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Blockchain 101: What You Need to Know

Companies need to know what goes on beyond the four walls of their businesses in order to gain greater insight to their full supply chain. They need technology that will enable them to understand the total process that runs their supply chains. Thus, Blockchain becomes a very interesting idea for organizations. It promotes trust among companies by bringing transparency into the supply chains, therefore making it “trustless”.

What is a Blockchain?
First, let us define what a Blockchain is. It is a transaction database that contains a continuously growing list of data shared by all nodes participating in the system. Every block contains a hash of previous blocks, creating a chain of blocks. Each block is guaranteed to come chronologically after the previous block and is computationally impossible to modify as every block after it would have to be regenerated.

Blockchain is the main innovation and technology behind Bitcoin. It is most widely used in the currency’s public ledger of cryptocurrencies. Based on a Bitcoin protocol, it contains every transaction executed in the currency. It contains all information about the addresses and their balances. That is because every computer connected to the Bitcoin system gets a copy of the blockchain. It is automatically downloaded upon signing up to the network.      

Decentralization
A block chain is open but secure. It is auditable and runs without a centralized operator. It is the only place that Bitcoins can exist in the form of unspent outputs of transaction. Unlike traditional payment systems like PayPal, it does not require a centralized database.  Since transactions are made by software applications, the nodes validate the transactions, add them to their copy of the ledger and broadcast them to other nodes.

The blockchain provides transparency a traditional centralized approach cannot. It can allow companies to make informed purchases by increasing visibility. It makes the authenticity and transparency of products and services less difficult by ensuring safe and verifiable transfer of digital property across expansive networks. In a word, blockchains may very well change the game of the complex global supply chains.

Time will tell.  Organizations are conservative, but we are already seeing adoption of the technology across the financial sectors worldwide.   Supply chain professionals should start considering the value of an open public ledger when considering new b2b commerce networks.

Blockchain Disrupts Business Models

Most companies wait for a certain technology to mature before investing on it. That’s why fin-tech companies have their eyes on the blockchain. They are investing huge amounts of time and money on its development. The technology is believed to disrupt business models by making financial services more efficient. Soon, companies will be able to execute financial transactions in entirely new – and secure – ways.

What is exactly a blockchain? It is a geeky term for a digital ledger or bank vault that participants can access and make changes with. It is popularly known as the technology that underpins the Bitcoin, providing indelible record of its transactions with high levels of cryptographic security. It has many features that fin-tech companies find compelling:

  • It’s decentralized. It doesn’t have a single point of failure.
  • It’s secure. It utilizes cryptography to validate all transactions.
  • It’s has an immutable history. It has a write-once, spend-only attribute.
  • It’s efficient. You can exchange information fast and easy.
  • It’s transparent. Everything is documented in the blockchain.

The blockchain technology has the potential to streamline and accelerate business processes. It can also reduce or eliminate the roles of intermediaries, and increase cybersecurity as well. While it has some challenges, it will be extremely powerful and will change how businesses operate. Instead of relying on a third-part clearing house, financial companies can use the technology to execute and verify transactions safely and discretely among themselves.

However, financial companies face a number of challenges in using the blockchain:

  • The main roadblock is that the industry is heavily regulated. This means that many of its transactions have to be regulated by a third-party and must be transparent.
  • There is also the question of privacy. It can be difficult to satisfy participants who want to conduct safe transactions without an intermediary, but do not trust one another.
  • Lastly, there is the issue of Due to high volumes of financial transactions, the system can slow down or stop – even for just a second. This limits adoption in cases where speed and volume are important.

Despite these limitations, the blockchain is becoming a significant part of the financial services industry. Today, it is being used by banks to streamline and automate their back-office operations. It is also spreading to other industries, such as the healthcare, IoT, real estate, insurance, cloud storage and supply chain management. Hopefully, it will transform the inefficient ways of conducting transactions. A lot will depend on which consensus mechanisms will be adopted. Some transactions may find this technology beneficial. Others may not. It is up to companies which works best for them.

Blockchain Revolution: Can It Solve Security Problems?

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.

Blockchain Weaknesses
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.

  1. 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.
  2. Bitfinex
    $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.

 

 

 

Blockchain: Empowering the Industrial Internet of Things

While Bitcoin is the most popular application of Blockchain, the technology also has trustless, secured and decentralized capabilities that can redefine business solutions, including those that empower the Internet of Things.

What makes the Blockchain an essential element of industrial Internet of Things? The fact that the technology behind the Bitcoin is autonomous, trustless and decentralized makes it an ideal component of industrial IoT solutions. Thus, many enterprise IoT technologies have quickly become its early adopters.

In an IoT network, the Blockchain keeps an undisputable record of the history of smart devices. This enables the autonomous function of smart devices without the need for a centralized authority. This means that difficult or even impossible scenarios of the Internet of Things are now probable.

By leveraging the technology, industrial IoT solutions can enable secure communication between smart devices in a network. This means that the Blockchain will treat the exchange of data between devices like financial transactions in a Bitcoin network. To enable this trustless and secure data exchange, smart contracts are required between two parties.

The Blockchain also enables autonomous smart devices to exchange data without the need for centralized broker. It also maintains a suitably decentralized ledger, which allows regulatory and compliance requirements of industrial IoT to be applied without the need for a centralized model.

The promise of Blockchain in IoT solutions is more than just a theory. Many IoT solutions are already leveraging the technology, including IBM, Samsung, and Filament. IBM and Samsung collaborated to build decentralized IoT solutions. Filament develops wireless devices that accept Bitcoin payments.  While these solutions are still in the early stages, they have garnered remarkable results.

How does the Blockcahin empower IoT solutions? It enables secure communication, keeps undisputable record of history, and enables data exchange without a centralized authority. In a word, it redefines business solutions. Sign up for our weekly blog summary and newsletter!      

Explaining the Blockchain Technology to an Average Person

What do we call blockchain technology so the people will understand it better? The blockchain technology is not for average persons. It probably ranks on the 10,000th level of the nerd scale. This makes it difficult for a startup business to get people to comprehend it. They need to explain the technology behind Bitcoin in ways that laymen understand to help unpack some of its complexity.

In order to unpack the complexity of blockchain, some shiny marketing gloss should be placed on top. However, marketing to the masses will clearly take more than a 10-minute brainstorming session. It can be difficult to get mainstream consumers to trust their life savings to a decentralized bank or a blockchain-based insurance when they don’t understand the concept.

The blockchain is a massive decentralized trust machine and a distributed ledger technology. It is a programmable trust infrastructure that allows you to program your trust in the concept or the rules. This allows you to remove the systemic risk, which is one of the technology’s key benefits. Technically, it cryptographically validates secure web pages and pulls together data from them.

There is a broad range of things that you can do with the blockchain technology. Integrating it into the Internet of Things lets you keep track of rental or ownership of physical objects. It could also act as a real-time inference audit tool that promotes continuous blockchain traceability. This means that you do not have to do another audit on failed spot checks because, essentially, you would be auditing as you go along.

There are a bunch of upstart players across industries, and they can benefit from the blockchain technology if consumers understand the concept. The technology is a distributed ledger that records and verifies every transaction made worldwide. It is a decentralized trust machine; thus, it is difficult to hack or alter records in its registry. Understandably, it is a brilliant and extraordinary technology.

Blockchain: The Next Big Thing in the Supply Chain

Blockchain has the potential to change how the supply chain works. Although it is owned and monitored by everyone, it is ultimately controlled by no one. It is like a gigantic interactive spreadsheet that everyone can access and update. It consists of transactions and blocks, which contain a hash of the preceding blocks – thus the name blockchain. It creates new and secure ways of interaction between businesses, with no prior relationships, over the Internet.

The blockchain promotes trust and transparency in the supply chain. It can create a formal registry to tag products and monitor their course in different points of the supply chain by confirming receipts and automatically releasing payments. Without the blockchain, transactions can take place in two to three days. The technology speeds up the operations within hours and also reduces transaction fees.

Every time a product is moved, the transaction is documented in the database and into the blockchain. This helps producers to trace where their products are and how they are integrated into finished items. It also allows consumers to identify and trace the merchandise from manufacturing to delivery. In a word, the blockchain assures producers and consumers that the products were safely and verifiably transported.

The blockchain changes the game of complex global supply chains. It promotes trust among companies by ensuring a secure and confirmable transfer of digital assets across expansive networks through a transparent supply chain. It also allows them to make informed decisions by improving visibility. Thus, supply chain professionals need to consider its value when regarding new B2B commerce networks.

Many are now employing the blockchain in ways that go far beyond Bitcoin. In fact, the financial industry has already adopted the technology. Companies have found a way to improve supply chain efficiency through it. As a distributed ledger, blockchain tracks a product throughout its journey in the supply chain. This enables businesses to understand the process that runs their supply chains.

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