Unit-4

Enterprise Applications of Blockchain

Cross Border Payment, know your customer(KYC),Food Security,
Mortgage over blockchain, blockchain enabled trade, we trade-trade
finance network, supply chain financing, Identity on blockchain.
Cross Border Payment
Blockchain technology can be used to facilitate cross-border
payments between parties in different countries.
Why Move Cross-Border Payments to the Blockchain Rails

• Compared to international bank transfers, blockchain offers

substantially lower transaction processing costs due to eliminated
intermediaries (e.g., commercial banks, clearing houses, etc.). Plus,
there are no cut-off times for payment processing, which results in
drastically increased processing speed.

• Compared to the independent e-payment systems such as PayPal or

MoneyGram, blockchain provides much more robust security of
sensitive data and eliminates the risk of data leakage. Also,
blockchain money transfer is fully transparent, which contributes to
the mutual trust between payers, payees, and cross-border payment
B2B cross-border payments
Key benefits:
• Fast, secure, and cost-effective global B2B
payments, including high-value interbank
settlements and P2P business payments.
• Eliminated manual errors and payment delays due
to cross-border payment automation.
• Compliant financial reporting under different
jurisdictions due to immutable records of payment-
related data.
C2B (consumer-to-business) cross-border payments
Key benefits:
Prompt and convenient international payments in
crypto and fiat for individuals.
Low payment cost due to no need for third parties,
such as governmental entities or financial institutions.
Minimized risk of security breaches.
Improved transparency and streamlined control of
payment operations due to full visibility of money
transfer transactions.
How Blockchain for Cross-Border Payments Works

Architecture
It is blockchain’s innovative architecture that drives
the advantages of blockchain-based vs. traditional
cross-border payments. A sample architecture of
blockchain-based cross-border payment
Transaction life cycle
Cross-border payment transactions are submitted by the blockchain
network members or automatically enforced by smart contracts upon
predefined events. The requested transaction is transmitted to the
peer-to-peer (P2P) network of nodes that validate the transaction
according to the selected consensus protocol. Traditional financial
institutions and large businesses dealing with high-value transfers
mainly rely on permissioned blockchains. In such networks, only
known and trusted users with special rights can access and validate
payment events and transactions. Fintech companies and SMEs
focused on smaller-value B2B and C2B transactions usually opt
for permission less blockchains to promote financial inclusion and
ensure maximized payment transparency.
Upon validation, payment-related data is encrypted
with a hash function and stored in timestamped
blocks linked chronologically. The blocks form
an immutable ledger that provides a single source of
truth to trace payment activities. Individuals,
businesses, and financial services providers interact
with a blockchain to make, receive, and monitor
payments using role-specific web and mobile
applications. All the participants maintain their
own up-to-date copies of the distributed ledger.
A blockchain solution typically requires integration with
financial data marketplaces and accounting software.
Additionally, the solution may be integrated with:
• Business-specific systems where payment initiation
takes place, e.g., core banking software or a treasury
system.
• A payment analytics system to share relevant data
required to analyze cross-border payment
transactions and payers’ behavior.
Benefits Blockchain-based cross-border payments
• Reduce costs: Transaction costs can be reduced
by up to 80% compared to traditional methods.
• Speed up settlement times: Transactions can be
completed in seconds instead of days.
• Increase security: Blockchain-based payments
offer end-to-end traceability of payment-related
data.
How it works in practice
Here's an example of a cross-border payment using blockchain:
• The merchant offers a crypto payment option at checkout.
• The customer selects the digital currency they want to pay
with and agrees to the exchange rate.
• The customer sends funds to the merchant's public address
using their crypto wallet.
• The transaction request is submitted to the blockchain and
checked by nodes.
• The transaction is approved and recorded on the blockchain.
A wallet address, a unique identifier in the blockchain, is a randomly generated series of
alphanumeric characters that corresponds to a specific crypto currency stored in a blockchain
wallet.
 know your customer(KYC)
KYC is a process by which banks obtain information about the
identity and address of the purchasers. It’s a regulator governed
process of performing due diligence for verifying the identity of
clients. This process helps to make sure that banks’ services aren’t
misused. The banks are responsible for completing the KYC
procedure while opening accounts. Banks also are required to
periodically update their customers’ KYC details. KYC may be a
manual, time-consuming, and redundant across institutions.
Sharing KYC information on Blockchain would enable financial
institutions to deliver better compliance outcomes, increase
efficiency, and improve customer experience.
Problems and Deficiencies
• Work wiped out collecting KYC information
unnecessarily replicated by multiple
institutions.
• Isolated view of consumers and their
transactions insufficient to detect
concealment.
• Uncertainty in knowing if implemented
practices are sufficient.
Key Problem Areas and Solution Benefits
• Redundancy: Most large files use similar data and processes to
verify an equivalent client. The solution benefit is to eliminate the
redundancy documentations that got to be verified only once
before the approval information is shared.
• Inefficiency: Manual and time-consuming process to collect and
verify documentary evidence. The solution benefit is to extend
automation where documents and approvals are digitized and may
be verified without manual intervention.
• Lack of specificity: Requirements for due-diligence are often fuzzy,
creating uncertainty on compliance to avoid legal sanctions.The
solution benefit is to standardize process i.e. standardized,
automated KYC processes sanctioned by the regulators.
The Idea Behind Blockchain and KYC
Each company has to verify your identity somehow, and
it’s particularly important for financial institutions. From
this ‘know your customer,’ or KYC protocols was the rise
to assist companies to ensure they know who they’re
doing business with. Typically, this involves an
extended, drawn-out practice where certain documents
are shown, and a few kinds of background checks or
verification takes place.
KYC Blockchain Implementation
• In the traditional KYC system, each bank will conduct its
identity check i.e. each user is checked individually by an
individual organization or government structure. Hence, there
is a waste of time for checking each identity from scratch.
• The blockchain architecture and the DLT allow us to collect
information from various service providers into one
cryptographically secure and unchanging database that does
not need a third party to verify the authenticity of the
knowledge. It makes it possible to form a system where the
user will only need to undergo the KYC procedure once to
verify his/her identity.
The process is as follows:
• For KYC procedure a user submits documents to one of the banks where he wants to
take a loan or use another service.
• Individual participants are responsible for collecting personal data(banks,
government agencies, companies, or users themselves) and stored in a decentralized
network.
• The bank checks and confirms the passage of KYC if everything is normal.
• The bank is responsible for entering the data about the user into the blockchain
platform, to which other banks, organizations and state structures have access. All
parties can control and regulate the KYC process. The system will monitor changes
and updating of the user data, and if someone breaks the rules, it will become known
to all parties.
• When a user wants to use the services of another bank, this second bank accesses
the system and thus confirms the user’s identity.
• The access to user data will be based solely on its consent. The user must log in with
cryptocurrency transactions i.e. use the private key to initiate the information
exchange operation.
food security
Blockchain technology can enhance sustainable food
security because of its distinct characteristics such as
traceability, decentralized and unchangeable databases,
and smart contract protocols. Nevertheless, blockchain
technology in agricultural applications is still in the early
stages of development.
• Raw food suppliers transact data on the food origin and movement
across the supply chain.
• Food manufacturers provide information on the food product
ingredients and manufacturing processes.
• Food inspectors and certification entities verify documents on the
product origin and quality.
• Transportation and logistics providers upload details on the
location and storage conditions of food products in transit.
• Food product distributors trace food supply chain activities to
assure responsible sourcing practices, food product quality and
safety.
• End consumers access details on food products’ provenance to
verify their authenticity.
Mortgage over blockchain
Here is an example. A home buyer is already pre-
qualified for a mortgage. They’ve found a home
they want to buy. They complete the mortgage
application, which becomes a block. Every party
that is part of the mortgage process gets access to
the block, and the information in the application
gets verified nearly instantly.
After approval of the loan, the buyer receives an
encrypted key to sign the offer. The record of the
buyer’s signature becomes a unique block that gets
added to the chain. The next step is to transfer the loan
funds to the buyer. The funds transfer also becomes a
block in the chain, as does the transfer of the title. All
told, the process of getting approved for a mortgage
and settling on a loan takes just days, rather than at
least a month, using blockchain technology.
After a mortgage is approved and settled, blockchain
technology still has a role to play. Mortgage servicers
can use blockchain to keep track of payments from
borrowers. If a homeowner wants to refinance or sell
the property, blockchain can help verify the ownership
of the property. If one mortgage company wants to sell
its loans to another company, blockchain can help the
companies confirm that the initial servicer has a claim
on those loans.
TRADE FINANCE
• Due to the lengthy procedures that frequently create business
interruptions and make managing liquidity challenging, traditional
trade financing techniques have been a big source of pain for
companies. When exchanging information, such as the origin
nation and product specifics, cross-border trading entails a lot of
variables, and transactions require a lot of paperwork.

• When importers and exporters from diverse parts of the world

require transactional confirmations before they can execute a
trade financing transaction, global trade can be a challenging
procedure. Blockchain quickens the process by enabling all
participants instant access to documents and statements.
SUPPLY CHAINS
Enterprise blockchain brings the elusive goals of supply chain
visibility and transparency closer by increasing the number of
suppliers and customers and ensuring the integrity of data
moving through the supply chain.
Supply chain management is being improved by organizations
adopting enterprise blockchain. This technology can facilitate
tracing faulty goods and improve supply chain visibility and
accountability.
Additionally, because each partner in the network checks the
product information, customers may trust it.
Identity on Blockchain
What Is Identity Management?
Identity management is the framework of processes,
policies, and technologies to ensure that only
authorized people have access to technology resources,
information, or services. Identity and access
management systems are continuously evolving to
improve security and the user experience.
A digital identity is the total information about an
individual or organization that exists online. Data
that forms a digital identity includes usernames,
buying history, ID number, and search history.
Almost all of our digital identities are connected
through devices, services, and apps that have
dominantly used centralized and federated
identity systems.
With blockchain identity solutions, users don't need
to worry about third-parties being involved in the
verification processes or providing sensitive
information to anyone else but the verifier. This
ensures greater protection from fraud and identity
theft since all user data is cryptographically
protected and only stored by the users’ in their
identity wallet apps.