Doing Business with Blockchains

by - 3 min read

Doing Business with Blockchains

by admin - 3 min read

by admin

 

Tech company IBM and Danish shipping giant Maersk are joining forces to create a new shipping and supply chain company that aims to commercialize blockchain technology. For now, it’s owned 51% by Maersk and 49% by IBM. The shared accounting technology is meant to help shippers, banks, and other stakeholders in global supply chains track freight as well as replace related paperwork with tamper-resistant digital records.

Maersk CEO Michael J. White was convinced when the companies first partnered on a blockchain trial in 2016. The test traced a container of flowers that sailed from Mombasa, Kenya, to Rotterdam, Netherlands. Multiple follow-up tests made the system’s potential clear. Using blockchain technology, the logistics industry is able to gain more control, replacing paperwork with more secure and transparent digital records.

Made famous by Bitcoin, the seemingly abstract idea behind blockchain can be difficult to process. Various websites explain the concept in a few ways to make it easier to wrap your head around. In the context of cryptocurrency, one block is a record of new transactions. Once each block is completed, it’s added to a chain, hence, “blockchain”. When you own cryptocurrency, you receive a private key (in the form of a really long password) to its address on the blockchain. You need this key to withdraw currency. Each account also has a public key, which lets other people deposit cryptocurrency into your account. Information on the blockchains is decentralized and publicly available, so the transactions are visible to everyone.

Here is an explanation from online forum, Bitcoin Talk that might help visualize the idea: imagine there are a bunch of bulletproof glass safes lined up in a room. Each safe has a number used to identify it. Being clear glass, anyone can see how much is in any of the safes and anyone can deposit money in any safe. When you open a Bitcoin account, you are given your own safe with its own key. When someone wants to send you money, you tell them which safe is yours and they drop money into the slot.

Another simplified explanation comes from blockchain specialist William Mougayar, comparing blockchains to a Google Doc. The traditional way of sharing and collaborating on a file was by sending a Microsoft Word document or Excel sheet to someone else to edit. The issue was that you would be locked out of editing the file and had to wait until you received the return copy to view it or make changes. Now with Google Docs, both parties have access to the same doc and can collaborate at the same time. The one file is always visible to them and they can watch changes be made in real time. According to Mougayar, all business documents should become shared instead of transferred back and forth. “So many types of legal contracts would be ideal for that kind of workflow… Instead of passing them to each other, losing track of versions, and not being in sync with the other version.”

In a nutshell, Blockchains use complex mathematical functions to create a secure and definitive record of who owns what, and when. In other words, it’s like a public ledger. However, it doesn’t have to be just cryptocurrency. This technology can be used in everything from the insurance business, to airplane manufacturing to tracking vegetable shipment history. Jeannine Sargent, President of Innovation and New Ventures, Flex, says, “we have the capability now to think about implementing blockchain into systematic solutions, particularly secure transaction management.”

Blockchain technology is an opportunity to increase efficiency and timeliness for cargo movement, according to White. Marie Wieck, general manager of IBM’s blockchain team, said that “presently, many shipping supply chains are bogged down by a morass of paperwork shuffled between a glut of middlemen… Documentation, which when lost or delayed causes perishable goods lying in wait to spoil,” which can cost as much as a fifth of the total expense of physical transportation. For IBM and Maersk, blockchains provide a single view of all transactions that take place among a large network of parties, which can help eliminate resource waste.

Along with Maersk using blockchain to track shipments and coordinate with customs, Airbus is hoping to use the technology to monitor the parts that come together to make a plane. According to Fortune.com, Accenture, Microsoft and a United Nations group are collaborating to build a blockchain for digital identity, which can help refugees that lack social documents. Walmart was able to track the shipping history of two mangos in two seconds, something that would have taken a little under seven days if standard methods were used.

Blockchain is a decentralized technology, which means the network operates on a peer-to-peer basis, eliminating the middleman. The possibilities of mass collaboration that can stem from this are just beginning to be explored. Eventually, you won’t need to know about blockchains for it to be integrated into your everyday living.


 

Helen Jacob | Staff Writer

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