Why is Blockchain Important for Cryptocurrencies?
Blockchain is the foundation that makes cryptocurrencies possible because it:
Challenges of Blockchain in Cryptocurrencies
While powerful, blockchain isn’t perfect. Here are some challenges:
Real-World Analogies and Use Cases
To fully appreciate the significance of blockchain, it is useful to move beyond the hypothetical scenarios introduced in lesson 2.1, Understanding Distributed Ledgers and Blockchain, and consider how these principles are applied in practical settings beyond the context of cryptocurrencies. While cryptocurrencies such as Bitcoin represent one of the earliest and most well-known applications, blockchain technology is now being adopted wherever trustworthy, transparent records are essential.
Use cases extend into areas such as supply chain management, land registries, and digital identity systems, all of which benefit from blockchain’s ability to create an immutable audit trail. In each of these domains, data recorded on the blockchain can be independently verified and is resistant to tampering or unauthorized changes.
Finance: Banks Leading the Charge
Rather than maintaining costly and inconsistent systems, the industry has a compelling opportunity to streamline operations. A consortium of banks managing interbank settlements can replace fragmented, individual ledgers with a unified, continuously updated and verified ledger. Transactions added by any participant become visible and immutable, removing the need for reconciliation and reducing the risk of discrepancies.
Kinexys by JPMorgan (formerly Onyx) is a blockchain-based platform developed to modernize and streamline financial infrastructure. It provides settlement solutions, tokenized assets, and digital payment rails for institutions. Kinexys enables the issuance and transfer of JPM Coin—a digital representation of the U.S. dollar held within JPMorgan—and supports real-time settlement of transactions between institutional clients.
Kinexys processes an average of more than $3 billion in daily transaction volume across its services. Since its inception in 2020, the platform has handled over $1.5 trillion in cumulative transactions. This includes the use of tokenized repo markets, which allow trades to settle in minutes rather than overnight, significantly improving liquidity and reducing counterparty risk.
Meanwhile, in Europe, SIX Digital Exchange (SDX), working with the Swiss National Bank, successfully settled CHF 750 million in bonds using a wholesale central bank digital currency (CBDC) on a blockchain platform—demonstrating the feasibility of integrating blockchain into traditional monetary systems.
Transport and Tourism: Transparency and Empowering Participation
The transport and tourism industries—sectors that depend heavily on coordination, scheduling, and trust—are beginning to adopt blockchain to resolve long-standing issues such as data fragmentation, booking disputes, and platform monopolies.
In the travel sector, the Australian online travel agency Webjet has developed a blockchain-based system called Rezchain, which addresses one of the most persistent problems in travel bookings: the reconciliation of data between multiple parties. In traditional systems, hotel bookings often pass through a chain of wholesalers, agents, and suppliers, increasing the risk of double bookings, missed reservations, or invoice mismatches. By recording each booking event on an immutable blockchain ledger, Webjet ensures that all parties—including hotels, resellers, and agents—access a single, trusted source of truth. This reduces error rates, accelerates settlement, and improves the customer experience. Webjet’s blockchain solution is now used not only internally but also offered as a service to other travel companies, marking a significant step toward industry-wide transformation.
In the urban mobility space, Arcade City presents a radically different model for ridesharing—one built entirely around decentralization. Unlike traditional platforms like Uber or Lyft, which operate as centralized intermediaries taking commissions and controlling platform rules, Arcade City uses blockchain to allow direct, peer-to-peer connections between drivers and riders. Through the use of Ethereum smart contracts, drivers can set their own prices, negotiate terms, and manage payments autonomously. In some configurations, drivers also receive crypto-equity in the platform, promoting democratic participation and long-term alignment with the network’s growth. Arcade City also explores decentralized governance models, where local driver communities manage their own networks and resolve disputes collectively. While still in early stages of adoption, especially outside North America, the platform exemplifies how blockchain can empower gig economy participants by removing gatekeepers and redistributing control.
Insurance: Automated, Data-Driven Claims
Blockchain is transforming insurance by enabling automated, condition-based payouts, often referred to as parametric insurance. These models use real-world data to trigger claims automatically when predefined conditions are met, reducing administrative overhead and fraud.
In the UK, Arbol is partnering with European insurers to offer blockchain-based parametric weather insurance to farmers and renewable energy producers. For example, wind farm operators can insure against periods of insufficient wind; when data from trusted meteorological sources indicates that conditions have been met, payouts are issued automatically—without the need for manual claims.
This approach is particularly effective in sectors where measurable events (like rainfall, temperature, or wind speed) can be linked directly to financial loss.
Supply Chain: Transparency Across Borders
In Europe, Carrefour, one of the continent’s largest retailers, has implemented a blockchain-based traceability system across its supply chain. Customers can scan a QR code on food packaging to access detailed information about the product’s journey—from farm to shelf.
For example, blockchain is used to track organic chicken in France, documenting every stage from hatchery and feed supply to transportation and final sale. This allows consumers to verify origin, animal welfare standards, and freshness with complete transparency.
"... consumers will be able to find out where and how each animal was reared, the name of the farmer, what feed was used (whether or not they were fed on French cereals and soya beans, on GMO-free products, etc.), what treatments were used (antibiotic-free, etc.), any quality labels, where they were slaughtered, etc." —Carrefour
By leveraging blockchain, Carrefour has seen increased consumer trust and loyalty, especially in product lines where quality and origin are critical.
Luxury Goods: Ethical and Circular Fashion
In the luxury sector, European brands are collaborating on blockchain platforms to fight counterfeiting and support sustainable practices.
The Aura Blockchain Consortium—led by LVMH, Prada, Cartier, and other high-end European labels—uses blockchain to record and verify the authenticity, ownership history, and sustainability credentials of luxury items.
Each product is assigned a unique digital certificate stored on the blockchain, enabling customers and resale platforms to authenticate items instantly. The system also supports circular fashion by recording refurbishment, resale, and recycling, encouraging consumers to participate in sustainable consumption while protecting brand value.
Public Services and Governance: Secure, Transparent Voting
Blockchain is also being explored in e-governance, especially in the area of electronic voting, where concerns around transparency, tampering, and voter trust are particularly high.
In a blockchain-based voting system, each vote is treated as a unique transaction recorded on a decentralized and immutable ledger. This structure offers several key advantages:
- End-to-end verifiability: Voters can verify that their vote was recorded as cast and counted as recorded—without revealing their identity.
- Tamper resistance: Because the ledger is append-only and distributed across a network, no single party can alter the results without detection.
- Auditability: Independent observers can audit the election process in real-time, improving institutional trust.
A notable example is Estonia, which has pioneered digital governance and is piloting blockchain elements within its i-Voting system. While not yet fully blockchain-based, Estonia’s infrastructure lays the groundwork for future integration.
Elsewhere, Switzerland’s city of Zug, known as “Crypto Valley,” has trialled blockchain voting for local referenda. Voters could cast their ballots via mobile devices, with identities verified on a digital ID platform and results recorded on a blockchain.
These initiatives demonstrate the potential of blockchain to modernize democratic processes, offering greater security, accessibility, and confidence in electoral outcomes—especially in an era of increasing concern over election integrity.
At its core, blockchain is a system for reaching and preserving consensus over shared information. Whether managing financial transactions, legal agreements, ownership rights, or supply chains, its value lies in combining distributed architecture, cryptographic security, and incentive mechanisms that ensure cooperation, resilience, and integrity—across borders, sectors, and systems.
As we've explored in this lesson, blockchain's importance extends well beyond the world of cryptocurrencies. It's the backbone of trust, transparency, and decentralization. While the technology offers powerful benefits, it's not without its challenges, both technical and societal. Still, real-world use cases and analogies help ground this complex system in more relatable terms.
With a clearer understanding of blockchain's role in crypto, business and public services, you're now equipped with the foundational knowledge needed to appreciate how blockchain systems truly work.
Let’s now bring everything together as we move into the conclusion of this module—a final look at how the pieces fit together in the broader picture of blockchain technology.