By design, blockchains are inherently resistant to modification of the data. A blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which needs a resolution of the network majority. Decentralized consensus has therefore been achieved with a blockchain.
The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem, without the use of a trusted authority or central server”.
In simpler words, the Blockchain is an emerging technology, a tracking system that discreetly verifies the provenance of products as they move through a supply chain — sending proactive alerts about unexpected detours that could signal potential tampering or environmental conditions that might pose safety issues.
Applications: Blockchain technology can be integrated into multiple areas as, efficient way of pricing and selling; at consumer products companies and retailers seeking a better way of validating supply-chain claims; and among banks and insurance companies interested in verifying the provenance of minerals, commodities or raw materials. Blockchain technology likewise could prove instrumental for improving a company’s ability to track a product’s entire lifecycle, verifying sources more explicitly and easily than is possible through most of the manual methods used currently; improves food safety by acting more proactively if an item is shown to be compromised; do strategic removals and enhanced traceability, potentially suitable for the recording of events, medical records and other records management activities, such as identity management, transaction processing, documenting provenance, or food traceability.
Benefits: Blockchain technology has a large potential to transform business operating models in the long term: significant efficiencies to global supply chains, financial transactions, asset ledgers and decentralised social networking; payment system and digital currency, facilitating crowd sales, or implementing prediction markets and generic governance tools; helps startups protect their authentic ideas; to collect taxes; reduce systemic risk and financial fraud, effectiveness of the blockchain at speeding land sale deals;
The sharing economy and IoT are also set to benefit from Blockchains because they involve many collaborating peers; online voting; data storage, publishing texts and identifying the origin of digital art. Banks explore how Blockchain can be used in financial services to increase efficiency and reduce costs. Blockchain technologies create a "trusted environment for transactions”. Blockchain could greatly reduce the financial costs associated with strategic procurement.
It is used by food suppliers and retailers to prove authenticity and increase consumers’ trust in their brand; provides complete transparency across a product’s end-to-end supply chain journey, plus not having a need for a third-party payment authentication across. It creates a frictionless and faster process upstream and downstream, lowers costs and significantly and reduces fraudulent interactions. It also removes unnecessary costs paid to banks, making the end cost to brands and consumers more palatable; the long-term benefits as proving the authenticity of products, improving the quality of food and cutting down costs, could make it easier to automate Supply Chain certification processes.
Security: Blockchain is the technology behind Bitcoin and other cryptocurrencies. Blockchain is a protocol for a digital ledger that enables proof of ownership and the transfer of ownership from one entity to another without using a trusted third party intermediary (like a bank). One of the key advantages of blockchain is that it is much, much more secure than traditional IT solutions.
The software was developed to validate Bitcoin transactions. The transactions are made public (with confidentiality over elements secured, rendering hacking into the system and tampering with data nearly impossible. Security is further ensured through the crowdsourcing of storage. Without a single storage point, there is no direct target for malicious attacks.
The secure (encrypted) digital ledger provides a level of transparency that most record systems cannot support. The blocks of information are secured by complex algorithms that are hard to hack and cannot be erased or manipulated. Blockchain is an ingenious technology that enhances security in transactions and enables tighter tracking of the supply chain. Blockchain has great advantages in terms of cybersecurity.
Blockchain security methods include the use of public-key cryptography. A public key (a long, random-looking string of numbers) is an address on the Blockchain. Value tokens sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their digital assets. Data stored on the blockchain is generally considered incorruptible. Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries including a proof of work. These always have the ability to restrict who can participate in the consensus processes.
Implications and Challenges that need to be addressed before Blockchain can propagate across supply chains.
There's the need to overcome embedded corporate thinking; business leaders and organisations need to open up to the sharing of information with mainly unseen network partners.
There’s the need to be interoperability across private and public Blockchains. This process requires standards and agreements.
It takes months to negotiate the relationships needed to help make the service possible.
Participants need to agree on the terms of a transaction or a contract.
Understand the problem to be solved. This requires the cooperation of multiple participants.
Laws and regulations -- which vary from country to country; industry must agree on best practices and standards of technology and contract structure across international borders and jurisdictions.
The technological talent is scarce and expensive.
There are network effects associated with deriving the value from blockchain in logistics. The more entities that participate, the more valuable the solution is.
At a company level, implementation costs, filling the talent gap internally and externally, and conflict management among business partners; full transparency and smart contracts.
Miners are used in validating the data. With Bitcoin, this process can take several minutes. There are supply chain processes where less latency would be very desirable.
In summary, corporate interest in the Blockchain is in part derived from the near total absence of systems providing complex supply chains with the required degree of transparency. With consumer expectations for quality and authenticity only set to rise, building a Blockchain strategy will be key for maintaining brand reputation, minimising contamination and fighting fraud, as well as boosting margins. Once the rules are in place, Blockchain systems could automate many processes enabling them to run far more efficiently.
Are you ready to leverage Blockchain ensuring coherence and collaborative visibility?
Dave Food