2017 was the year that blockchain technology came of age. For those of you operating in the world of bitcoin currencies, you’ll be familiar with blockchain as something that has been around for many years acting as a fundamental building block of the wealth of digital currency markets.
For everybody else, it is still fairly unknown as a digital technology. The good news is that it is becoming a really useful tool for improving company value chains, radically shifting the way different companies can work together and unlocking the value that can often be tied up in time-consuming processes. So, here’s how it works.
A blockchain is basically a great big spreadsheet, or a ledger, of recorded information. It is something almost every company keeps to record important information. But unlike a traditional Excel spreadsheet, blockchains accept inputs from lots of different parties and the details can only be changed when there is a consensus among a group of users. This makes the spreadsheet much more secure and removes the need for any one person or entity to centrally manage and approve transactions and inputs into the spreadsheet.
The blockchain is a spreadsheet that has been duplicated thousands of times across a network of computers. And this network of users can regularly update the spreadsheet. So, a blockchain is information that exists as a shared and continually updated database – one that isn’t stored in any single location, serving up information and data in a public and easily verifiable way.
Right now, whenever a company exchanges information with those along its supply chain – whether they are suppliers, logistics companies or buyers – it can a complex and time-consuming activity. Asking multiple partners to input and share data over and over again can be hugely inefficient.
But the decentralised and digital nature of blockchain technology could well fundamentally change how data is managed – shifting from a situation where every company creates and maintains its own copy of a data set to a situation in which all parties have access to a shared copy.
And this can build much more trust into transactions and help to create more transparent supply chains. “The most critical area where blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism,” says the technology futurist, Ian Khan.
And here’s the kicker: Each blockchain network lives in a constant state of self-auditing. Every ten minutes, the technology can checks each transaction, financial or otherwise.
To give an example. A batch of fish might be caught at sea, transferred to a net, on to a ship and then taken to a processing plant. It is then packed and distributed to a retail outlet. Right now, information attached to that fish is recorded in a number of different ways by a number of different people – from the fisherman, to processing plant operatives – using a number of different devices.
The disparate and disjointed recording of information is a problem should something go wrong. If the fish are caught illegally or ship workers are being mistreated, it is very difficult for brands to trace the issues back to the problem area.
But that’s where blockchain could help. By collecting information on the origin of the fish, where it was caught, processed and sold on, the characteristics of blockchain could open up the supply chain for wider, public scrutiny.
The growing demand for greater transparency for the products and services we know and love continues to spur innovation in developing new ways to build more accountability into supply chains. And blockchain might just be the answer, so ignore it at your peril.