How Blockchains & Subnets Are Used in Business
Blockchains and Subnets are expected to drive major changes in the business world by enhancing operational efficiency in nearly every kind of enterprise.
Commentary on the potential of blockchain technology as a socially transformative tool very often sounds utopian in nature. Although it’s widely agreed that blockchains hold enormous promise to facilitate the digitization of assets, it tends to seem that these systems and processes belong to some distant future. This is a misconception, however. In many ways, blockchain technology has already arrived.
Over the last few years, the global business community has made huge strides toward normalizing blockchain transactions of various kinds. Some use cases have already been implemented; many others are in active development, and may soon become standard elements of the business landscape.
For the business world, the virtues of blockchain technology are many. Managed by self-executing smart contracts rather than human moderators, blockchains provide a virtually immutable method of recording transactions, with an advanced level of cryptographic security. At the same time, blockchain transactions can be made publicly accessible for verification purposes. Businesses can engage in a wide range of transactions, involving a variety of digital asset types, in a trustless manner, thereby circumventing the regulatory delays and roadblocks associated with third-party moderation.
On the Avalanche platform, Subnets extend the effectiveness of this decentralized tech by enabling the creation of highly customized blockchains that will not be impeded by traffic spikes on other chains and supply a nearly unlimited degree of scalability. In addition, Avalanche Subnets offer an extremely fast time-to-finality.
All this adds up to an extremely flexible, labor-saving resource that promises to revolutionize the ways that businesses both large and small conduct their operations. What follows is an overview of blockchain use cases in the business community.
Capital Market Transactions
Blockchains are at the heart of the decentralized finance (DeFi) movement, offering highly liquid, easily accessible transaction options that can’t be matched by legacy traditional finance (TradFi) institutions. Capital markets stand to benefit enormously from the power of blockchains to simplify and speed up transactions involving the sale or trade of stocks, bonds, exchange-traded funds (ETFs), initial public offerings (IPOs), and a host of other assets.
With smart contracts, it's possible to reconcile transaction details without the need for a traditional clearinghouse to serve as an intermediary. Settlements can also be handled automatically, in real time.
International Payment Processing
The global economy is based to a large extent on the international transfer of funds, a process that needs to be protected by the highest standards of data security tech. Blockchains can provide the level of security necessary for these kinds of transactions. And this is another area where automated blockchain technology can reduce transaction-related costs by eliminating traditional middlemen.
This type of financing involves funding trades conducted on an international stage, and it is a notoriously complicated procedure that involves a large amount of paperwork such as export insurance and letters of credit. Blockchains can simplify trade financing by supporting transactions via a single secure, encrypted platform in which transaction details can be recorded.
Peer-to-Peer (P2P) Transactions
Blockchains can offer easy access to P2P transfers of funds, without the various restrictions that govern standard digital payment platforms. Blockchain-based transactions can be performed 24/7 from anywhere in the world. These transactions also improve on other payment services by providing a relatively high level of security.
The public nature of blockchains and the immutability of their data records allows anyone to view the transaction history of a particular asset without compromising security. This feature alone could provide the financial industry with the kind of operational transparency needed to prevent crises like the Great Recession of 2007-2008. Blockchain platforms can also accommodate KYC (Know Your Customer) rules that are standard in the banking industry for verifying the identity of entities involved in a transaction.
Businesses must furnish proof of compliance with certain industry-specific and generally applicable regulations. Blockchains can be a powerful tool for auditing purposes, as their ability to record transactions in an immutable manner can provide a trail of records whose authenticity is not in doubt.
The processing of insurance claims is yet another procedure that is being supported by blockchains. Smart contracts can largely automate the claims process, allowing insurers to make speedier payouts and dispense with many of the costly manual safeguards involved with the process. Claimants receive payment in the form of cryptocurrency. One promising example of this approach is the Lemonade Crypto Climate Coalition DAO, backed partly by Ava Labs. The DAO offers weather insurance to African farmers who might be ineligible for standard policies.
Supply Chain Management
Tracking consumer products as they gradually make their way to their final destination is such a vital part of the modern economic system that an entire industry has developed around this function. Blockchains is serving as an invaluable aid to supply chains by generating an unfalsifiable record of each touchpoint in the system. This can improve supply chain efficiency, reduce the incidence of fraud, and bolster auditing procedures.
The energy sector took an early interest in the labor-saving potential of blockchain. In 2016, a blockchain trial run in New York enabled individuals to utilize this technology to sell energy directly to a neighbor.¹ Billing and metering procedures could become greatly simplified.
Real Estate Transactions
Blockchain technology offers several useful tools that can facilitate real estate transactions. The ability of blockchains to tokenize real-world assets enables transfers of property to take place entirely online, while smart contracts can play an important role in escrow services and processing of payments. Tokenizing these activities can help to streamline an industry notoriously prone to opacity and procedural delays. It is widely believed that it will eventually become a standard practice for proof-of-ownership documents to be stored on blockchains.
Blockchains have the potential to revolutionize public access to media, from music to motion pictures. Several blockchain platforms have already been launched to provide independent content creators—those not affiliated with corporations or traditional distribution channels—to supply videos, articles, and other digital media for public consumption. This gives creators monetization opportunities far beyond those offered by legacy media.
Healthcare Data Management
Managing medical records in a secure manner is a pressing concern for healthcare organizations, which are subject to the Health Insurance Portability and Accountability Act (HIPAA) and other data retention standards. With blockchains, this information can be stored in a decentralized manner that remains compliant with data security regulations. Additionally, blockchains make it easy for researchers to share data accumulated in clinical trials.
Avalanche and Customization
One of the primary drivers behind the growing interest in blockchain technology is its ability to accommodate a wide range of use cases, many of which have been outlined above. Avalanche Subnets exemplify the enormous design flexibility and power of blockchains—they enable creators to launch custom chains with unique rule sets that comply with the specific needs of a particular business or industry. That’s why nearly every industry can benefit from blockchain technology, and why the number of use cases associated with it will surely continue to expand over the coming years.