Blockchain was originally developed as an open-source technology for handling transactions of the crypto-currency Bitcoin. As a peer-to-peer network, it removes the need for a central authority or third-party intermediary such as a bank. Industry is now waking up to the fact that the impact of this technology is far wider than crypto-currencies. Blockchain has the potential to affect all business sectors and transform the way we trace and verify transactions of all types.
Whether public or private, Blockchains are distributed ledgers that record “blocks” of information. Each block is linked securely to the previous block using cryptography. The chain cannot be modified. The Blockchain is therefore secure by design, an essential feature in a world where hacking and falsification are real risks.
Without getting too technical, it is important to highlight four key features of Blockchain. First, consensus. All participants (“nodes”) must agree that a transaction is valid. Second, provenance. Participants can find out where an asset came from and how its ownership has changed over time. Third, immutability. If a transaction was made in error, a new transaction must be made to reverse the error, with both transactions visible to all parties. Lastly, finality. There is one single place to determine the ownership of an asset or completion of transaction: the distributed Blockchain ledger.
Blockchain is interesting for businesses because it enhances the traceability and security of transactions. Supply chains are one key area where the technology provides great added value. For example, take food production. The global trade in food products is becoming increasingly complicated, which is good for consumer choice but results in long, complex supply chains that are difficult to audit. Information is often kept on paper, while the lack of transparency means different parties hold different and sometimes contradictory information. Do you want the ability to know where your food comes from? Blockchain makes this possible. Every transaction or process involving a product and its components is recorded in a distributed ledger. The supply chain is permanent, verifiable and complete, bringing a new level of trust and transparency to the network of growers, processors, retailers, regulators and consumers.
Blockchain and the more recent IOTA – a next-generation technology with greater applicability for the Internet of Things – are elevating the traceability and transparency of industrial manufacturing to a new level. They are reshaping business models and making requirements such as regulatory compliance quicker and more cost-effective. At RINA, we have seen enough technologies come and go to know that one shouldn’t overestimate a new technology in the short term. But it is equally important not to underestimate the long-term potential of Blockchain. That is why we are committed to staying at the forefront of innovation in this area, identifying practical ways in which it can help our clients enhance their businesses.