Take a look at a few MultiChain Blockchain use cases that enable enterprises to deploy private solutions for trust, security, and efficiency in the network.
MultiChain refers to an extended open-source Bitcoin fork. It enables enterprises to launch custom public or private blockchain solutions with easy configurations. It presents a set of features and enhancements, especially for enterprise and business use cases. Its capability to support native assets and the storage of huge chunks of arbitrary data is quite promising. It provides an optional but unique consensus-based permissions management for consortial blockchain solution requirements.
- Private Shared Database - Control of Capacity and Cost - Designated ‘Miners’ - No Cryptocurrency - Blockchain as Tool, not Ideology
A group of institutions develops a financial system. The institutions use this system to transact and exchange scarce assets. Any asset is scarce when its unit cannot be available on more than one place at a time. We also know it as ‘double-spending.’ Also, it must be impossible for anyone to create new units of the asset. An institution able to do either of these things can make fraud in the system. A solution to this is physical tokens or ready cash. They cannot be in two places at the same time and are difficult to manufacture. However, there are shortcomings that make them impractical.
- No traceability - Costly and complex to create new units - Slow and costly to send in large numbers across long distances
Traditionally, we avoid these shortcomings of physical tokens by representing assets’ ownership through a ledger maintained by a trusted intermediary. The intermediary oversees and enacts an ownership transfer by updating the ledger’s content as a response of an authentic request.
Unlike complex settlement with physical tokens, the intermediary defaults or reverse the questionable transactions easily. But, it still poses a critical challenge, the concentration of control, or in a simpler term, centralization. Centralization creates significant security issues in both technical and human terms. For instance, if someone succeeds in hacking the traditional ledger, they can alter the ledger’s information, steal funds, or even destroy its content completely. What’s more terrifying is someone from the inside corrupting the ledger with no trace and detection of fraud.
Here, blockchain technology, a digital distributed ledger, provides several benefits like no centralization, security, transparency, and trust, among others. It means that each participant gets a copy of the ledger and complete control over their assets with private keys. Transactions occur in a peer-to-peer manner while blockchain maintains the consensus. It prevents hackers from corrupting the ledger by providing an architecture that has no single point of failure.
Consequently, institutions can deploy digital financial systems with efficiency and the added advantages of automatic reconciliation in real-time. However, these advantages come with a downside. As discussed above, blockchain enables all participants to see all the transactions taking place on the ledger. It makes the established transparency unusable in situations where confidentiality is important. Here, blockchain platforms like MultiChain suit better by providing rather different use cases that we call lightweight financial systems. In such systems, the economic stakes or participants’ number remains relatively low, as well as confidentiality tends to be less of an issue. So, even if the participants know what others are doing, they don’t learn much of value. Precisely, because the stake is low, the need to involve a costly and complex intermediary becomes needless.
Some of the significant use cases of lightweight financial systems include crowdfunding, loyalty points, gift cards, and local currencies. We can also apply their use cases in the mainstream financial functioning, like peer-to-peer trading or lending. Not only this but MultiChain blockchain based solutions can also operate as internal accounting systems. For instance, they can serve large organizations where each department or service is required to maintain control of its funds. Significantly, the lower cost and less friction enabled by MultiChain blockchain provide several immediate benefits while making the loss of confidentiality a nonchalant issue.
Tracking the provenance and movement of valuable items across a supply chain is critical for any type of business. The items include luxury goods, cosmetics, electronics, and pharmaceuticals, as well as critical documentation like letters of credit and bills of lading. Due to supply chains stretching across time and distance, these items experience issues like counterfeiting and thefts.
A MultiChain blockchain based provenance tracking solution can tackle these issues efficiently. A trusted entity can issue a unique identifier to the asset when it is created on the blockchain. The unique identifier acts to authenticate its provenance point. Then, whenever the assets change hands, the identifier leaves an ownership’s digital audit trail behind. So, it precisely mirrors the real-world chain of custody with a chain of transactions on the blockchain. Essentially, the final asset’s recipient, like a bank, retailer, distributor, can verify the chain of custody with this unique identifier from the provenance. Indeed, a traditional ledger maintained by an item’s manufacturer can accomplish these tasks in a similar way too.
So, why resort to the blockchain instead? The answer is, in this type of application, establishing distributed trust provides several benefits. Centralized databases are always vulnerable. There are people who can corrupt the ledger and its content. Contrarily, we can use blockchain to track the belongings of a supply chain’s participant.
Besides, exchanging the corresponding bill of lading and letters of credit is safe and easy with a two-way swap.
It does not mean that MultiChain blockchain has no other applications and use cases in this industry. In fact, for each of the use cases outlined above, we see significant blockchain application development opportunities for banks and other financial institutions. Those are provenance tracking for trade finance, bilateral contract notarization, and the aggregation of AML/KYC data.
The key to understand is that, architecturally, these use cases are not specific to finance. They are equally relevant to other sectors like insurance, healthcare, distribution, manufacturing and IT. In reality, private blockchain solutions should be considered for any situation in which two or more organizations need a shared view of reality. In these cases, MultiChain blockchain offers an alternative to the need for a trusted intermediary, leading to significant savings in hassle and cost.
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