriculture but maybe you will soon be sending holiday cheer with IBL!
Besides the long list of monumental benefits coming from blockchain powering the supply line and logistics industries, retail and e-commerce would reap tremendous benefits that would spill over to holiday shoppers.
With blockchain powering the supply line and logistics industries, buyers can be assured of the accuracy and authenticity of the products they buy. The traceability benefit would not just let purchasers trace their products but also the ingredients and goods used to make that product. If a holiday shopper purchases a manufactured product promised to have an ethical source, in addition to tracing the product’s place of origin, the buyer could also trace the materials used in its creation. Blockchain allows for total transparency between retailers and customers which gives the retailer the ability to prove that products are responsibly sourced, ethical, and will add a new level of trust to the brand-customer relationship.
Similarly, there is always a tremendous concern about counterfeit items when purchasing luxury or specialty goods. The traceability advantage of blockchain lets buyers track the data tagged to the item to ensure the authenticity of the product.
High transaction costs constrain markets, and with growing demand in global retail, payments made outside a country, economic system, or jurisdiction deflate the demand for certain goods and cost consumers. By eliminating the need to rely on intermediaries to approve transactions between consumers, blockchain technology can speed up payments at lower rates than those charged by banks. In easing the cost of money transfers (more on that later), retailers can access global markets easier with higher demand.
Read more about The Future of E-commerce.
Do you have a family member abroad who’s got everything and is impossible to shop for? Perhaps you are like many of IBL’s international staff working thousands of miles from home and you want to send the gift of cash to friends and family? Maybe the holiday season has you down and you simply don’t have the time to shop for presents. Whatever the case is, blockchain will make money transfers simple!
Blockchain-based attempts to improve cross-border money transfers have drawn considerable attention. There is tremendous enthusiasm to apply blockchain to money transfers especially in the area of remittances, the earnings of migrants that flow through international borders to their families in their home countries.
Like with payments, by eliminating the need to rely on intermediaries to approve transactions between banks, blockchain technology can speed up transfers at lower rates than those charged by banks. Right now the focus is on virtual currencies. Virtual currencies are based on blockchain, meaning they are decentralized and not controlled by governments or banks. Anyone in the world is able to transfer without the use of banks. Furthermore, one has to truly trust that their funds are safe within a bank.
Virtual currencies were created to bypass central institutions. Every trade is public for the world to see while maintaining anonymity. Nobody owns the blockchain, and bitcoin’s software is open source, with a source code that’s publicly accessible for inspection, modification or enhancement. Virtual currencies exist outside of central authority thus it should be able to move around the world eliminating transaction costs and intermediaries. However, regulatory regimes and other challenges have prevented this from becoming the standard for money transfers.
Regarding remittances, blockchain technology can speed up and simplify the cross-border payments process which cuts out many of the traditional middlemen and making money remittance more affordable. Until now, the general global average costs of remittance were approximately 5%. However, blockchain could reduce transaction costs to less than 1%. The technology also provides guaranteed real-time transactions across borders, thus reducing the risk of loss due to currency fluctuations.
Banks and Fintech are currently considering applications of blockchain as the foundation for new cross-border payments infrastructure to solve inefficiencies and provide faster and more affordable services.
Banks have tremendous incentives to experiment with and implement blockchain technology in their current remittance systems. Transactions on foreign exchange markets alone total $4.8 trillion daily. According to the world World Bank, global remittances grew to $616 billion in 2018, up from $601 billion in 2016. Remittances to low- and middle- income countries grew to $466 billion in 2018, an increase of $25 billion from 2016. A reduction of costs in cross-border payments by just 5% will result in $16 billion in annual savings.
The holidays are the season for giving, but not just presents to loved ones, also to the community. Blockchain and virtual currencies present impactful opportunities to charities and for charitable giving itself. In enabling true transparency, blockchain can save large amounts of money through minimizing transaction costs and bad projects, reinstating trust that people have lost in charitable organizations, and maximizing the true potential of organizations with visibility. Basing charitable organization platforms on blockchain could also present tremendous benefits in the form of promoting efficiency in organizations and adherence to regulations based on smart contracts.
Transparency, traceability, and fighting corruption
Along with blockchain’s ability in facilitating donations by securely speeding up transactions by eliminating intermediaries, donors will be able to fully track their donations with full organization transparency.
Transparency is critical in creating trust by showing donors their money is going towards the stated goal and allowing them to see exactly what impact their money is making. A donor will no longer be left wondering what percentage of their donation actually goes towards their intended purpose. With blockchain, the donor has the ability to track his or her donation and see whether or not their donation is making the intended impact.
Along with letting donors see the effects of their donations, transparency will force accountability and fight corruption in charities. This applies to corruption in organizations and charities built on fraud by forcing organizations to be fully accountable to their donors who can track every step of their donations. Although this heightened level of accountability will have a negative impact of forcing charities to spend more time accounting, it will serve a significant blow to corrupt organizations and provide tremendous trust to organizations. In reviving trust, charities would likely see a spike in charitable giving.
Regulation and monitoring Monitoring
Charities operate like companies and entities in that they are required to follow a range of legalities in their formation and are composed of members or boards of trustees who adhere to the established bylaws of their organizations. All of this organization formation can be recorded on the blockchain.
Why would blockchain help? The process of registering new charitable organizations with governments could be efficiently streamlined while ensuring compliance with local regulatory frameworks and transparency. It would be much easier for people to establish charities with much less paperwork and denials of applications.
It would also be much easier for regulators to enforce rules. Currently, governments establish rules and can only act when, or if they learn of, people break those rules. If charities exist on the blockchain, those rules would be established on smart contracts which would govern the way the organization works, thus making it impossible for charities to break the rules in the first place. This would change our perception from government enforcement to enforcement by algorithms. Assuming this is done correctly, this would drastically undermine transaction costs and boost trust in organizations.
Infinity Blockchain Labs (IBL) is a visionary R&D company committed to advancing society with next-generation solutions. We are currently the blockchain ecosystem leader in Vietnam with a global reach. Our mission is to be the R&D engine that transforms future technology into practical applications for business and everyday life. Named one of the top ten blockchain technology solution providers in 2018 by APAC CIO Outlook, our 200+ employees at IBL aspire to empower Vietnam to become the global leader in blockchain research and development.
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