Blockchain holds much more meaning for the future of technology than bitcoins and cryptocurrency, says Professor Campbell Harvey, a finance professor at Duke University’s Fuqua School of Business.
“This is a very straightforward application that could solve a huge number of problems,” Harvey, who has taught courses about blockchain for the past three years, says. “It is a glimpse of the future.
“This technology is not going away,” he adds. “Bitcoin might go away, but that’s just one application of blockchain technology.”
Here’s a look at what he sees as the top applications.
- Money transfers. Digitally transferring traditional currency is very inefficient and costly – mostly because it’s insecure, and protection from that is expensive. “People have been trying to do this since at least 1981,” Harvey said. Every single attempt failed, and the problem is that it’s so easy to counterfeit. You can make a perfect digital copy of anything.” The structure of blockchain eliminates that problem because every transaction is recorded in the blockchain. So you know the person paying you legitimately has the money by checking the ledger. This will cut costs by removing the need for fraud detection.
- Banking. The current banking system relies largely on computing systems from the 1960s. Globally, banks spend about $200 billion per year on IT. Last year J.P. Morgan spent over $500 million alone on cyber security. Blockchain’s ability to record transactions securely and efficiently could greatly reduce back office costs.
- Reporting. Blockchain could enable corporations to issue financial statements in real time, which Harvey said could eliminate the “shenanigans” some firms indulge in at the end of a quarter to bolster their numbers.
- Stock transfers. In the 1920 it took five days to settle a stock transaction. Almost a century later, it still takes three. “Computing speed has dramatically increased, but we’re still stuck at three days,” Harvey said. “This should happen in a matter of minutes, and blockchain is exactly the technology that can do this.”
- Derivatives. The Depository Trust & Clearing Corporation, which processes securities transactions, is looking at blockchain to clear derivatives transactions. “That’s an $11 billion industry,” Harvey said.
- Vehicles. A thumbprint scan in your car could verify you are the owner by consulting a blockchain and start the engine. However, if you have missed a certain number of payments on your car loan, the car does not start for you – but it will start for the bank. The same idea can be applied to entry into houses and rental properties. The same process of identification could prevent the hacking of self-driving cars, Harvey said.
- Health care. Prescription drug fraud resulting from stolen prescription pads could be all but eliminated by blockchain-secured prescriptions, Harvey said. One prescription gets you one perishable token for the medicine prescribed and only you are allowed to use the token – it can’t be resold.
- Medical records: Using blockchain, you could instantly access your medical records at any health care facility at any time. Harvey said blockchain would improve security because when everyone has their own key to their records, hackers can no longer access thousands of records with one stolen password.
Read more from Harvey about bitcoin and blockchain at: