Blockchain Tech: Why All Industries Should Be AwareBy Karel van Laack | Fri, 04/09/2021 - 09:15
Blockchain Technology is a concept that many people and businesses may have heard of, but it is often looked over or misunderstood as only being related to cryptocurrency or bitcoin. There are, in fact, many benefits of implementing this system that has already been successfully used by large corporations such as Unilever, DHL, Rabobank, British Airlines, and many other companies from a diverse range of industries. Blockchain technology should not be overlooked, especially by SMEs, since almost 100 percent of business practices have been converted to be completely online, and the globe will inevitably become more digitalized in the future. There are, of course, increased risks of hacking and loss of data that can come with digitalizing all functions of a business; however, with the help of blockchain technology, these risks can be minimized.
Blockchain Technology in a Nutshell
As its name suggests, a blockchain is a series of blocks that are interlinked, with each block containing its own information. It can be viewed as a distributed database that any authorized individual can receive a copy of. Each person with access can add new blocks of information, but data that is already on an existing block cannot be altered. Each block contains data, hash, and hash of a previous block. An example of a type of data that would be stored in a block could be an invoice statement or a transaction that occurred between two parties (sender, recipient, and amount transferred). A hash is a special identification code that is unique to that specific block, similar to a fingerprint or a passport. Moreover, each block contains the hash of a previous block to be linked, creating a chain of security.
The aspect that makes blockchain technology secure is the near impossibility to alter or change any information that is recorded on a block, as they each have a “Smart Contract.” The term refers to a completely digitalized contract that acts as a computer program within each block that is immutable, meaning that once a smart contract is created, it can never be changed again. A smart contract is also distributed among authorized individuals for validation of the output. This concept was created in 1991 and was originally intended for digital documents to be timestamped without being allowed to be backdated or edited. Blockchain technology was eventually used in 2009 to create the digital cryptocurrency, bitcoin, a type of online currency that individuals were able to use as a form of payment without the need of a third-party bank.
Overall, blockchain technology is a transparent form of storing data. Any authorized individual can view the data in each block without being allowed to tamper with the information stored. In this sense, implementing the use of blockchain technology can make a company seem more credible, reliable, and trustworthy due to the transparency of its databank. Moreover, the implementation of blockchain could potentially save costs by providing faster transactions without hiring intermediary or third-party services.
An Example of How Blockchain is Used
Many companies have already adopted blockchain technology into their practices. One notable company that has been using blockchain technology in energy and supply chain is the Dutch corporation and Holland House Mexico member Royal Dutch Shell. “We are exploring blockchain as a way to ensure the validity of carbon credit programs. By tracking the progress and effectiveness of nature-based solutions for carbon capture or avoided emissions, blockchain could identify and avoid double-counting of carbon credits and help to maintain the quality of re-afforestation or conservation projects.” Moreover, on its company website, Shell states that it has created a “Decentralized Digital Passport System” to authenticate equipment, their parts, and products that are being manufactured or distributed. This is intended to monitor the safety and adequate functioning of its equipment and track the life cycle of each product. Authenticating every tangible item of the supply chain creates easier tracking and monitoring, seeing that every authorized individual that is a part of the supply chain (such as contractors, manufacturers, and inspectors) has instant access.
How a Variety of Industries Benefit
Blockchain technology is not limited to recording financial transactions. Due to its ability to store data without easy access to alter the data, it can be an added benefit of data storage and record-keeping for many different industries, especially relating to supply chain/logistics, government agencies, healthcare institutions, airlines, and all energy sectors.
In the supply chain and logistics sector, blockchain technology can be used for its secure and reliable form of recording data. This could potentially increase efficiency, accuracy and traceability of a supply chain by recording all information pertaining to the creation and quantities of products, which products are sold, and the mileage of the vehicles in which products travel during the delivery process. Since all information recorded on each block cannot be changed, this lowers the risk of disruptions of the supply chain flow. One important aspect that the healthcare sector and government agencies have in common is keeping track of sensitive, personal data of individuals. Blockchain technology has the potential to add an extra layer of security in terms of monitoring, distributing, and recording confidential information. For commercial aviation, blockchain technology can be an added benefit when it comes to aircraft monitoring and maintenance in regard to tracking all aircraft parts for functionality and repairs, keeping exact track of mileage flown and aircraft locations. Additionally, functions of blockchain can create an added convenience for securely documenting passenger information, baggage and cargo tracking, and tickets for flights to prevent overbooking.
All things considered, blockchain technology is a simple concept, yet it is versatile enough to be used by a variety of different sectors and job functions. It is a possibility that in the near future, more companies will be implementing blockchain technology due to its affordability and added layer of cryptic security. There is, of course, the fact that this form of data storage is continuing to develop, and like any form of cryptic protection, it is not guaranteed to be completely secure. Nevertheless, every company of any size and industry should be made aware of this innovative and ingenious method of data storage.