Blockchain has become a buzz phrase in the business world in recent years, and not only for its application to investing in Bitcoin, as well as other cryptocurrencies. Along with other new technologies, blockchain has the potential to transform industries and change the way business is done on the international level. The technology is advancing and interest is growing, and those pioneers ready to take the first step could be rewarded handsomely in years to come.
At any stage in their development and growth, any business – but particularly those interested in cryptocurrency’s benefits – may need to employ IT support services that can help to address IT issues from network infrastructure to cybersecurity.
How does blockchain work?
Blockchain is an expanding list of records (blocks) that each has a timestamp, transactional data and a cryptographic hash of the preceding block, which links the blocks together to form a blockchain. This structure, in which units are linked together by means of cryptography, is known as a Merkel Tree.
Blockchain is a decentralized, distributed ledger that records transactions between two parties efficiently. Through a peer-to-peer network, data cannot be changed retroactively without changing other blocks in the chain, which requires network consensus. This means the technology is completely secure, as well as saving time and expense, and it is not controlled by any central authority.
Naturally, with these qualities, blockchain, or Digital Ledger Technology (DLT), is attractive to many businesses, and various applications are being considered or are currently in development. These range from international payments to identity verification and smart contracts. In addition to cryptocurrency and financial transactions, digital ledgers can store unalterable information and provide absolute confirmation for different purposes.
How can blockchain be used in the supply chain?
Supply chains can become extremely complex, with hundreds of stages, various global locations, invoices, transactions, individuals and parties all involved in the process. It may also extend over a lengthy period of time. As it is an area of industry that’s difficult to manage efficiently and ensure transparency, there’s a great deal of interest in how blockchain could transform the supply chain.
In the past, supply chains were easier to follow because commerce was more local. With improved freight transport and shipping, the development of computers and global manufacturing, supply chains are much more intricate in structure. This means that consumers cannot clearly know the value of products, and it is more difficult to investigate any illegal practices. Blockchain promises to put an end to this.
Examples of blockchain in the supply chain
The blockchain-based supply chain verification network from IBM is Trust Your Supplier (TYS). This was designed to increase efficiency and reduce errors in the supply chain. IBM’s blockchain services company, Chainyard, is bringing TYS to clients that include GlaxoSmithKline and Vodafone. This is still in the development stages but is expected to be widely adopted.
Tomcar, the Australian vehicle manufacturer, pays some of its suppliers in Bitcoin. These include three that are based in Israel and Taiwan. This arrangement can avoid the costs of international remittances, although – because Bitcoin is international – some governments categorize Bitcoin payments as an investment, and therefore subject to taxation.
Blockchain can be used to follow products through production. Walmart applies the technology to pork products in China, through a system that keeps a record of the origin, processing and storage stages in the supply chain, as well as the sell-by-date. This is especially useful in the event of a product recall.
The world’s largest mining firm, BHP Billiton, announced at the second annual Global Blockchain Summit that it would use blockchain to securely track wellbore rock and fluid samples. This is particularly useful, as the company uses vendors – such as geologists and shipping companies – at every stage of the process and throughout the world.
The blockchain platform, Tracr, was launched by the international diamond corporation, DeBeers, last year. It is intended to track the supply chain of diamonds from the mine to the consumer, through the use of a ‘digital road system’. The data stored on the digital ledger will include each diamond’s physical attributes as well as transaction data. Tracr will not stay exclusive to DeBeers and has already included the retailers Signet and Chow Tai Fook in its pilot programme.
300Cubits is a newly-formed, Hong Kong-based company that aims to address the issue of lost cargo in the container shipping industry. The company issued a TEU cryptocurrency and issued tokens to shippers and shipping lines who both deposit tokens when the cargo is moved. Both parties are only able to recover their tokens when the cargo is delivered successfully, and the agreement is honored.
At this stage, blockchain projects are in development and have yet to find their true potential. For widespread adoption to be possible, a number of large corporations need to make real commitments that others will follow. Blockchain has the ability to transform supply chains, ecosystems and industries, but this will not happen overnight. Smaller implementations are already underway, and these will bring numerous benefits to individual businesses, but the inevitable blockchain revolution has yet to arrive.
