Blockchain is a hot topic right now. It's disruptive. And its use is accelerating through industries ranging from finance to media and entertainment. The benefits are already becoming clear. In finance, blockchain is enabling more efficient online payments and accounts, for example, while in the entertainment world it is streamlining digital rights management.
But what exactly is blockchain? And what makes it a vital component of any business network where trusted data needs to be shared? Not least supply chains.
Traditionally, trusted third parties have acted as intermediaries for financial transactions. If you send money overseas, as an example, the intermediary will usually be a bank. The transaction can take up to three days and the intermediary will take a commission in the form of exchange rate conversion or charges.
The original blockchain was open-source technology which offered an alternative to the traditional intermediary for transfers of the cryptocurrency bitcoin. The intermediary was replaced by the collective verification of the ecosystem – offering unrivalled traceability, security and speed.
A distributed digital ledger
In essence, blockchain technology is an advanced database mechanism that allows transparent information sharing. While any conventional database can store information – a file of transactions on a computer, for example – blockchain is decentralised. Many identical copies of a blockchain database are held on multiple computers (referred to as nodes) spread out across a network – that's why it's described as a distributed digital ledger.
With blockchain, data is stored in blocks that are linked together in a chain. As fresh data is added to the network, a new block is created and attached to the chain. This involves all nodes updating their version of the blockchain ledger to remain identical. The data is chronologically consistent because you cannot delete or modify the chain without consensus from the business network.
Why is blockchain secure?
How the new blocks are created is key to why blockchain is considered highly secure. A majority of nodes must verify and confirm the legitimacy of the new data before a new block can be added to the ledger – unlike a standalone database, where one person can make changes without oversight.
As a result, blockchain technology offers a decentralised, tamper-proof system to record transactions such as orders, payments and accounts. And it's why blockchain lies at the heart of our Atamai Freight digital border solution that provides real-time visibility and security of consignments in transit to each supply chain partner.
More than trusted data
But having data you can trust is just the start when it comes to supply chains. Fragmented supply chains and paper-based systems and processes are hiding huge reserves of valuable insights. Blockchain technology makes it possible to harness that data and monetise it or learn from it.
Mapping every journey through a port of entry/exit, monitoring CO2 emissions from the transportation of goods, quantifying the deterioration of pharmaceuticals by tracking the integrity of a cold chain, linking an individual’s biometrics with a vehicle registration – all of these activities have value to different stakeholders in the supply chain. Blockchain holds the key to unlocking all these new revenue streams – and more.
As the Internet of Things (IoT) grows, it will enable organisations to collect all kinds of new data from different stages of a supply chain – anything potentially readable is easy to add to the chain. Smart seals containing telematics technology could be manufactured into trailers and shipping containers, for example, to emit real-time location, speed and temperature. When collected on a blockchain, this data has potential value to organisations on the chain, as well as other parties they transact with.
But supply chains are just one example. By increasing trust, security, transparency and the traceability of data shared across a business network, blockchain is set to transform companies, sectors and industries across the world.