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Blockchain goes beyond crypto: Real-world applications in emerging markets

  • Cryptocurrency is currently the main application of blockchain but the technology has much more widespread applicability

  • Emerging markets could benefit most from distributed ledger technology. We highlight some firms creating real-world uses

  • Finance, logistics, e-commerce and communications are key areas adopting blockchain. Asia is the most innovative region

Blockchain goes beyond crypto: Real-world applications in emerging markets
Rahul Shah
Rahul Shah

Head of Financials Equity Research

Contributors
Rabail Adwani
Rohit Kumar
Tellimer Research
22 November 2021
Published by

Blockchain’s main use to date has been in the US$2.5trn cryptocurrencies’ sector. New currencies with enhanced blockchain functionality are being launched continually and many emerging market consumers are enthusiastic converts. But blockchain could conceivably have a much more profound impact in other areas.

In this report, we highlight how some leading-edge emerging market companies and governments are using blockchain to solve real-world problems. Our examples are all from Asia, where most innovation is currently concentrated (China is a clear global leader in this field). As these cases show, blockchain has the power to smooth out some of the roadblocks preventing emerging economies from reaching their full potential. As such, this technology could have profound benefits for the poorest members of humanity.

International remittances

The value of tracked cross-border remittances to low and middle-income countries was US$540bn in 2020. With traditional financial infrastructure, each transaction can take days to complete, and the average transaction cost for smaller volumes is over 6%. Even digital providers charge c3% of transaction value. This represents a significant drain on resources for recipient households and nations.

Remittances costs by provider type

Blockchain can help to squeeze transaction costs, by eliminating third-party intermediaries entirely. Transaction security could also be enhanced. For example, Pakistan’s Easypaisa (in whom Ant Group is an investor) offers a blockchain-powered cross-border remittance service from Malaysia in partnership with Valyou – cUS$1bn is transmitted annually as remittances from Malaysia to Pakistan.

Easypaisa-Valyou’s blockchain-powered partnership

Source: Company data, Tellimer Research

Insurance

Blockchain has many potential use-cases in the insurance sector, including smart contracts, tamper-proof customer records/data and trackable payments that in aggregate could help to reduce operating costs, improve underwriting risk management and improve the overall customer experience. For example, ZhongAn Technology is using blockchain to record and verify insurance policies. Fellow Chinese firm, SOS Ltd, intends to use blockchain security for its big data insurance marketing activities.

How ZhongAn Insurance digitises its policies

Source: BCG Digital Ventures, Tellimer Research

Logistics

The post-pandemic recovery has brought to light many bottlenecks in the global logistics value chain. Complexity, bureaucracy, lack of trust and poor information sharing are all contributory factors.

Blockchain can help as it allows organisations to record information and share it with permissioned parties across the supply chain. Immutable digital records enable accurate and secure tracking of goods, optimising operating efficiency and ensuring compliance with applicable laws and regulations.

Tradelens' platform activity

Source: Company data, Tellimer Research. Note: As of 12 November 2021

For example:

  • TradeLens has tracked around 50mn container shipments and recently launched a joint initiative with China Unicom Digital Tech.

  • Powerbridge Technologies is using blockchain to prevent counterfeit products from entering the supply chain, a significant problem in China.

  • The Blockchain Community Initiative (BCI) of Thailand launched an electronic letter guarantee (e-LG) platform for swift processing in 2019 (see below).

  • Singapore’s PLMP fintech is using blockchain to allow for automated customs clearance in Cambodia and commodities tracking in Indonesia.

  • India’s Tata Consultancy Services has used blockchain to help the Indian government manage Covid-19 testing kits.

  • Israel’s Bank Hapoalim, together with Microsoft and Tata Consultancy Services, has developed a blockchain-based Digital Bank Guarantee Network, covering the whole lifecycle of the product, including issuance, modification and termination.

Blockchain Community Initiative – Letter of Guarantee benefits

Source: BCI, Tellimer Research

E-commerce

Blockchain can help to resolve some of the biggest hurdles faced by e-commerce businesses. It can streamline the whole process from purchase order generation to delivery, as well as facilitating alternative payment methods, such as cryptocurrency. For example, Future Fintech Group's product range includes a blockchain-based online shopping mall platform, Chain Cloud Mall (CCM), and a cross-border e-commerce platform, Nono Girl. China’s Alibaba, one of the global leaders in the field, uses blockchain technology to manage T-Mall’s cross-border supply chain, while affiliate Ant Group uses blockchain to generate smart contracts for its Trusple cross-border trade settlements platform.

Trusple’s value proposition

Source: Company data, Tellimer Research

Urban planning

South Korea's CityLabs is undertaking a government-sponsored project that will use blockchain technology to monitor old buildings in Seoul and warn of any dangerous deterioration in their structures.

Intellectual property

China’s Baidu search engine runs a blockchain-based digital image property rights management platform, Totem. This creates a traceable chain of tamper-proof data to protect photo-sharers’ intellectual property.

Communications

India’s Tanla Communications uses blockchain technology in its Trubloq product, which helps individuals block spam calls and messages, and enables companies to comply with regulatory requirements in their direct marketing. Outside India, the firm is marketing its Wisely product, which also has secure messaging functionality, with Microsoft.

Wisely’s business model

Source: Company data, Tellimer Research

Blockchain solutions

Many firms are providing blockchain and distributed ledger solutions tailored for specific needs/ sectors such as healthcare, supply chain, bank guarantee, smart contracts, etc. The solutions are deployed to improve the processes of the businesses in order to achieve security, transparency, and efficiency. For example, India’s Infosys provides blockchain solutions for governments, healthcare providers, insurance companies and pharmacies.

Infosys’ blockchain portfolio

Source: Company data, Tellimer Research

Governance

Country-level use-cases of blockchain can be helpful in cases where the public’s faith in government institutions is poor. In elections, blockchain can be used to create registries and monitor electronic voting. This has already happened in Indonesia, a country with citizens located on around 17,000 islands where manual vote-counting from 800,000 polling stations can take over a month to complete. During the 2019 election, c25mn votes (out of a total of c195mn) were independently verified (using blockchain) within a few hours.