Blockchain, or in tech parlance distributed ledger technology (DLT), is the technology behind most cryptocurrencies today. Blockchain stores encrypted data blocks and links them via hash – a cryptographic validation.
Blockchain is a peer-to-peer network with a decentralised database managed by multiple stakeholders. If someone remodels the data block, other blocks have the chance to deny the ledger entry. This distributed structure allows blockchain to run an endless list of distributed ledgers without a centralised authority. The three elements – hashing, peer-to-peer and proof-of-work – make blockchain immutable, transparent and resistant to hacks. Blockchain is still considered a freshman in the world of innovations; however, it has already given birth to Bitcoin – the world’s most mined cryptocurrency.
The transparent, secure and decentralised way of recording transactions makes blockchain revolutionary, primarily because it has the potential to transform B2B activities. Through blockchain’s ledgers, businesses can enhance their operational efficiencies, relations and profitability. Stakeholders can now achieve transparency, traceability and accountability in B2B transactions sustainably.
As IBM puts it: “A blockchain network can track orders, payments, accounts, and production. Because members share a single view of the truth, you can see all details of a transaction end-to-end, boosting confidence, efficiencies, and forthcoming opportunities.”
Blockchain in Supply Management
Today, blockchain has multiple use-cases besides cryptoassets. It has the capability to deliver transactions in supply chain management. The current pandemic has highlighted the inefficiencies in logistics – trust issues, delayed payments, sporadic product movement and opaque transactions. Capgemini offers blockchain-driven solutions to management problems and is currently building a mechanism to secure IoT devices in the supply chain.
Blockchain reduces paperwork for businesses and slashes down the production time. UK company eTEU offers blockchain-based document transfer solutions for logistics and supply chains. Its services include data optimisation and security, document transfer, and processing operations like ports release, cargo insurance and quality control. CargoCoin in the UK also employs blockchain to facilitate transactions between traders in the supply chain.
Financial Institutions and Blockchain
Blockchain’s contribution to facilitating digital currency payment is already well known.
London-based Adhara provides real-time solutions for multi-currency global liquidity management and international payments based on tokenised money over the smart contract-enabled, decentralised ledger. Ripple is a famous name and enables banks, payments providers and digital exchanges to send money globally using blockchain.
By implementing blockchain for secure payments, most financial institutions have created an environment of trust and reliability. Mastercard also plans to implement the technology for cross-border payments.
Circulor, which has offices in Europe, utilises smart contracts to verify the chain of custody. These smart codes are known for their ‘unhackable’ property and allow companies to streamline their operations. Smart contracts automate tasks in a business and save money by cutting down intermediaries.
The New Architecture of Trust
Another industry that has the potential to scale up its business via blockchain is food processing. Walmart has already employed blockchain in all its British outlets. The public sector is also utilising blockchain for e-governance solutions.
Keeping in mind blockchain’s applications in border management, the Eurostar train between London and Amsterdam won’t have to go through multiple border checks in the coming years. Both governments have tabled a blockchain alternative to secure passenger data. The mechanism will be developed by the Dutch and audited by British officials.
Insurance companies have also found a solution in blockchain technology to help their clients. IBM is partnering with American International Group (AIG) to produce a smart insurance product with international coverage. Standard Chartered is also running a pilot project to deliver a similar product.
With the Paris Agreement, most nations have promised a greener planet for their offspring. Following China, the UK is also in the process of developing a blockchain-based carbon credit tracker. IBM has already launched a solution with Energy Blockchain Labs to facilitate carbon trading between carbon creditors and debtors.
Blockchain is the new architecture of trust, as noted by Kevin Werbach, an Associate Professor of Legal Studies and Business Ethics at The Wharton School, University of Pennsylvania.
The technology is now ramping and passing its saturation point. A study by the World Economic Forum has revealed that by 2025, blockchain may drive one-tenth of global GDP.
Some will argue that the technology not only replaces traditional solutions but solves challenges associated with them.
However, blockchain itself will have to cut through the test of time. Interoperability is one challenge that stands in the way – meaning the simultaneous working of blocks. At times, individual blockchains may outstrip others, causing seasonal delays. Developers need to devise a perfect interoperability mechanism for these data blocks. Another issue that may hinder blockchain’s progress is scalability and high transaction fees.
Blockchain may not be a mass adoption tool yet, but the technology could bring fruitful results to the table with time. It’s time to welcome blockchain revolution 1.0.