Blockchain solutions make transactions more transparent and secure
Those who are already familiar with blockchain technology most likely associate it with the cryptocurrency bitcoin, which is where it originated. At a high level, blockchain is a highly secure and accurate distributed public ledger consisting of all the details about every bitcoin transaction that has ever been conducted. In light of the success of bitcoin, organizations are now figuring out new ways to apply blockchain solutions to track the transfer of digital, tangible and intangible assets across the business network to improve security, provide higher transparency and improve overall operations. In fact, MarketsandMarkets predicted that the blockchain market will grow to over $2.3 billion by 2021 (up from $210 million in 2016), representing a compound annual growth rate of 61.5 percent over the period.
How blockchain solutions work
Blockchain is a distributed system that records and stores the record of the transfer of any asset. Though users with proper permissions can access or add to the data, they can’t change or delete it, which provides transparency into the entire supply chain without compromising the accuracy of the information. The technology was created to facilitate, track and verify cryptocurrency transactions, but it can be used to record, track and authenticate the transfer of any asset that holds value, including physical, intellectual and digital property.
Essentially, blockchain is a new type of database that runs on distributed processing nodes. Each node can contain a copy of the full database, and contributors are encouraged to establish a consensus about the integrity of its contents. This distributed and collaborative environment makes it virtually impossible for anyone to tamper with the data without being detected by another person or monitoring/auditing system.
Potential for the supply chain
In terms of the supply chain, blockchain technology enables organizations to create a permanent record of every step of the lifecycle of a product, from development to manufacturing and ultimately to sale. This can increase efficiency, reduce inevitable human error and make the entire supply chain more resistant to fraudulent activity, since the ledger is highly transparent. For example, using blockchain technology can help organizations do the following:
- Record the quantity and transfer of physical assets
- Track purchase and change orders, receipts, shipment details and any related documentation
- Store details about specific product attributes and related certifications
- Link physical products to digital RFID tags, serial numbers and bar codes
- Record financial transactions
- Share information with third-party suppliers and logistics vendors
- Better prepare for regulatory and financial audits
Though the adoption of blockchain solutions in any industry will create new, more secure ways of doing business, the global diamond industry provides a great use case for the technology, particularly because it’s global, highly regulated and prone to fraud. With a transparent record of all transactions between mining, manufacturing, regulatory, legal, financial and commercial entities involved, businesses can not only improve operations across the board, but also deter fraud and meet compliance mandates around the world.
In the end, blockchain technology has the potential to transform the way business is conducted in all industries, with greater visibility, collaboration and security. More importantly, the technology enables businesses to focus on innovation in a highly competitive mobile world.