5 uses of DLT that are nothing to do with the digital dollar
This week has seen the Biden administration throwing its support behind further development of what would be known as a U.S. Central Bank Digital Currency, or the ‘digital dollar’.
Distributed ledger technology (DLT) is too often regarded solely as the technology underpinning blockchain, cryptocurrency and NFTs, but many are still unaware of its breadth of potential. There are a whole host of other innovative ways in which DLT is transforming our society and enterprises, and they have nothing to do with the digital dollar.
From supply chain management, all the way through to government services, DLT is offering safer, more efficient and cost-effective ways for businesses to run digitally. By providing a decentralised ledger upon which data can be entered, stored and shared, DLT increases the transparency of these transactions. No single party has sole ownership or access to the data. By sharing it across multiple sites, it ensures any changes that are made are instantly identifiable and data is effectively immutable (cannot be amended or deleted).
So what does this mean in practice? When built into a digital infrastructure, DLT can be used to facilitate greater transparency, accountability and security; a must in an increasingly volatile cyber landscape.
Let’s take a look at five of the most exciting cyber applications of DLT set to transform our business and personal lives for the better.
1.Streamlining automation with Smart Contracts
Improving efficiency remains a key priority for businesses across the globe, with efforts to cut out the middleman and streamline costly and time-intensive processes are increasingly vital. The puzzle facing leaders is how to introduce automation in a way that is safe, compliant and effective.
Secure automation can be provided using DLT in the form of Smart Contracts. Programmed onto a distributed ledger as “if/when…then…” statements, Smart Contracts automatically trigger an action, whilst ensuring all necessary requirements have been met. For example, a payment can be made automatically upon receipt of delivery; or a new employee can be onboarded as soon as their credentials have been received, without the need for manual input or review.
Each Smart Contract comprises a set of specific criteria, predetermined by an authorised member of the distributed ledger on which it is stored. These must be met before the action is triggered, ensuring that transactions are made safely and in accordance with all necessary regulations.
2. Making supply chains more sustainable
Throughout the past year supply chain crises have repeatedly made headlines around the world. From petrol pumps running dry, to retailers struggling to keep up with Christmas demands, the severity of consequences when our supply chains hit disruption have been laid bare.
Supply chains are under even greater scrutiny over their role in helping reach ESG targets in the wake of COP26. So businesses are now searching for solutions to strengthen the underlying infrastructure and mend the weak points enabling corruption and delay to derail supply.
Some are innovating by incorporating DLT as a means of making supply chain records more transparent and holding key players to account. The timber industry, which sees around 30% of its timber taken illegally across the market, has introduced a Timber Chain. Certification and proof of transactions can be immutably logged on the distributed ledger, presenting a transparent record of the entire supply chain. As a result, bad players in the system are easily identifiable and can be held to account. This reduces levels of corruption which in turn saves money, limits delays and makes the supply of timber more environmentally sustainable.
3. Leveling the playing field for Intellectual Property (IP) Rights
Currently, the enforcement of IP rights is an extremely time-intensive and expensive process. Still largely paper-based, the actions required to log, prove and dispute ownership of assets require extensive resources. This leaves smaller businesses at a major disadvantage, as many simply cannot afford to protect their IP rights.
DLT provides the foundation for digital IP management, through which assets can be claimed and data relating to IP rights stored and shared safely and securely. Assets can be digitally tokenised, or issued a cryptographic hash, which unalterably identifies them as belonging to a specific organisation or individual. By storing this information on a distributed ledger, it can be transparently shared, and protected against fraudulent claims.
4. Taking ownership of our own data
With more of our lives now online than ever before, there is naturally increased concern surrounding exactly who can see and use our personal data. Recent high-profile cases have proven the potential consequences of data being misused - whether it’s been in influencing elections or tailoring the ads you see. So innovators are now looking for ways to hand back greater control over data to individuals.
Self sovereign identity (SSI) is one evolving application. Using decentralised identifiers (DIDs) as well as verifiable claims (VCs), data can be shared in a more controlled manner, giving third parties access only to what is necessary. For example, proof of age can be given without the need to disclose your exact date of birth. A VC provides confirmation that you meet the age requirement (e.g. you are over 18) without sharing the raw data itself. Other potential uses for SSI include decentralised certification for employee onboarding or visa applications, and the provision of digital identity wallets.
5. Bolstering security for our personal records
The days of paper-based health records may be largely behind us, but there remains much room for improvement in the way records are stored and shared digitally. DLT presents the mechanism for providing a comprehensive record of all our health data, which can be accessed by appropriate doctors and clinicians, while remaining in our individual control.
By storing health data on a permission-based distributed ledger, service users can retain control over how and when their data is shared. Looking forward, innovators hope to be able to add homomorphic encryption to these DLT-based records. This would enable data to be processed and used by third parties for research or administration purposes, without decryption. Personal data will be kept completely private, and ultimately controlled by the individual.
Ultimately, the potential of DLT is enormous and far outstretches crypto currencies or the future ‘digital dollar’. From health records to digital passports, supply chain management to IP rights, the world of utilising enterprise blockchain is just beginning, but it’s definitely here to stay and we’re only scratching the surface of what it can do.
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