Blockchain for dummies

Blockchain has been spoken and written about across industry press and the broader media for the past two years. This innovation is painted as some …

Blockchain has been spoken and written about across industry press and the broader media for the past two years. This innovation is painted as some sort of future technology set to change the way industry manages itself, transacts and tracks product. If the general coverage is to be believed, blockchain is a panacea for anything we choose to apply it to. Like most things touted as a solution, the truth is less promising – so where does the value of blockchain lie? In this article, we explore what blockchain really is and how it can be used to best advantage in the food industry.

What is blockchain?

Blockchain is a technology that in one sense is not unlike a conventional database from a more traditional system. It stores information. This information is what all parties in the system agree it to store. The difference is, blockchain stores its data and records in a solution that is distributed and encrypted securely and provides transparency to all participants in the blockchain.

It’s perhaps easiest to think of blockchain as a way of keeping track of a transaction. This transaction may be financial, but it could just as easily be a transaction involving data point, product shipments, services, emails or other communications, documents, certificates, accreditations or just about anything that could be stored as data.

As is typically the case when the media develops an infatuation with a new piece of technology, blockchain is generally poorly understood. Often described as a distributed ledger, blockchain uses multiple redundant copies of the ledger, each hosted by a participant in the network or supply chain to ensure security. If a copy of the data with one of the participants is compromised (hacked/manipulated), that copy of the ledger is overruled by its peers (the other copies). In this way the system remains secure and can be trusted by all.

Trust through transparency

Frequently blockchain is described as a “trust-based” system. In truth, when digging a little deeper, it is clear the technology’s successes originate where the blockchain can generate value in markets where there is a lack of trust. When implemented well, blockchain allows people to trust other parties by providing visibility into the actions of the other party. This means participants don’t have to trust what each other say they’re doing, or have done, but can trust when the outcomes can be seen in the system.

Unfamiliarity and deceptive behaviour in transactions or interactions in businesses breeds distrust. If, however a business can see that other parties are performing as required, then distrust is mitigated and supply chains can move quickly as decisions can be made with confidence.

A true blockchain system ensures all participants in the system have the same data. This data is a snapshot in real-time of the status of the system (goods, finances, approvals etc.). Not only is there a snapshot, but everyone in the system has a copy of the truth and knows it is valid and has not been compromised by someone in the system attempting to deceive the other parties.

This means a party in the supply chain who is responsible for a step knows when they perform their action (e.g. approve the goods for export) and update the system, every other party in the system knows this has been completed and by who. Visibility through the system places the onus on the next party to perform their own subsequent responsibilities and this sequential visibility drives the behaviours in the supply chain all parties want to see.

A lot of the examples held up as case studies for how blockchain will change industry often lack some of the characteristics that make blockchain valuable. These are more likely technical proofs of concept for blockchain and not true examples. A little online research shows it’s clear that for blockchain to really create value it needs to be applied to the right kind of problem. A helpful checklist can be used to determine if blockchain could be an appropriate solution.

Do the requirements of the ecosystem considering blockchain have each of these?

• Is there a need for shared common database?

• Are there multiple parties involved (usually from different entities)?

• Do the parties involved have conflicting incentives and/or are not trusted?

• Are the rules governing participants uniform?

• Is there a need for an objective immutable log?

• Do the rules governing transactions change infrequently?

There are many examples, around the globe of industries or value chains adopting or trialling the use of a blockchain solution. When we look at these it is clear that they do not always meet the threshold of the list above. Whether the use of blockchain was essential for a system or not, often the adoption is being driven by technology players like Oracle, SAP and IBM.

Who is using it?

One of the most high profile and relevant blockchain projects is from Walmart. Walmart and IBM have partnered on a food safety blockchain solution. Walmart announced in September 2018 that it will require all suppliers of leafy green vegetables to upload their data to the blockchain solution by September 2019.

Walmart mandating that its suppliers comply with Global Food Safety Initiative (GFSI), and that this data be stored in a blockchain system, does not improve food traceability beyond that of a conventional database-backed solution.

Blockchain is not omnipresent and cannot magically watch product from the farm to the plate. Like any data storage system, blockchain needs inputs. It needs humans to interact with the platform. In this case, Walmart is introducing an onboarding system that allows people to interact with the blockchain solution. This onboarding unifies the ways in which people keep track of product in the supply chain. This unified data input is the real challenge Walmart’s blockchain implementation is overcoming. The way it tracks the data once it gets into the system is irrelevant, its achievement is putting the information onto a computer. In truth, Walmart’s market force enabled the company to make compliance with its systems and the collection and input of data mandatory, but this could have been supported through a traditional database system.

Why blockchain?

Walmart is driving early adoption of a technology that will drive better performance across its supply chains. It starts with food safety, but through the partnership with IBM, and its learnings from this program, it will drive compliance and visibility across thousands of supply chains in the years ahead. These supply chain tools based on the blockchain will be the sort of supply chain that Walmart believe will be the future of its business.

What does it mean for industry?

The amount of hype around blockchain is yet to be matched by the scale of investment or the proliferation of systems. Although this means blockchain is not ready for wide adoption yet, there are enough indicators to show that its right around the corner. The biggest technology names are on board and working with government, finance, defence and the large corporations to bring about massive change to how we track, transact and manage our supply chains and monetary systems. There may be another 10 years of time to maturity of industry blockchain systems, or maybe only another two years, but it seems the value blockchain creates will make a significant contribution to the markets that adopt it. This means blockchain running part of our value systems is only a matter of time.

Related Posts:

  • No Related Posts

Still Don’t Understand Blockchain? Read This!

Blockchain is a form of distributed ledger technology. Okay, no, let’s strike that. Let’s begin with an example. Say you are working on a group project …

Feb 17, 2019 21:30&nbspUTC

| Updated:

Feb 17, 2019 at 22:03&nbspUTC

By&nbspRushali Shome

Blockchain technology has gained a great deal of popularity over the course of the recent years because of its immense potential and diverse applicability. There is no way you have never heard of it but even after having read countless articles, do you feel like you still don’t understand blockchain? If you do, read this!

For all those blockchain beginners who find technical jargon confusing, we are here to simplify it for you. “What even is a hash rate or a hard fork?”, you are probably wondering after reading your first few articles on blockchain.

Reading this article, you can safely set aside those complex terms and try to understand what blockchain is, in the simplest way possible.

We promise to make this so simple that if you have aspiring techies for children, you can even use this guide to explain the technology to them.

Simply Put: What Is A Blockchain?

Blockchain is a form of distributed ledger technology. Okay, no, let’s strike that. Let’s begin with an example. Say you are working on a group project with your friends and five of you have to together make edits to a document.

When one of your friends make the edit, you would ideally wait till they finish before you take over right? Not if you were using Google Docs and definitely not if you were using blockchain.

Now, a blockchain is basically a database that is simultaneously stored on a number of different computers, in a way that all of them can view, access and edit AT THE SAME TIME. This makes ledger management much easier, you no longer have to pass around a document to be able to keep track.

You could possibly do simple sharing of data with something like Google Sheets but for complex, large volumes of data with a large number of parties inputting sensitivity data, you would need a blockchain.

You May Also Read: Blockchain Architecture Explained

So, at this point, you are probably wondering how blockchain is at all different from a shared document such as Google Sheets. Well, in using Google Sheets or Google Docs, you do have several people working together on the same document, with one agreed-upon version of the truth. But this technology is centralized. Google controls it.

However, in blockchain, there is absolutely no central authority, it a decentralized, distributed ledger with robust security.

Where does the security come from, you ask? Well, in blockchain, each unit of information is known as a block. Now, all these blocks are tied to one another, chronologically, one after the other. Think of it like a special chain, where each link can be freed with a secret password written on the insides of its previous link.

What this means is that if you wanted to take out link number 432 from a chain, knowing the password of link 431 would not be enough. You would need to know the password to 431 to open it, and for that you would have to depend on 430 and then 429, and so on.

A blockchain network works exactly like this, the blocks being the link in the chain. This makes it extra secure and prevents interlopers from making unauthorized changes to the database.

Therefore with this decentralized, secure way of sharing databases, blockchain makes a variety of use cases possible.

Here Are A Few Other Articles For You To Read Next:

Rushali Shome

Rushali Shome is a history undergraduate with a keen interest in puns, politics and beyond. When not typing away furiously in the “Notes” section of her phone, she can be found trying to catch the eye of servers at restaurants or weddings for a second helping.

Related Posts:

  • No Related Posts

Could blockchain tech improve state government? Proposal aims to find out

SALT LAKE CITY — Beehive State lawmakers are considering a bill that would launch an exploration of how the hive mind of blockchain technology …

SALT LAKE CITY — Beehive State lawmakers are considering a bill that would launch an exploration of how the hive mind of blockchain technology could help optimize some state government tasks.

Blockchain technology — which may be envisioned as a shared digital spreadsheet in which every transaction or change to the data must be verified by participating, validating peers — is an innovation best known as the platform on which cryptocurrencies like bitcoin, Ether and others are based. But, the potential applications are much wider ranging than just an alternative to fiat, or standard, currency.

On Thursday, members of the House Public Utilities, Energy and Technology Standing Committee voted their unanimous support of HJR19, a joint resolution that would direct a study of how blockchain technology could be utilized by Utah government agencies.

The bill’s sponsor, Rep. Mike McKell, R-Spanish Fork, said even before the bill’s first committee hearing, he’s heard from numerous companies that support the effort.

“It’s been fascinating how many entities have come to me and said, as we study this as a state, they want to be involved,” McKell said. “They’ve said this is something we want to work on.”

Overstock.com’s investment subsidiary Medici Ventures has been all-in on blockchain technology since launching in 2014. The firm has funneled tens of millions into companies working to leverage blockchain-based innovations, most of which have nothing to do with cryptocurrency.

Medici President Jonathan Johnson said his company is in full support of HJR19 and believes the effort, if approved by the Legislature, will help keep the state out in front of technological advancements.

“Overstock.com supports HJR019, the bill calling on legislative study of Blockchain technology,” Johnson said in a statement. “Blockchain is the most promising technology to emerge in a decade. It is poised to resolve problems and challenges now known, and some that will stretch long into the foreseeable future.

“Utah has long positioned itself to be at the forefront of technological discovery and application, and this bill will help to move us to the crest of the blockchain wave.”

While the resolution only directs that blockchain potentials be studied, David Fletcher, chief technology officer for the Utah Department of Technology Services, said he believes there are numerous areas, under the purview of state government, that could be made more efficient through the adoption of a blockchain-based approach.

“Really, there are dozens of potential uses,” Fletcher said. “There are many interesting case studies out there … and we’re seeing other states taking the first steps toward adopting some blockchain-based processes.”

Fletcher said the management of property and vehicle titles would lend itself well to a blockchain-based system, as would driver’s licenses and state-issued identification cards. Contracts, chain of custody records and the work of notary publics are other areas that Fletcher noted could be optimized through using decentralized blockchain systems.

The election system and vote casting is another area that has the potential to be substantially redefined by blockchain, which can provide a level of security that just isn’t possible with systems, like the current voting protocols used by most states, that continue to rely on a centralized controls.

1 comment on this story

Last year, Johnson told the Deseret News that he believes blockchain technology could solve ongoing issues with securing election processes.

“Democracy will benefit greatly from critical improvements blockchain technology can bring to voting systems,” Johnson said. “For example, providing secure, immutable record keeping will bring greater confidence in accurate results, and ease of use will lower the barrier to entry for citizens to participate in elections.”

HJR19 now moves to the full House for that body’s consideration.

Related Posts:

  • No Related Posts

Blockchain: Useful Marketing Tool But Not A Cure-All

You’ve heard it before – the sales pitch that goes something like this: “Blockchain is the answer to marketer’s nightmares of ad fraud, transparency, …

You’ve heard it before – the sales pitch that goes something like this: “Blockchain is the answer to marketer’s nightmares of ad fraud, transparency, and discrepancy. Thissingular technology will fix all ad tech problems – a promise of delivering one solution to solve for brands, agencies, publishers, and platform troubles.”

If you think theseclaims sound too good to be true, it is because they are – at this point in time. In the near future, the technology has encouraging potential for specific advertising use cases. Beforewe’re able to apply blockchain thoughtfully and effectively to advertising, the industry needs to undergo a crawl-walk-run education around its key components, what it truly enables, and how itshould realistically be used today.

Similar to when AR/VR became available in 2014, the industry is facing shiny object syndrome where we’re enamored with the potential ofblockchain for advertising. However, marketers are still not quite sure how to apply the technology to reap its full benefit. Candidly, a decentralized ledger, or blockchain solution, is not alwaysthe most efficient or best way to achieve marketers’ goals; it may just replicate other solutions in-market, with little to no incremental value to the advertisers but additional technical costsand complexity. Additionally, most companies are still in alpha or early beta stages with no global offerings live.

advertisement

advertisement

What blockchain can help achieve today and in the near future are twodistinct massive enterprise issues that all advertisers face: ad fraud and supply chain transparency. If we can re-focus interest and efforts around these two lanes specifically, we can begin to solveissues that marketers handle on a daily basis, and provide a proof of concept for blockchain in advertising.

Tackling Ad Fraud

Ad Fraud is a major issue for advertisers and representsover $7 Billion lost dollars, according to The Trustworthy Accountability Group (TAG), an advertising industry initiative fighting fraudulent activity and increasing trust in the digital advertisingindustry. Blockchain can help tackle ad fraud by leveraging encryption technology to make it nearly impossible for fraudsters to spoof domains. By locking a bid request and requiring an encryption key from the legitimate publisher to unlock and servean ad.

In this example, only the publisher and the advertiser have the key and the ad will only serve when they match. This approach to leverage blockchain to tackle ad fraud will helpadvertisers prove if we can more effectively, through a decentralized immutable ledger, identify non-human traffic. Blockchain proof of concept experiments can help increase transparency andadvertisers’ paid digital media quality. If blockchain can eradicate the unsolved domain-spoofing and other forms of ad fraud, the technology can immediately add value to the supply chain.

While supply chain transparency may be a longer timeline to tackle than an ad fraud solve, it is still within reach. In the realm of supply chain, buyers and sellers are in discussion around usingblockchain to address billing and reconciliation workflows. However, we see a huge opportunity for blockchain to use algorithmic consensus of all sellers and buyers to create a new standard for supplypath transparency. If every member of a supply chain authenticates each step in programmatic buying process, the opportunity to transfer hidden fees can be eliminated.

Following programmaticbids along each step within DSPs, SSPs, ad servers, and publishers, there are opportunities to understand where incremental charges are unnecessarily inserted into the workflow. The push to useblockchain technology to identify supply path inefficiencies and subsequent unfavorable ad experiences for consumers delivers immediate value back to marketers. In addition, this information fromsupply chain transparency extends beyond campaign performance and can be used to identify valuable partnerships, subsequently exposing the good and bad players in the marketplace to create true supplychain transparency from consensus.

Now What?

Beyond ad fraud and supply chain transparency, we anticipate some applications for blockchain may become viable for our industry much morequickly than others. While tackling ad fraud and creating supply chain transparency are viable solutions for the near future, transaction settlement, for instance, is unlikely to movequickly. Because of the scale and complexity of the media business and the amount of parties involved in the various facets of it, significant alignment between players will need to occur- which may require years.

At this time, most of the buzz around blockchain in advertising will actually further complicate the ad tech landscape by adding new technology to solve forgaps in existing tech. The industry needs to focus on the problems we can solve today with blockchain, to provide a proof of concept for its effectiveness in tackling the industry issues oftomorrow.

For this to be a reality at scale, the marketplace needs an end-to-end test of the blockchain solutions that solve for ad fraud and supply chain transparency, which would requireparticipation of independent SSPs, DSPs, and marketers that are open to sharing proof of concept learnings to better the entire advertising ecosystem. It is only through industry collaboration thatblockchain innovation can have the opportunity to fix marketers’ unsolved pain points.

Below is a list of blockchain terms you need to know:

Blocks: packages of data that carrypermanently recorded data on the blockchain network

Consensus: achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exactcopies of each other

Central Ledger: a digital register that is used to record and is maintained by a central agency

Cryptocurrency: also called tokens, cryptocurrencies arerepresentations of digital assets

Digital Signature: a digital code generated by public key encryption attached to an electronically transmitted document to verify its contents + thesender’s identity

Distributed or Decentralized Ledger: ledgers in which data is stored across a network of decentralized nodes; does not have to have its own currency and may bepermissioned and private

Distributed Network: a type of network where processing power and data are spread over the nodes rather than having a centralized data center

Encryption Key: arandom string of bits generated specifically to scramble and unscramble data created with a unique code that makes it harder to break.

Mining: the act of validating blockchain transactions

Node: a copy of the ledger operated by a participant of the blockchain network

Private Key: a string of data that allows you to access the tokens in a specific wallet that act as passwordsand are kept hidden from anyone but the owner of the address.

Public Address: the cryptographic hash of a public key that act as email addresses which can be published anywhere (unlike privatekeys).

Smart Contracts: encoded business rules in a programmable language onto the blockchain that are enforced by the participants of the network.

Transaction Settlement: the processwhere each member of the supply chain receives funds for a transaction

Wallet: a file that houses private keys

Shelley Pinsonneault, VP of Partnerships & Standards, PublicisMedia, contributed to this article.

Related Posts:

  • No Related Posts

HSBC Saving Costs with Blockchain Based System on a Global Scale

Giant powerhouse HSBC Bank Plc, one of the largest banks in the world has come out to verify the hype surrounding the implementation of blockchain …
HSBC
Advertisement

Giant powerhouse HSBC Bank Plc, one of the largest banks in the world has come out to verify the hype surrounding the implementation of blockchain technology after revealing that it has significantly reduced its incurred costs on a global scale.

No Fluke

Blockchain technology’s offer of a decentralized database boasting credible efficiency, speed and security have been publicized over the past few years now, but critics and skeptics have been quick to discard it as initial excitements and exaggerations. Although the tide has obviously turned with influential financial giants such as JP Morgan and Ali Baba already pushing for blockchain patents on their own, early excitements before practical tests have tended to fizzle out almost as quickly.

After making tests and proving the success of one or two transactions on a blockchain, financial institutions have been reluctant on implementing on a global stage. HSBC, however after taking the brunt early this year, are now revealing the benefits.

Faster and Cheaper

The Chief Operating Officer of FX cash trading and risk management, Mark Williamson told Reuters that HSBC Bank Plc. since its implementation has reduced the costs incurred in settling foreign exchange trades by a quarter via its new blockchain-based system.

The London based financial services giant which has more than 750 offices in over 80 countries all over the world processes more than 4000 trades on its ‘FX Everywhere’ system every 24 hours. Williamson describes the new benefits of its blockchain based system, crediting HSBC for moving forward beyond tests and ‘proof of concept’ trades. According to him, the significant savings that its new system brings along with removing unnecessary inefficacies is proof that blockchain technology is no joke.

“We’re able to demonstrate that this is not a one-off proof of concept or just one or two trades,” he said, with transactions worth more than $350 billion being settled effectively on ‘FX Everywhere.’

With HSBC settling transactions worth billions of dollars everywhere, the financial giant has defied the tentative approach that other ‘institutional enthusiasts’ are adopting towards the underlying technology behind cryptocurrencies. Williamson has suggested HSBC is not considering reclining on their oars, and are planning to move rapidly on further blockchain developments.

“The more participants that you have joining the HSBC shared permissioned ledger and the ecosystem, the more efficient we’re going to become in providing services to our clients,” Williamson said.

Related Posts:

  • No Related Posts