Blockchain Beyond Cryptocurrency

How businesses and governments have tried to use blockchain for supply chains, records and payments between banks, and why many projects have struggled.

Beyond cryptocurrency, businesses and governments have explored using blockchain technology for many purposes.

Proposed uses

Supply chain tracking: recording each step of a product’s journey, such as food from farm to shop, to improve traceability and detect fraud.
Land and property records: creating tamper-resistant records of ownership. Some Indian states have piloted blockchain land records.
Trade finance: digitising documents like bills of lading to speed up international trade.
Tokenisation: representing assets like bonds, property or funds as digital tokens that can be traded and settled more efficiently. Large financial institutions have experimented with tokenised bonds and funds.
Interbank settlement: central banks have tested blockchain-based systems for wholesale payments and cross-border settlement, including projects coordinated by the Bank for International Settlements.
Digital identity and certificates.

Why many projects struggled

Many early enterprise blockchain projects were scaled back or ended. Reasons include:

A central party already exists: if one organisation is trusted to keep records, a regular database is usually faster and cheaper.
Garbage in, garbage out: a blockchain cannot ensure that information entered into it is true. If a supplier records false data, the blockchain preserves the falsehood.
Coordination costs: getting many companies to agree on a shared system is hard.
Integration with existing systems is expensive.

A well-known example: a blockchain platform for global shipping developed by Maersk and IBM, TradeLens, was shut down in 2023 after failing to attract enough industry participation.

Where it may help

Economists suggest blockchain is most useful when many parties who do not fully trust each other need a shared record, and no single trusted intermediary exists or is acceptable to all.

The mango's record

A retailer uses blockchain to track mangoes from farm to shop. Each step is recorded, so if contaminated fruit is found, its source can be traced within seconds rather than days. But if a farmer records false information about pesticide use, the blockchain simply stores the false record. Technology needs honest inputs and checks.

Thinking blockchain improves every database

For most uses with a trusted central party, traditional databases are faster and cheaper. Blockchain's value lies in specific situations where shared trust is hard to establish.

Key takeaways

Blockchain has been proposed for supply chains, land records, trade finance and tokenised assets.
Many enterprise projects struggled, including TradeLens, which shut down in 2023.
Blockchain cannot guarantee that the information entered is true.
It is most useful when many distrustful parties need a shared record without a trusted intermediary.