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“Are you doing something with Blockchain?” A frequently asked question of our (potential) clients. Blockchain is the ‘Holy Grail’ which will solve all problems. Many companies will sell it as just that. While in the core it’s a way of bookkeeping. Let me take you on a blogjourney in the world of the digital collaborations. Topics like blockchain, the logistics supply chain and the demand chain will be discussed.
In the previous blog post you could read an introduction about digital collaboration. Before we talk about the proces within a logistics supply chain, there are a number of characteristics that need to be explained. In this blog I will further discuss the relevant properties for permissioned blockchains and centralized databases and systems
Relevant properties
o Privacy
An important feature, since May 25 2018, within every system. There’s a tension between privacy and transparency. Privacy is easy to achieve in a centralized system, because transparency and public verifiability aren’t required for the functioning of the system. Within blockchains, privacy and authentication are the foundation, so the system can see who has the right to watch.
o Transparency
The transparency of data within the process and the way it’s updated is a requirement for public verification. The accessible information must therefore be different for each party and not every participant must have access to any kind of available data. Think of an end customer who does not necessarily have to see how many more orders are shipped by a carrier that also delivers to him.
o Integrity
The integrity of information ensures that information is protected from unauthorized changes. This means that retrieved data is always correct. This integrity is closely linked to public verification. If a system offers public verifiability, everyone can check the integrity of data and thus also keep track of what corrections have taken place within the supply chain.
o Redundancy
Data redundancy is extremely important for many user cases. In blockchain/ subsystems, there is provision for replication between and through writers. In centralized systems, this can be done, for example, by backing up data.
o Verification
Within blockchain, but also within existing databases, verification is the most important part. Public verification allows everyone to check the correctness of the system. In a perfect system, every state and transition of a transaction is confirmed by parties who do verifications on the system. This could be done, for example, by applying a control function to recently processed transactions or Artificial Intelligence. Every observer (writer or reader) can check whether new transactions have been made or if something has changed. After all, everyone has the right to have the same insight within a certain pattern of rights.
Trust is good, verification is better?
In a current system there is one central point of truth. For example, a customer who keeps his own records. Supplier A, who keeps all his orders in his own customized system. There is no direct verification of transactions, because customers and / or transporters get forwarded emails, waybills or reports from them with the information, but no access to the data and the possibility to verify directly on the source. It can sometimes take up to three weeks for a transaction to be verified by the recipient who is, for example, in another country. Participants (suppliers, transporters and recipients) within this centralized system are therefore dependent on a central entity (in this case supplier A) and therefore have to rely on the supply of correct data and the correct statuses. If too little is shared by Supplier A, other parties may become suspicious about the accuracy of data. Sharing too much information can lead to disinterest or an overkill of information. This makes a user interface increasingly important for the transport sector. After all, I only want to see what is interesting for me, no more no less.
Transparency of data and process of status updates is for us an incredibly important pillar and requirement for public verifiability. The amount of information available for an observer (transporter or end customer) may differ. Not all available data always have to be shared for 100% and not every participant necessarily has access to the information.
What now?
In part three I will further discuss the applicability of an authorization system, the sharing of data, the logistics supply chain and how you can be helped. Let us know how your organization deals with new technological developments, such as IoT and blockchain. Do you want to know more about permissionless blockchains or do you have another question about blockchain? Please contact me.
