The 21st century is all about technology. Technologies like augmented reality and IoT that have gained pace in the past decade and now there’s a new addition to the pack i.e. Blockchain Technology.
Blockchain- The revolutionary technology impacting different industries miraculously was introduced in the markets with its very first modern application Bitcoin. Bitcoin is nothing but a form of digital currency (cryptocurrency) which can be used in the place of fiat money for trading. And the underlying technology behind the success of cryptocurrencies is termed as Blockchain.
What is Blockchain?
In the simplest terms, Blockchain can be described as a data structure that holds transactional records and while ensuring security, transparency, and decentralization. You can also think of it as a chain of records stored in the forms of blocks which are controlled by no single authority. A blockchain is a distributed ledger that is completely open to any and everyone on the network. Once information is stored on a blockchain, it is extremely difficult to change or alter it.
Each transaction on a blockchain is secured with a digital signature that proves its authenticity. Due to the use of encryption and digital signatures, the data stored on the blockchain is tamper-proof and cannot be changed.
Blockchain technology allows all the network participants to reach an agreement, commonly known as consensus. All the data stored on a blockchain is recorded digitally and has a common history that is available for all the network participants. This way, the chances of any fraudulent activity or duplication of transactions are eliminated without the need of a third-party.
How Does a Blockchain Work?
A blockchain is a chain of blocks that contain data or information. Despite being discovered earlier, the first successful and popular application of the Blockchain technology came into being in the year 2009 by Satoshi Nakamoto. He created the first digital cryptocurrency called Bitcoin through the use of Blockchain technology.
Each block in a blockchain network stores some information along with the hash of its previous block. A hash is a unique mathematical code which belongs to a specific block. If the information inside the block is modified, the hash of the block will be subject to modification too. The connection of blocks through unique hash keys is what makes blockchain secure.
Blockchain allows the contract for asset transfer to be embedded in the transaction database. Once a contract is validated and deployed, its execution is guaranteed. All transactions against the ledger require consensus across the network, where the provenance of information is not subject to misinterpretation and accessible to all participants.
Transactions cannot be changed and are final.
Blockchain technology coupled with the ability to program business logic with the use of smart contracts enables the following:
- Transparency into the provenance of consumer goods— from the source point to end consumption
- Accurate asset tracking
- Enhanced licensing of services, products, and software
Even in today’s technologically advanced world, supply chains could dramatically improve efficiency, audible tracking, and limit exploitative behaviors. In the container industry, paperwork can account for half the cost of transport. A nationwide study conducted in the U.S. from 2010 to 2012 by the international ocean advocacy organization Oceana revealed that seafood is mislabeled up to 87% of the time. Mica, which is present in makeup, electronics, and automobile paint is often sourced from illegal mines by child laborers.
consumer goods, especially electronics, pharmaceuticals, and luxury brands, are susceptible to counterfeiting and fraud. A report from PwC claims that more than 2% of global economic output results from counterfeiting revenues.
The implementation of public, private, and hybrid blockchains will bring traceability, transparency, and accountability to the movement of goods and commodities. The technology can be applied to logistics to make business processes more efficient and to cut costs from supply chain infrastructure.
Blockchain makes supply chain management more efficient:
Supply chains contain complex networks of suppliers, manufacturers, distributors, retailers, auditors, and consumers. A blockchain’s shared IT infrastructure would streamline workflows for all parties, no matter the size of the business network. Additionally, a shared infrastructure would provide auditors with greater visibility into participants’ activities along the value chain.
Blockchain has the potential to drive cost-saving efficiencies and to enhance the consumer experience through traceability, transparency, and tradeability.
Blockchain technology enhances supply chain management through process tracking, regulatory compliance, reporting.
Supply chain traceability is one of the top use cases for blockchain technology. Replacing the traditional processes with distributed ledger technology could increase trade volume by 15% and U.S GDP by up to 5%. Blockchain provides the ability to track any digital or physical product throughout its lifecycle. Distributed ledger technology has the potential to expand the sustainable and ethical production and consumption of any commodity on a global scale.
Almost every industry uses third-party manufacturers or various products from multiple vendors before creating and labeling the final finished goods. In some cases, white-label products are sold before being repackaged and relabeled under another brand. Transparency in process tracking gives producers a bird-eye view into their value chain, allowing them to guarantee the proper handoff of third-party goods and final product labeling.
Blockchain can track the progression of assets, record the information, and show previous asset records. Smart contracts are used to enforce the asset tracking processes on the Ethereum blockchain. Anyone can view the provenance and journey of an asset in real-time, whether the asset is physical or digital.
By reviewing and restructuring the supply chain to effectively serve the front-end, from the consumer all the way back through to the suppliers’ suppliers, organizations can achieve similar results without the technical complexities that blockchain can raise.
Source: www.supplychaindigital.com, consensys.net, www.forbes.com, hackernoon.com.
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