7th Oct // 2018
There’s still a lot of confusion around Blockchain and many people still mix it up with Bitcoin. It's now been around for about ten years but it's only over the past couple of years that we've seen a growth in the number of applications using it. While the concept of Blockchain technology is fairly easy to understand, having real life examples makes it easier to see how it can be applied.
One of the main uses of Blockchain is where you want to keep a record of, say, ownership.
One successful example is with diamonds. To solve the issue of blood diamonds reaching the supply chain, Blockchain technology is used. There was already an identification system that could identify each diamond. However, that was vulnerable to fraudulent transactions being recorded. It would have taken just one company to issue a false identification document and a blood diamond could be “laundered.” Using Blockchain, the companies that (physically) mine the diamonds are verified in the real world and verified companies are the only ones that can add a diamond to the ledger. As the ledger uses Blockchain technology, a fraudulent transaction would need 51% of the Blockchain mining companies to agree before it is recorded. This is much harder, if not impossible, to achieve. When the diamond is manufacturered and sold, the ownership is also recorded - and in this case the ownership can also remain confidential (unless the owner agrees otherwise). If the diamond is sold on, the ownership changes on the Blockchain ledger. In this way, each diamond can be verified and traced back to its source. Although one of the world's leading suppliers of diamonds, De Beers, was originally behind the scheme, it has trust because it also involves other parties in the industry. You can find out more details at www.tracr.com
Blockchain can also be applied to, for example, supply chain management. At present, disparate systems track supplies - for example in the assembly of cars, the parts are on the part suppliers stock systems. They are then copied onto a carrier’s system during transportation and then onto the car company’s stock system when they arrive. At this stage they can be tracked to individual vehicles but it may be hard to find out which parts supplier batch the part came from. Using block chain means that each part can be tracked in a distributed ledger with the part supplier, carrier and car company all updating the same records using normalised data. This can really help when reconciling deliveries and paying for parts. But the ledger can be extended so that when the car is sold, the owners details are entered. So an owner can look at each part that went into the car. The car companies can use this data to record details about when parts were changed and why and they can look at improving the products. Of course, at present there is traceability but it’s hard to maintain and easy for mistakes to be made. Blockchain can make this process much easier. It could also be extended so that part manufacturers and different car companies can use a single system. Obviously here, the data may not be fully open but Blockchain can be set up to be private.
At the moment, the main uses of Blockchain seem to be as a land grab to apply Blockchain to particular sectors. As with all new technology, the main uses aren’t clear yet, however it’s a technology that’s worth investigating. If you need some pointers, contact me here.
If you're still unsure about how Blockchain works - check out this article.