Categories: Bitcoin Business

Blockchain and the supply chain share a future fastened around trust

Click here to view original web page at www.globalbankingandfinance.com

By Shivani Govil, Global Vice President for artificial intelligence and cognitive products at SAP Ariba, the world’s largest business network, linking together buyers and suppliers from 3.4 million companies in 190 countries.

According to a growing chorus of business technologists around the world, blockchain stands poised to revolutionise nearly every industry. Momentum has gathered pace as companies around the world evaluate proofs of concept and pilots using this emerging technology and venture capital investment flows toward startups embracing it. Every week, it seems, a blockchain-related conference or event takes place somewhere in the world.I was initially a skeptic when the technology first came on the scene a few years ago.I thought it held promise, but many aspects remained unproven. Fast-forward a few years, and I have evolved from pure skeptic to cautious optimist. While none of us can foresee precisely when or in what form blockchain will transform business, I believe the technology has the potential to revolutionise the world of enterprise software as we know it.

Shivani Govil

But what is it, exactly?

Blockchain uses cryptography, peer-to-peer networks and consensus algorithms to create a digital ledger or repository of transactions. Every participant in a blockchain can observe these transactions, which are verified and recorded in a connected chain of information. Blockchain allows multiple participants to share information and conduct business transactions directly with each other, eliminating the need for third parties. The transparency of information is built-in, because blockchain allows multiple parties to retain an identical record of the history. Any updates to the repository can only be achieved via consensus from all impacted participants. It is important to note that while blockchain is commonly associated with cryptocurrency, the two are not interchangeable. The former is a technology, while the latter represents its application.

Several factors make the technology appealing to enterprise software:

WANT TO BUILD A FINANCIAL EMPIRE?

Subscribe to the Global Banking & Finance Review Newsletter for FREE
Get Access to Exclusive Reports to Save Time & Money

By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

  1. Trust

Blockchain is a decentralised, distributed, digital ledger that stores a registry of transactions, secured through cryptography. Blockchain writes data as blocks of transactions, where each block contains a hash of the previous block. It is not possible to change data in a block without effectively destroying the chain. Once data has been written to the blockchain, it cannot be updated or deleted. Trust is achieved through this immutability of data and is unlike traditional centralised databases where data can be changed in most types of records.Trust comes not only from immutability and cryptography, but from the fact that the “digital truth” is replicated to many blockchain nodes and thus everyone can own a digital copy (or one can have many nodes operated by different organisations).

  1. Transparency

Because no centralised entity owns the blockchain data, all parties to a transaction enjoy a full view. This transparency, not unlike Wikipedia or other crowdsourced platforms, becomes important in scenarios such as a supply chain, where multiple parties need to contribute information — or when data needs to cross organisational boundaries.

  1. Verification

Blockchain enables buyers and sellers to rely on the same, verifiable set of information. This audit trail means that if someone tries to make a fraudulent transaction, the decentralised nature of the chain will encourage others to thwart it before it goes through. This aspect of blockchain removes the intermediaries traditionally involved in commercial transactions, making them faster and more efficient.

  1. Smart contracts

One of blockchain’s core features — smart contracts — contain executable code designed to trigger a particular action when predetermined conditions are met. For example, if a transaction exceeds a set dollar amount, the smart contract initiates an additional level of management approval. This conditional requirement, coded within the blockchain, can help procurement professionals to ensure compliance and meet budgetary goals.

Those of us working in digital procurement have understood the importance of these attributes for years. That’s because, long before the emergence of blockchain, the architects who designed the first digital networks realised that until they instilled trust, businesses would never turn away from pen-and-ink ledgers and dead-tree product catalogs. Two decades later, today’s cloud-based procurement networks facilitate secure, encrypted commerce among millions of buyers and suppliers in nearly every country on earth.

However, there are still several limitations need to be overcome if blockchain is to be widely adopted:

  1. Complexity

For many, blockchain can be confusing. More than merely an innovative technology, it represents an evolution in people’s approach to commerce itself. There is limited talent who understand how this technology works — and even the experts often think about the technology slightly differently from each other. Moreover, expertise in the technology is not distributed uniformly but clustered in certain parts of the world. Yet the solutions it enables are global, so adoption requires a widely dispersed talent base who understand it well.

  1. Ecosystem adoption

Blockchain adoption is not simply about the technical details. It is equally important to have the involvement among all stakeholders in an ecosystem.

For example, in the procurement scenario of “Know your supplier,” where a buyer needs to know the details and certifications of key partners, the solution can be useful only if all suppliers adopt the blockchain and enter their information. Similarly, in seeking to verify the provenance of raw materials, the related business partners must be on the blockchain in order to track from origin to end-product.

  1. Bad data

The immutability of blockchain records becomes a challenge the moment faulty data is entered, since correcting it requires unanimity on the part of transaction participants.Companies that own and develop“systems of record” have an inherent advantage, as they can ensure the accuracy and authenticity of the data at inception. When bad data is entered,it is kept forever and can have long-lasting negative impact.

  1. Speed and power consumption

Today, the speed at which most blockchain transactions are processed remains limited. Blockchain platforms are not designed to process millions of transactions in seconds, as credit cards do. For example, the Bitcoin network is capable of processing a maximum of seven transactions per second. Imagine applying this processing time to a network of millions of people;one’s wait time would be a century, give or take! In contrast, Visa processes thousands of transactions per second, enabling the network to move with fluidity and ease. There are some protocols enabling much higher volumes of transactions per second – still not yet comparable to the credit card payments– but sufficient for many enterprise scenarios. In addition to speed, there is a concern about the total volume of data stored in the Blockchain, which can also slow things down.

  1. Interoperability across blockchains

There are several different public blockchain protocols. In addition, many companies are moving to launch “permissioned” blockchains. These are a variation of public blockchains, where only certain people are invited and allowed to view the data. As public and permissioned blockchains are set up, the challenges related to the interoperability of all the emerging protocols and consortiums arise.

Despite the afore mentioned constraints, blockchain boasts many strengths and enables new capabilities that can unlock value across a business. Andindustry leaders are working to figure out how they can leverage the technology to do this.

In many organisations. Procurement is taking the lead. And it’s only natural. After all, procurement networks — like blockchain — are global and secure. both depend on trust to function properly and require information-sharing, across company boundaries,among buyers and sellers. Blockchain has the potential to become the complementary technology layer to digital networks, where data-sharing across parties can be facilitated and execution of transactions can be enabled and buyers and suppliers’ ability to share data exclusively, authenticate each other reliably, collaborate on products virtually, evaluate third-party risk instantaneously, and maintain an audit trail permanently enhanced.

And this is a good thing for technologists and procurement professionals alike. Because together, they can shape a future where digital networks and blockchain aid buyers and sellers everywhere in securing products and services in a more secure and trusted manner.

cinerama

Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Share
Published by
cinerama

Recent Posts

New York Gym Grit Bxng Accepts BTC Payments

Who would have ever thought that working out and bitcoin could ever go together? Well, thanks to a new Manhattan-based… Read More

4 hours ago

Are Whales Behing Bitcoin’s Latest Dips?

A reason for the recent up-and-down behavior of bitcoin may have been uncovered. It’s being reported that several whales moved… Read More

4 hours ago

Bitcoin Drops Below $10,000 as Support Wears Thin

Bitcoin (BTC) has once again found itself caught in the throes of a choppy trading range that has provided little… Read More

4 hours ago

Bitcoin Bottomed at $9,080, BTC to Rally Into End of 2019

Once again, Bitcoin (BTC) has stagnated, finding a foothold around $10,000 for the umpteenth time in a matter of weeks.… Read More

4 hours ago

Cresio CIO Comments, New ‘Satoshi’ and BTC Games: This Week in CT Spain

As many of our readers probably know, Cointelegraph has a number of non-English branches, each covering news from different parts… Read More

4 hours ago

VeChain Attends Shanghai International Blockchain Week 2019

SHANGHAI, Aug. 24, 2019 /PRNewswire/ -- From September 14-18, 2019, Shanghai International Blockchain Week 2019, the largest and most influential… Read More

4 hours ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More