Blockchain at its core being a decentralised ledger can not only transform industries but also have the potential to create more industries. What is decentralisation? To let you know what decentralisation is let us begin with centralisation. Centralisation is nothing but what we have today in most of the industries. Let us take the example of banks. Though we have many public and private sector banks, they all are controlled or guided by a central entity. This central entity would be a central bank in each respective country. These central banks essentially dictate terms and conditions to all the other banks in the country, and they must oblige. Having a central authority is nothing but centralisation.
Decentralisation is the just opposite. There is no central entity to control each aspect of the industry. It is entirely transparent and should be approved by all the requisite people in a network which in blockchain terminology we call consensus. Additional to these properties, blockchain is immutable, i.e. we can only add new records to the blockchain but cannot amend any old entities. It offers better security and faster settlement. Many believe that blockchain is the next internet, which is set to transform the whole world, just like how the internet changed our lives since the invention.
The internet is imbibed in our lives in such a way that few moments of disruption of the services leaves us frustrated. Blockchain technology is going to be the same very soon. It will be the inbuilt layer of protection in many existing and upcoming industries to ensure security and privacy. In this article, we are going to talk about the Music industry and the Mortgage industry. These two industries have seen minimal innovation so far. But with the help of blockchain, they can see the new sun that they have been waiting so far.
The music industry has been a low paid industry even though some of the albums bag tremendous hits and become famous throughout the world. Technology has made it very easy for the music lovers to get hold of any song they love. Most of the times through YouTube or any other pirated version is readily available on the internet. While the internet has made our life easy, it has bought its own set of problems with it. Piracy is one of them and has its damaging effect on not only the music industry but in the entertainment industry as a whole. Due to piracy, artists lose their income.
How the artists of the music industry get paid? By selling their music, of course. The artist’s music is sold on numerous platforms, thus having no fair knowledge of how much money is being made. Most of the artists are not paid on time, and some of them must wait for years to get paid. To make more money, artists regularly tour internationally. While some of us prefer live music, it affects the mental health of an artist as they have to be always on the road to complete their schedule.
While blockchain may not solve all the music industry problems, most of them can be solved, to improve the industry economically. Thus encouraging the upcoming and existing artists to work on music instead of worrying for monetary issues.
Since blockchain is a distributed ledger, blockchain can be used as a piece of evidence for ownership rights. This helps to distinguish the ownership between artists and studios. Pay per listen concept can be easily brought in to practice by using blockchain enabling people to abide micropayments. These micropayments can be directly credited to the artists crypto wallets. Muisccoin created on Etherium network precisely allows this functionality. One of the significant uses of implementing blockchain in any business is to cut the third parties which are prevalent in any given industry today. By using blockchain in the music industry, we can eliminate distributors. Choon is a music streaming and digital payments platform. This company allows song contributors to set up smart contracts on Etherium platform. The company pays to the artists almost instantaneously based on the number of streams generated on a day instead of waiting for a long time.
We see companies that are changing the industry by adopting blockchain already, but we need global players like youtube, Spotify to utilise the technology to see widespread results. Spotify has already acquired a blockchain startup called Mediachain Labs to helps artists in payment transparency. Hence the music industry is going in the right direction to award artists what they deserve, all thanks to blockchain!
Most of the people, no matter the background desire to own a house. An easy way to own a home is through the mortgage. 65-66% of Americans have a mortgage on their house while this figure goes to 70% in the case of the Chinese citizens. We call it easy because the financial institutions lend us money to own the dream house that one aspires for. But only one who has gone through the mortgage process knows the real trouble. It is not only a time-consuming process, but also it costs so much to obtain a mortgage in the first place. There are so many intermediaries in between, and all of them charge a certain percentage on the loan amount. The entire process is heavily centralised with a lot of intermediaries in between hence a perfect target for blockchain.
Let us see a typical mortgage application process. Current mortgage process involves a lot of third-party services. When a buyer and seller agree to transact on a property, the buyer approaches a financial institution for a loan. Here starts the paperwork. The institution would require, bank statements, proof of income, existing loans if any, credit report by an external credit report company. To estimate the eligible mortgage, the financial institution would require the property evaluation for which it will approach an external surveyor. The bank would also confirm the land ownership details which will be given by the seller with land registry offices. Finally, the bank would decide on the amount to be given as a loan. Then the bank informs its decision to the requisite parties and mortgage papers are signed. Therefore funds are credited to the seller directly. The registry offices are later updated with the new owners of the property to update their ledgers. This complete process takes up to 30 to 60 days in any given country.
All the process mentioned above is manual, and it takes at least around 500 – 2000 pages of paperwork depending on the type of property. Blockchain helps in digitising the entire process. To approve the loan bank depends on property surveyors, law firms, credit agencies etc. If all the information is stored digitally and securely on a blockchain platform, the banks can easily access the required information from this network. Blockchain can be used to create a unique digital id for a property. Thus, making the property trackable over the network. This digital id would include current market valuation, all the people with whom the property had been so far and the current market price of the property. Thus, instead of depending on any third-party services, banks can obtain all the information through the network to grant a line of credit. Smart contracts can be used disperse the amount to the requisite amounts when predefined conditions are met.
To achieve this, a lot of entities should come together, and moreover, governments should approve to change the entire structure of a mortgage. We are seeing several banks trying to adopt blockchain with respect to the mortgage. As always only if more and more banks come together and standardise the process using blockchain can we see more transparency and fewer costs.
These are only some of the improvements that blockchain is capable of making to the music and mortgage industries. But this would take time as most of the processes and procedures must be approved by the governments in order to implement this technology. But that day is not far as we have already discussed and seen the real-time startups that are working towards this goal in their respective industries.
Please watch this space to know more on how blockchain can revolutionise other major industries in our upcoming articles.