16.04.2019

Have you wondered about Blockchain? - The future is immutable.

I just wanted to write a quick overview of what it offers, where we are today and where it looks like going.
 
As there is a strong belief in the future widespread and mainstream adoption of blockchain technology, it is certainly worth investigating.
 
In the next 5 years this technology is likely to see something of a renaissance with early adopters gaining solid first user advantage with significant efficiency and cost benefits.
 
The current best use cases are;

- Consumer delivery (track and trace), consumer payments and loyalty point schemes
- Digital advertising (see basicattentiontoken.org)
- Business to business payments and connected transaction services
- Stolen product retrieval and counterfeit product identification
- Targeted product recall
- Connected supply-chain traceability (see vakt.com) and proof of sustainability
 
What are the features of blockchain?

1. Near real-time transaction recording between counterparts
2. No single point of failure as all agreed information is distributed across many systems which check each other for        correctness
3. Transparency due to multiple systems holding identical information
4. Immutability since historical records cannot be changed without detection and correction 
5. Smart digital records which can express any document or asset in digital form
 
Gartner estimates the future investment in blockchain technology will reach 176 billion$ by 2025 and 3.1 trillion$ by 2030.
 
The current main barrier to wider investment and so adoption is seen as both a lack of knowledge of this technology in the C-suite and a lack of understanding by executives of the potential applications relevant to their particular business.
 
One of the most promising areas for early adoption is product supply-chain.
 
There are four main areas that are a current problem for all supply chains which blockchain can address;

1. Traceability - Blockchain provides a full audit trail of data allowing a record of every transaction along the supply
    chain from the end user to the origin.
2. Immutability - All transactions on a blockchain are time stamped and tamper proof so it provides a single source of
    integrity of transaction
3. Automation - Smart contracts can be incorporated into the blockchain which can instantly react to a change
    in circumstance and allow for different scenarios to be anticipated ahead of time, planned for and executed without      large cost increases
4. Disintermediation – Peer2peer interactions can be fully trusted based on a digital signature without the need for          paperwork
 
In the short term blockchains largest impact is likely to be in traceability and sustainability across supply-chains. This can eliminate counterfeits and increase confidence in quality and origin of goods.  This is also a valuable component in corporate social responsibility.

In addition smart contracts will allow for far better inventory control along the chain significantly improving working capital efficiency.

There are of course also significant challenges ahead for Global adoption;

Quantum computing - todays cryptographic algorithms may be broken by the advent of quantum computers and although new quantum proof algorithms are being developed they are not yet deployed

Scalability of transaction blocks - Due to the distributed nature of blockchains there is a limit to the throughput of transactions which can be a drag particularly on public permissionless blockchains i.e. ones which are open to everybody. It is less of an issue to permissioned or corporate blockchains of the sort which will be deployed in industy supply chain applications

Interoperability - This is both a technological and semantic challenge. Many systems do not and cannot communicate with each other creating, in effect, many digital islands. In a blockchain enabled supply chain there must be transparent and seamless communication between all systems. In order to ensure this seamless communication can be developed accepted interoperability standards need to be created so everybody works basis the same semantics. Currently a number of bodies including the ICC, UN and WCO have working groups looking at this. 

Regulatory framework - There needs to be agreement that blockchain transactions are legally enforceable and the data exchange permissible. Data privacy laws must be clarified as they will relate to blockchain immutable transactions

Blockchain is here and it will change the way many businesses operate in the future. It is necessary to stay current with developments as well as how and when it can be deployed to create cost efficiency.