Blockchain Blooms
The multitude of changes to the technological infrastructure supporting the global business environment have given way to initiatives seeking to leverage and organize the ways in which companies operate. For example, the Internet of Things (IoT) expansion has led to the development of communication protocols used exclusively by machines (M2M or machine to machine), enabling information gathering and exchange between devices. Sensors placed in products allow inventory control systems to know when it is time to place a new purchase order, just as industrial lines are capable of acting on components showing signs that usually precede particular faults.
Similarly, the introduction of blockchain technology — a decentralized database distributed over hundreds or thousands of computers, where changing original data is not possible and records can only be entered chronologically — has triggered a number of initiatives capitalizing on the innovation’s specific features, making it a powerful tool for the business world. One of these initiatives, the Hyperledger project, was launched in December 2015 by the Linux Foundation. It follows the “open source” model advocated by the consortium, harnessing the collaborative effort of a large number of teams through the sharing of ideas, suggestions, and models. Airbus, Cisco, Hitachi, IBM, Intel, JP Morgan, and SAP are among the nearly two hundred project participants of various economic sectors — aerospace, financial, technological, logistics, electronics, and others. The common goal is to improve the performance and reliability of blockchains, including the services for identifying and supporting smart contracts.
According to the World Trade Organization, blockchain technology may bring about considerable improvements to global commerce, raising the overall volume of traded goods and, consequently, the world’s GDP. In fact, one of the first concrete results delivered through the Hyperledger project is a partnership between IBM and Maersk, a Danish group operating in the logistics and energy sectors. The first quarter of 2017 saw the launch of a blockchain-based system to increase the efficiency and safety in the import and export of goods transported in containers by sea freight (which carries around 90% of global trade).
Avoiding scams and reducing the documentation processing cost for each container — around one-fifth of the total transportation cost — were immediate benefits of the implemented system, which was tested by exporting a flower container from Kenya to Rotterdam, in Holland. Such a transaction would usually generate almost two hundred communications among those involved. However, with adequate blockchain support, not only the safety of the operation was improved but also its efficiency.
The flow was initiated by the exporter, who registered a smart contract in the blockchain, which, in turn, triggered the flow of necessary approvals in the three agencies of the Kenyan government linked to the process. All stakeholders had access to the digital documentation, which was updated with the applicable — and also digital — signatures. At the same time, the inspection process, container preparation and truck delivery route of the flowers were all electronically shared with the port of Mombasa, which could then start preparing to receive the container at the appropriate time.
With blockchain’s intrinsic characteristics — security, unalterable records, and chronological event storage — all parties involved can rely on the information presented. The need for a central authority to validate data or a complex structure to warrant participation in global supply chains is gradually eliminated. These chains linking the world over will be our next topic. See you then.
