Introduction to Blockchain Technology

A modern way of preserving and sharing information on certain transactions, Blockchain is the distributed database of a specific company that stretches across an array of interconnected computers. It was first introduced in 2009 as a technology on which Bitcoin, a decentralized digital currency, was built. As much as the technology was used to create cryptocurrencies, developers and entrepreneurs later realized that it could be applied in other fields. At its core, blockchains are a decentralized ledger that records an organization’s transactions. These transactions may include anything from financial and goods-delivery records to properties, contracts, or ideas of value. Yet the most defining aspect of blockchain technology is the fact that instead of relying on a central bank or government agency to house and manage the data, we have distributed computing which enables people to record and share but doesn't allow them to duplicate or modify it. The information stored in a blockchain infrastructure forms a continuous ledger. A series of immutable records known as 'blocks' makes up this public account. These blocks serve as containers for new transactions. A group of blocks forms a linked list representing transactions in order; they also carry timestamps. On the other hand, every block points to the one before it and cryptographic techniques are used to guarantee that no data in any part of the previous block changes. After data is put onto the chain of blocks, only one thing makes getting it off impossible: it can never be retrieved.

The database in blockchain is decentralized, with information being spread out across a network and therefore cannot be found in one place if hackers or the network itself are compromised somehow. Rather, there are many copies of the blockchain running on computer servers distributed all over the world. These servers are called "nodes" to use old-fashioned telephone terminology or "super nodes" in modern times that process many more transactions than regular old-fashioned upright poles.

In this decentralized consensus mechanism, third-party middlemen such as banks, lawyers, or even government agencies to validate the transactions are totally unnecessary. The construction of such a mechanism guarantees transactions can be P2P of any kind of value exchange. While the client and server mailbox system keeps clients anonymous, its underlying public key system still gives these things out transparently.

Blockchain is moving into fields other than digital currency as well, such as finance, medicine, logistics, prognosis numbers, voting results, and music distribution.

As an example, the global shipping industry can use blockchains to track the exact location and status of cargo containers being shipped around the world. This enables key players in any value supply chain to make much more reliable tracking in real-time by sharing data they have exchanged safely through an unbroken chain.

There is also a big expansion in the industry asking for data storage with blockchain technology to securely keep medical records or ID cards. Can distributed ledgers such as those provided by blockchain networks avoid losing documents which are the result of technical failures?

However, the issues that it won’t scale or has a slow throughput (transaction rate), consumes too much power, and has legal problems still exist. With development and maturation of supporting facilities, blockchain is already in place to become an underlying structure for future networks. While computers and the Internet completed the information revolution for mankind, blockchain technology may be the spark that is bringing finance, business, media, government, health, and education to all-new heights at least as long as computers exist.

Smart Contracts and Decentralized Applications

Smart contracts are contracts that run on their own, with the terms of agreement between buyer and seller put into computer code abstractly. It is important to recognize that the code and the agreements written into it operate in a distributed and decentralized system. Smart contracts are self-executing digital contracts which enforce trusted transactions between parties with whom one does not know nor trust and do not require a third party to act as the referee, such as government or courts.

The concept of smart contracts can be traced back to Nick Szabo, who first proposed using cryptographic methods and programming to design logical steps to facilitate transactions. It was not until the year 2015 that an Ethereum blockchain had been created, where smart contracts could be written and executed. The Ethereum network is intended to provide a habitat for decentralized applications (dApps) that are based on development languages like Solidity, which led in China for instance.

Smart contracts are very useful in almost any sector where there is an aspect which needs to be automated, including finance, real estate, and supply chain management. Within the Financial Industry Convention (FFIC), for instance, smart contracts aid in financing more conveniently because we don't have to use third-party processing as an abnormal way of payment. In supply chains, smart contracts can be used to control inventory and to pay for goods once they have been delivered.

In essence, smart contracts also make possible independent applications running entirely free of any central authorities. The goal of decentralized applications is foremost to reduce the relative reliance on middlemen who charge commissions and fees for transactions it handles between consumers and vendors. For example, Uber, eBay, and Airbnb are traditional middlemen that charged fees on transactions between different parties carried out through services of theirs. Applications written with smart contracts are designed to remove expensive intermediaries and offer the chance to complete transactions on the blockchain in an underlying protocol directly.

Decentralized applications are applied in various industries like finance, insurance, gaming, and others. In finance, decentralized exchange allows traders to trade without the use of cryptocurrencies in their wallets; stack chips wallet to wallet. In insurance, the developers are considering the use of parametric insurance solutions in which insurance policies pay out an amount through smart contracts when a measurable event occurs. In gaming, it enables asset ownership, scarcity of the virtual assets, and also fairness in odds presentation.

Even though new decentralized applications are emerging frequently, based on smart contracts being one significant change, many obstacles exist to widespread adoption today. Scalability becomes a downfall point because public blockchains will experience congestion issues under conditions of large amounts of transaction flow. Bugs that lead to exploits and hacking are problems that lie somewhere between reliability and security in terms of the codes and program. What is still in question are questions on regulation and whether it is suited for this field because decentralized networks incorporate many nodes and with members who act across national borders.

However, the financial commitment of today's entrepreneurs and the results of ongoing research at both start-ups and industry groups should go a long way towards realizing some brave new prospects for smart contract-enabled dApps, which can move work from hands to just overhead expenses in 2018. However, layer 2 solutions for blockchain scalability as well as basic programming techniques standardization have the potential to be employed by time-developers in a Distributed Application that will take over the role of all financial service providers from transaction mediator to whatever way capital is supplied; by decade nears its end.

Blockchain in Supply Chain Management

Blockchain is anticipated to impact opportunities for supply chain management in a number of ways, enhancing transparency, traceability, and trust throughout global networks. Blockchain, as we all know, is a distributed database that maintains an ever-growing list of records called blocks that are cryptographically linked to each other. So, when goods move from, say, a manufacturer to a distributor, all relevant data could be captured in the blockchain. This allows for the ability to track the product from when it gets produced all through to those who buy it.

Increased Visibility: Another direct benefit of combining blockchain into supply chain operations is the improved visibility it gives. All materials are tracked as they pass from one place to the next, and everyone has visibility into a shared ledger that other supply chain partners can see. This ensures product origin—using technology, companies can make sure their customers know where the products are from and even about its supply chain trail. If supply chain managers have an end-to-end vision, they can quickly figure out where the issue between process and efficiency is. Moreover, greater transparency enhances consumer trust in that they are able to follow where sustainability claims or fair trade labels come from.

Second, it increases supply chain visibility. Product status information at each point of transfer can be sent or registered with the blockchain, creating an audit-trail-type history for the product in question. These are appended as raw data points like the temperature of the shipment container, storage information, organization carrying out logistics, and so on. When a product goes bad, is damaged, or stolen, this makes tracking to the source way easier. Greater traceability means that the effect of a recall on this product is minimized by less searching for which lots are affected.

Blockchain provides a space for supply chain partners to share critical data and complete secure transactions. In general, smart contracts can use data entered when they trigger to meet a set of specific conditions automatically and without involving both parties. This reduces risk, conflicts, and time-to-delivery variance across the different stakeholders. Once data has been written to the blockchain, it becomes immutable, and all participants in a network can trust that this record hasn't changed. It helps to decrease fraud, improves accountability, and streamlines the supply chain experience for participants.

Supply chain insiders believe that early adopters of blockchain technologies monitoring their supply chains have shown the technology can pay for itself through it (can be measured) pension money: Early users of blockchains describe them simply to finance themselves through it.

Walmart reduced the time to track food sources from 6 days down to 2 seconds. This aids in a quick discovery of issues that are before to the clients.

Blockchain: A case study revealed that using blockchain technology, Maersk hinted at the potential savings of $6B in paperwork/processing costs across global trade, increasing efficiency by digitizing documentation.

— DeBeers scanned end-to-end of the supply chain through putting 100 high-value... That way to avoid deceptive sales.

However, companies struggle with re-architecting massive and complex global supply chains to work hand-in-hand with new blockchain solutions. Interoperability, integration with existing systems, legal matters, and organizing various stakeholders are also challenges in adoption. But the potential of it having a long-term impact is great and even far more interesting than short-term gains. By 2025, to be exact, and with more than $9 billion invested in it, the CAGR for that of blockchain in supply chain and logistics would come at a rate of around 69%.

In short, the technology of the blockchain has proven its ability in the supply chain to add a new dimension of transparency, traceability, establish trust, and increase efficiency. Supply chain analysis, supply fraud prevention with blockchain, and much more CPOs together with other stakeholders are conceptually involved in identifying the following four categories: sustainability at source; non-counterfeit ordering, proactive resolution of concerns that could result from poor performance, and aggregational savings via electronic trade processes. Blockchain is still very much embryonic, but it has the potential to develop over time into a key underpinning of end-to-end global supply chain transparency and trust—if not survival—in the next ten years.

Future Prospects and Challenges

In recent years, Blockchain technology has found to be an exceptional breakthrough in many promising areas. However, like the rest of new technology, it too has a big future and many future problems I will need to talk about another day.

One of the most relevant places such technology could be influential is finance. As they are transparent, immutable, and decentralized, it will make financial transactions faster, safer, and more secure. There are billions of dollars being invested by the powers-that-be in banking and other financial sectors for blockchain applications into payments, clearings and settlements; trade finance; Know Your Customer solutions or anti-fraud measures. The tool, it is hoped, will also cut the cost and complexity of extraction. But standardization of the platforms and processes across institutions precludes such a paradigm. Compliance of blockchain applications is another place where regulators need to provide clarification.

This technology could revolutionize the way we manage supply chains, recording goods and materials from their source to their final destination thanks to blockchain validation. Quantities, locations, certifications, and temperature conditions; all this information can be registered on blockchains at each node. This might lead to increased transparency and auditability in supply chains. Nonetheless, to realize this at scale, standardization of metrics and whether compliance is achieved would need to be consistent throughout industries as well as just countries. However, like privacy, there are some challenges that also have to be addressed and managed properly.

The healthcare industry is another area that could greatly leverage record sharing between providers. Implementation of blockchain health records would reduce the redundancies from existing tests, strengthen clinical judgment, and allow for your data to be owned by you. Nonetheless, healthcare IT groups lack expertise in technology-specific knowledge that can be improved to utilize blockchain applications. The privacy of personal health data and informed consent are also significant concerns.

The domain of identity management, which is fast maturing, is built to protect against information theft and fraud. Blockchain-based self-owned smart IDs would enable users to retain control of their personal information. But the tools require an ecosystem in which to operate; this will be built with collaboration from other government agencies, technology companies, and stakeholders.

The growth of the number of transactions through blockchain platforms is exponential, so if we use those current consensus protocols, it will lead to a very large consumption of energy ever. To give an example, recent calculations tell us that Bitcoin uses more electricity than entire countries. With newer, lower energy-consensus protocols, other guiding lights shine brightness on the horizon as well (i.e., Proof-of-Stake). The work it took to build the interoperability solutions needed for networks of blockchains to interact was moved along as well. Another is that real-time settlement on blockchain must also be above 90% instead of single digits at this stage.

To achieve mass adoption, the interfaces on top of blockchains need to iterate rapidly and become a platform for decentralized applications that resonate with both businesses and consumers. Blockchain networks need more integrated operational analytics to support AI and machine learning. The last bottleneck is the lack of talent, which can only be resolved by going through educational courses and certifications again. The proponents of blockchain technology usually go on about disintermediation, but the business culture is all about interoperating with existing legacy systems.

The future of blockchain will be faster, have better connectivity, and interoperability between different network blockchains. Yet, the smart regulation idea needs to be a carefully navigated approach for a class of applications in finance, supply chain, and healthcare, etc. The developments in cryptographic engineering and protocols need to be matched with progress in standardization, scalability, and real-world business models. Simply put, blockchain will further automate the decentralization of economic systems by moving cross-border transactions closer to open and transparent ones. However, the road to mass popularity will involve introspection of judgment and cooperation from other stakeholders.