Blockchain beyond the realm of financial services

This is a guest blog post, in which Jody Cleworth, CEO of MTI [Marine Transport International], explains why blockchain is, in his view, good for businesses in the real economy, including the shipping industry.

Blockchain is best known as the technology behind the bitcoin cryptocurrency. Although this is its most common association, it is important for businesses to recognise that blockchain is a standalone technology, with its value reaching beyond the realm of cryptocurrencies and financial services.

Blockchain is unique in its ability to provide a secure, yet transparent, platform that enables permissioned access to private transactions and digital records. Even more impressively, it can do this in real time and can be used in just about any industry. To name but a few, shipping, manufacturing, and real estate are beginning to recognise and exploit the promise of blockchain: that of absolute trust and accessibility.

Simply put, blockchain is a way of recording data: that is, anything that needs to be individually recorded and certified as having happened. It is a type of digital ledger that can be used to record a wide range of different processes. It is of most value when it comes to recording the steps in a process that involve a wide range of parties, where responsibility is handed off at each point. If a supply chain is blockchain enabled, absolute certainty can be created at each step of the process. Placing a digital ‘block’ on the ledger indicates that a process has taken place, and all parties have the ability to view this. It is similar to using a Google document, which is shareable and visible to all those inputting data.

In the business world, blockchain technology is becoming increasingly attractive for tracking the movement of items through supply chains which link a variety of organisations. A container logistics company, for example, is obligated to interact with stakeholders such as shipping lines and port authorities, and so there are many points at which accountability could become an issue. In order to ensure that containers are shipped and received in a good state, a safeguard is needed. Blockchain ensures that each party within the supply chain takes responsibility for their own dataset, but also shares their data with all other parties.

Early Proof of Concepts in the shipping industry have attested that greater efficiency is achieved by supporting supply chains with blockchain technology. Shipping companies, suppliers and distributors have recognised that ‘smart contracts’ can decrease costs and increase profitability, as a result of capitalising on the links between supply chain actors. The use of blockchain in the shipping industry serves as a promising example for all sectors that engage in a series of interrelated processes, as blockchain increases collaboration between parties, heightens visibility, and reduces resistance.

In addition, the distributed nature of a blockchain database makes it harder for hackers to attack. Central servers that store data are easy targets for cyberattacks, but the blockchain model does not include this. Instead, the data is copied identically across each ‘node’ in the network, meaning that if one computer is successfully targeted, it does not result in business devastation. Ultimately, in order to hack a blockchain database, simultaneous access to every copy of the database would be needed.

Blockchain has the ability to empower a multitude of industries to better adapt to the digital economy. Embracing this technology allows executives to assert greater control over their transactions, whilst protecting the privacy of terms and conditions between parties. Essentially, blockchain creates a secure business environment, where reliable transactions become a reality without the need for a centralised authority.