Technology & the Changing Global Landscape: What is Blockchain?
Posted on November 1, 2018
In this series, we will examine the impact of the latest technologies on global business. Our first technology is the word many are buzzing about – blockchain. But what is it and why are people so excited?
Blockchain is essentially a new type of internet where economic transactions take place. It was invented specifically for the digital currency Bitcoin, but now people are finding additional ways to use it. The attractive part about blockchain is that information can be distributed but not copied. Its records are permanent and unchangeable, allowing everyone to see exactly what and how much was transacted.
Blockchain technology is like having thousands of computers with the same shared spreadsheet open at the same time and everyone can see everyone else’s changes. The spreadsheet doesn’t belong to anyone and it’s saved on servers all over the world. There is no hiding or altering what you’ve added.
The word “block” is used because every ten minutes, a group or “block” of transactions is reconciled. Once reconciled, the blocks are added to the network and multiple blocks become blockchains. Blocks are time stamped, geographically located and traceable to who initiated the transaction. It is incorruptible since the network is decentralized and too large to override. Transactions are added to the network by computers called “nodes,” which are administered by people that voluntarily validate and relay transactions. These people are voluntarily developing blockchains because they have the chance to win Bitcoin during the process.
Confused yet? The good news is you don’t have to understand exactly how it works to take advantage of it. Block chain is based on transparency and security, and uses cryptographic signatures to validate identity. Blockchain is set to overhaul many industries, including finance, supply chain management and food security.
Equipment manufacturers and overseas buyers will be able to exchange money directly through the blockchain system, rather than having to get government approval or use a bank. If a buyer lives in an area where the banking system is underdeveloped, it gives them access to a worldwide finance system.
Companies may verify the authenticity of their supply chain through blockchain. From the original sourcing of goods through all transactions and owners, the blocks are visible and cannot be altered. In this way, you’ll know exactly where your goods came from, when they were manufactured and how much they sold for.
You’ll also be able to track shipped goods in real time, as Maersk is doing with their project called “TradeLens.” The project recently moved from beta testing to early application, and participants include IBM along with 90 cargo owners, customs authorities and freight forwarders. TradeLens tracks cargo with fewer middlemen and can quickly locate empty containers available for use.
The food industry is using another form of blockchain to enhance traceability with secure digital records proving exactly where and when food was produced, at what temperature it was stored and the safety certifications of storage facilities. Wal-mart is already requiring that suppliers of leafy green vegetables to their stores use blockchain to store their data by September 2019.
International contracts will benefit from blockchain, as well. There will be no second guessing if a contract was correctly executed as so called “smart contracts” will only allow currency to be transferred once all criteria are fulfilled within the blockchain system.
There’s already a slew of start-ups and established companies capitalizing on the blockchain revolution. The goal is to get companies around the world using the technology by making it quick and easy, with the only initial costs being an internet connection and the time it takes to choose a blockchain application.
It would be wise to familiarize yourself with the latest blockchain developments within your industry now, rather playing catch up later.