Despite the recent ups and downs in the cryptocurrency trading markets, Bitcoin’s potential continues to be widely discussed around the world. The oldest cryptocurrency has limited functionality compared to the newest DeFi projects, so it is mostly available as a means of payment. Naturally, lots of businesses strive to achieve borderless instant transactions with minimal fees in a peer-to-peer network without intermediaries or central authority. Is that achievable in the near future? Let’s discuss the most interesting use cases which have to do with Bitcoin adoption and blockchain in general.
Bitcoin & blockchain in business - use cases
Decentralized payment networks are a reasonable solution for the globalized financial system in which we are living now. Most clearing and settlement technologies that banks have been using since the ’90s are outdated and can’t process the load of transactions. What’s more, financial institutions need not only new mechanisms for their clientele but also new mechanisms for their interbank communication to make it instant, fault-tolerant, scalable, interoperable, and cost-effective.
Now let’s get deeper into particular business use cases.
Bitcoin’s distributed database inspired the American financial services’ giant The Depository Trust & Clearing Corporation (DTCC) to quietly implement blockchain into its day-to-day operations. DTCC stores 50,000 accounts with credit derivatives worth nearly $10 trillion, using a digital ledger AxCore. That’s heavy evidence in favor of blockchain in business, perhaps even heavier than Elon Musk’s and Michael Saylor’s efforts.
This company is famous for using blockchain in their supply chain tracking to keep records on products up to date and to keep the goods fresh anytime. Surprisingly, Walmart also registered 50 blockchain patents. How and when are they going to use it? Time shows.
The life insurance company uses blockchain for automated instant payments to pregnant women diagnosed with gestational diabetes.
The news about the first BNP Paribas payments gone live on blockchain appears back in December 2016. The international banking group also collaborates with IBM Cloud to migrate mission-critical applications to the public cloud, introduces an investment platform for the film industry on a blockchain, and explores an opportunity for creating an interbank digital currency.
The search legend invests heavily in blockchain. Namely, they were one of the investors of Veem, a global payments platform that uses Bitcoin as an intermediary holding. Also, Google made public blockchains easily searchable by creating their own AI-powered blockchain database BigQuery. They even offer a set of tools to analyze on-chain data in real-time - it’s like Etherscan but for all blockchains in one place.
Bitcoin for payments - hands-on and off
Hands-on Bitcoin payments are when a company processes some BTC through their own accounts. Whereas handling hands-off payments is when a company uses a third-party payment provider. If doing it hands-off, a larger amount of businesses might implement Bitcoin payments without the costly and long process of obtaining all the necessary licenses and infrastructure. Today, many companies with MSB registration like CEX.IO offer to buy Cardano and other crypto payments processing.
Blockchain for information
Another way for businesses to benefit from Bitcoin and blockchain technology is to maintain distributed ledgers for a variety of purposes. This might be a necessary measure rather than just voluntary technological progress. In our current conditions of the digital economy, businesses often face sudden challenges that they need to address and resolve as quickly as possible.
For example, according to new FATF Recommendations updated in 2019, all VASP (companies that provide virtual asset services) must share the users’ identity data with each other. Technologically speaking, blockchain seems to be the only viable solution that is relatively easy and fast to implement for numerous companies worldwide. What’s more, all transactions of VASP must be accompanied by identity data. Blockchains like ICP offer infinitely scalable, interoperable, and privacy-preserving ledgers for operations like these.
Another example might be the concern of online advertisers. Google announced in January 2020 that they are going to disable all third-party cookies in their browser Google Chrome. In this event, advertisers won’t have the targeting mechanisms that they have right now. Meanwhile, Juniper Research shows that advertising losses will reach $100 billion by 2023 when this new policy is fully implemented. One of the ways to make both advertisers and users happy is to use blockchain to provide transparent and respecting privacy solutions that will also eliminate the harm of automated traffic and will pay only for real human interactions.
If you read the most popular news headings, decentralized finance is promoted as a revolution and disruption to the old financial system. Yet, there is a widespread misconception that software as such (blockchain network, for instance) doesn’t need licensing. As a result, prospective users are concerned that no one is held responsible for billions of dollars lost on the blockchain and no one controls it or aims to tackle the misuse. New blockchains seem to appear almost every day and anyone can use them if they’ve got some crypto in their wallet.
That’s why implementing Bitcoin for an enterprise also comes with many risk factors. Because of their distributed nature, blockchains are hard to control. Meanwhile, the business remains accountable for the funds of its customers. So how can they implement a new payment opportunity if they don’t know how to manage it right?
Turns out, the regulation exists - there is an official FinCEN statement about dApps released in May 2019. Basically, they offer the same regulatory interpretation that applies to CVC kiosks. If the dApp makes any value transactions, it implies that the owner and operator of the dApp are both accountable for the results of these transactions. However, for now, it is not clear whether FinCEN oversees all such cases in the blockchain. In actuality, there is a need for the overarching accreditation system or regulation of every functioning blockchain before it enters the market.