What is Blockchain?
According to Wikipedia a blockchain is a distributed database that maintains a continuously-growing list of records called blocks. Each block contains a timestamp and a link to a previous block. The data in a block cannot be altered retrospectively.
The first blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency bitcoin, where it serves as the public ledger for all transactions. Through the use of a peer-to-peer network and a distributed timestamping server, a blockchain database is managed autonomously.
Think of it like this: If the entire blockchain were the history of banking transactions, an individual bank statement would be a single “block” in the chain. Unlike most banking systems, however, there is no single organization that controls these transactions. It can only be updated through consensus of a majority of participants in the system. In short, blockchain is a record-keeping mechanism that makes it easier and safer for businesses to work together over the internet.
Benefits of Blockchain to the Supply Chain
Many commentators agree that blockchain technology has far greater potential than just supporting a digital currency such as bitcoin. The potential for improvements in the Supply Chain are limitless. Imagine a scenario where every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today. The benefits for pharmaceutical manufacturers (all stage product lifecycle track and trace) and OEM’s (product recalls), to name just two industries off hand, are enormous.
According to an article by Jon-Amerin Vorabutra the advantages blockchain technology brings to the supply chain community could be listed as follows:
- Enhanced Transparency. Documenting a product’s journey across the supply chain reveals its true origin and touchpoints, which increases trust and helps eliminate the bias found in today’s opaque supply chains. Manufacturers can also reduce recalls by sharing logs with OEMs and regulators.
- Greater Scalability. Virtually any number of participants, accessing from any number of touchpoints, is possible.
- Better Security. A shared, indelible ledger with codified rules could potentially eliminate the audits required by internal systems and processes.
- Increased Innovation. Opportunities abound to create new, specialized uses for the technology as a result of the decentralized architecture.