What is Blockchain Technology?
In simple terms, Blockchain is a record-keeping database technology that stores blocks of information on a chain.
Blockchain – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto – is based on distributed ledger technology which securely records information across a peer-to-peer network. Originally devised for Bitcoin but its potential is huge, with Blockchain ledgers being used for loans, identities, logistics – almost anything of value.
Information is passed from A to B in a fully automated and safe manner. One party (A) to a transaction initiates the process by creating a block. This block is verified by thousands, perhaps millions of computers distributed around the net. The verified block is added to a chain, which is stored across the net, creating not just a unique record, but a record with a unique history, which is received by the other party (B).
Falsifying a single record would mean falsifying the entire chain in millions of instances. That is virtually impossible and because there is no central location, information is extremely difficult to hack or manipulated.
Example: Think of a Railway company. We buy our train tickets on an app or the web. The credit card company takes a % cut for processing the transaction. With Blockchain, not only can the Railway company save on credit card processing fees, it can also move the entire ticketing process to the Blockchain.
The two parties in the transaction are the Railway company and the passenger. The ticket is a block, which will be added to a ticket blockchain. Just as a monetary transaction on Blockchain is a unique, independently verifiable and unfalsifiable record (like Bitcoin), so can your ticket be. Also, the final ticket Blockchain is also a record of all transactions for, say, a certain train route, or even the entire train network, comprising every ticket ever sold, every journey ever taken.
It’s free. Not only can the Blockchain transfer and store money, but it can also replace all processes and business models which rely on charging a small fee for a transaction. Or any other transaction between two parties.
The Six Benefits of Blockchain Technology to Manufacturers
- Less Intermediaries – Blockchain is a true peer-to-peer system which reduces the reliance on third party companies (middlemen) such as brokers and banks;
- Faster Processes – Blockchain can speed up processes with faster transactions and business can still be done outside of the 9-5 and by locking away information in secure blocks, any errors can be instantly identified and corrected in real time, reducing any delays due to mistakes in the supply chain;
- Transparency – Information in Blockchains is viewable by all participants and cannot be altered. This will reduce the risk and fraud and increase trust;
- Return on Investment – Ensuring businesses become leaner, more efficient to speed up processes and increase profits. By using Blockchain as a digital supply chain, most manufacturers will find that they can completely eliminate a huge amount of admin from their existing business model;
- Security – As this technology is extremely difficult to hack, this will future proof business processes with IoT becoming increasingly adapted into production;
- Automation –Whether we like it or not, the manufacturing industry is changing, and Blockchain represents the first step towards the automation of future supply chains. By implementing and using Blockchain now, businesses can give themselves an edge over the competition in an increasingly high-pressure environment.Blockchain integration makes a business seem forward-thinking and agile, making it stand out in a sector that is sometimes accused of being stuck in the past.Blockchain technology is programmable meaning that actions, payments and events are automatically triggered once conditions are met.
DHL and Accenture already using Blockchain
Back in 2018, Global logistics company DHL partnered with IT services company Accenture to launch a blockchain-based prototype to track pharmaceuticals across the supply chain.
Global supply chains are notoriously complex, with diverse stakeholders, varying interests, and many third-party intermediaries all becoming involved at some point throughout the process. While this is less of an issue with some products, when it comes to something as vital as pharmaceuticals, the risks of getting it wrong are far too high.
Each year, 1 million lives are reportedly lost as a result of counterfeit or black-market medications and Interpol has estimated that as much as 30 percent of pharmaceutical products in emerging markets could be fraudulent.
The two companies launched a proof of concept which contained nodes in six geographies. These nodes are able to track the medicine and record its journey on the blockchain – also known as a shared ledger – with various stakeholders including manufacturers, warehouses, distributors, pharmacies, hospitals and doctors.
Blockchain technology has the capacity to handle more than 7 billion unique serial numbers and 1,500 transactions per second and can achieve a higher standard of safety whilst keeping costs and complexities to a minimum.