There has been a great discussion about the potential of the blockchain as a distributed ledger and as a secure solution for small and large business transactions. Some visionaries see the technology as revolutionary as the Internet itself, but others are restrained by its legal and compliance frameworks.
The blockchain has a potential to become an important tool in building stable, secure and well-connected enterprise systems. At this point, however, it is yet to be tested in terms of regulatory and compliance requirements. For instance, many hospitals are not ready or unwilling to sign some documents digitally because of HIPAA mandates that may need to be corrected manually.
Although often suggested as the answer to the security problems of the financial industry, recent news point that blockchain is vulnerable to security problems too. Two separate hacks happened in a span of 3 months this year.
- Ethereum and DAO
$55.4 million worth of Ether cryptocurrency were stolen through a smart contract in June. The smart contracts were created by DAO (Decentralized Anonymous Organization), which uses Ether as its primary payment currency. In immediate response to the attack, Ethereum published a public plea to suspend ETH and DAO deposits and withdrawals.
$72 million worth of Bitcoins were hacked at the Hong Kong cryptocurrency exchange in August. The bitcoin was stolen from users’ accounts. The company reported the theft immediately and cooperated with top blockchain analytics to track what was stolen.
There is still validity to the idea that the blockchain can solve security problems. The technology itself is very secure. Since there is no central authority in its system, participants exchange transactions over a peer-to-peer network. This means that they keep copies of the file and only agree on changes by consensus. The latest transactions are wrapped in a new block of data to be added to the chain. Alongside that data is a block that contains a cryptographic signature of the previous block and itself, creating an immutable record.
Blockchain for Food Supply Chain
A significant percentage of the global population still has no secure access to plenty amounts of food. Despite this context, recent studies still show that approximately half of the US and about 30% of the world waste food. Thus, many companies have begun to exploit the opportunities offered by the blockchain to tackle complex systemic challenges in the food supply chain.
Retailers demand for perfect products, leading to food waste. They also seek lower prices, resulting to the industrialization of food production processes. Because of the increased cases of foodborne illnesses, many consumers have less trust on food. These challenges created the demand for more information on food production processes. When paired with sensors, the blockchain could make food data more transparent throughout the supply chain and reduce the amount of food wasted.
Blockchain records information and holds data through a secure and immutable distributed ledger. The distributed nature of the network makes the ledgers resilient, and transparent to all users. Of course, it also has its limits. There are challenges that comes with blending a digital representation and a physical product. But, there is still reason to believe that it could secure an effective food supply chain in the future.