A brief history of blockchain
- 2008 – The mysterious Satoshi Nakamuto published his bitcoin white paper
- 2009 – First bitcoin minted
- 2013 – More money is moved with bitcoin than with Western Union
- 2016 – Bitcoin reached around US$900 by the end of the year
- 2017 – CoinDesk shows Bitcoin Price Index’s all-time high of $19,783.21 on Dec. 17.
While bitcoin may be the most well-known use of blockchain, it is simply a proving ground when compared with the other potential uses for blockchain technology.
How it works
Blockchain technology offers the potential to reinvent supply chain project delivery, using the IoT to monitor and automate the process end to end with minimal human interaction in otherwise trustless environments.
When is it appropriate to use blockchain?
As with any technology, it can drive dramatic and disruptive change when applied correctly. Blockchain is best used when:
- Immutable verification is paramount
- Multiple parties want to share and update data
- When removing third parties and intermediaries will reduce cost and complexity
- When fast responses are required.
Many of the challenges result from the complexity of defining the logic that the smart contracts will carry out:
- The digital identities of users and actors need to be binding and non-repudiable in the real world
- There must be consensus on roles and permissions of participants, as well as common standards
- Legal and control frameworks must be agreed.
The largest smart-contract hack to date has been the DAO (distributed autonomous organization). 15% of all Ether in circulation at the time was drained from its smart-contracts, resulting from the exploitation of a code vulnerability. This showed just how important it is to ensure that the logic within a smart contract is fully defined and robust enough to remove the risk of manipulation.
Blockchain offers a range of uses and benefits that can come together to facilitate the supply chain process in a way that has been previously impossible.
Supply chains are inherently and historically opaque, where participants have limited visibility.
Blockchain technology can allow participants to know:
- Are the goods safe?
- Is our supply chain ethical?
- Where is the value?
- Are we on schedule?
This solution could provide immense value in the form of:
- Records of each stage in the delivery is captured on the blockchain
- Bills of lading can be represented and authorized
- Loses can be identified on a granular level
- Trust is increased, fraud reduced, and administration simplified.
A basic use case for blockchain in supply chains
— Materials can be tracked at a fraction of the cost of current systems
— Any tampering will be easily noticed by the other blocks on the chain
— No reconciliation required due to a single ledger, reducing costs and enabling faster vendor payments
— Transparent, tamper-proof audit trails for administrative and regulatory requirements
Companies that are already using blockchain for supply chain monitoring
- Provenance, allows clients to use its blockchain-based technology to “share your product’s journey and your business impact on environment and society.”
- Walmart is working with IBM and Tsinghua University to follow the movement of pork in China with a blockchain
- Mining giant BHP Billiton is using the technology to track mineral analysis done by outside vendors
- Everledger has uploaded unique identifying data on a million individual diamonds to help jewelers comply with regulations barring “blood-diamond” products.
In conclusion, despite the formidable challenges that must be overcome for this technology to be correctly used, this is an area that may well lead to economic revitalization. For this to happen, the challenges must be weighed against the demands of a global economy that, although more connected than ever before, still has fractured communication and isolationist forces that hamper trade.