Blockchain Is A Potential 'Truth Machine' For The World's Transactions
There's so much more to blockchain than cryptocurrency. Blockchain may eventually reach into every corner of the business, providing online, "smart contracts" that bind and assure any type of transaction, from exchange of goods to services rendered to employee records.
The money is beginning to flow in this direction. Worldwide spending on blockchain solutions is forecast to reach $2.1 billion this year, more than double the $945 million spent in 2017, according to estimates from IDC. The consultancy expects blockchain spending to grow at a clip of more than 80 percent a year, reaching $9.7 billion a year in 2021.
What's all this money going to be spent on? Intelligent supply chains may be a big piece of it. Just recently, IBM and Maersk launched a blockchain-enabled shipping platform, essentially, an "end-to-end shipping solution that will give all parties involved in global trade a single view of where cargo is and allow authorities to give electronic approval for its movement," as described by Computerworld's Lucas Mearian.
There are plenty more initiatives in motion. "Many technology vendors and service providers are collaborating and working with consortia such as the Enterprise Ethereum Alliance and the Hyperledger Projects to develop innovative solutions that improve processes such as post-trade processing, tracking and tracing shipments in the supply chain, and transaction records for auditing and compliance," according to Bill Fearnley of IDC. Blockchain spending will be most pronounced in financial services, distribution and services, retail and manufacturing, IDC predicts.
It's time to start thinking creatively about how blockchain can be employed. In a recent interview, Michael Casey of MIT explored the implications, as reflected in a new blockchain book co-authored with Paul Vigna of The Wall Street Journal. For example, he relates, the World Food Program is using blockchain to track food distribution. As related in his interview with Rebecca Linke at MIT, he describes how the World Food Program is running a pilot program for 10,000 Syrian refugees, using blockchain to look at transactions, and assure that everyone is provided food allotments. "The World Food Program has millions of clients around the world. They're now able to have a single source of data around that. They're able to stitch together multiple sources of information into one coherent thing and use that without having to do these heavy, time-consuming reconciliation processes."
Casey points to supply chains as a natural place to apply blockchain technology. "Supply chains are a huge use because you have the problem of mistrust," he explains. "There's a series of entities along a chain. They have a common goal, but they have mistrust because every buyer wants to buy low and every seller wants to sell high. The idea is that, if we created a common set of records that shows the system's transactions, people could be more open with the information they share." With focused information, blockchain helps cut down on waste.
Disrupting supply chains with blockchain also is the goal of some of the latest startups to enter the market. Jonathan Long of Market Domination Media, writing in Entrepreneur, points to some startups employing blockchain as part of their disruptive value proposition. For example, a company called Fr8 (as in "freight" -- cute, huh?) employs a blockchain network to facilitate "the digitization of record-keeping related to the trade of assets, even in scenarios where intermediaries and brokers are incentivized to resist change. Last year, trucks drove 29 billion empty miles in the US alone. By applying blockchain, Fr8 helps to streamline and organize the industry in a trustworthy manner." Similarly, Long points out, a company called ShipChain has rolled out a freight and logistics platform built on blockchain. "The platform focuses on an end-to-end track and trace, which allows for unification across the entire supply chain, among all carriers. ShipChain is a member of the Enterprise Ethereum Alliance (EEA) alongside Microsoft, and the Blockchain in Transport Alliance (BiTA), alongside UPS and DHL."
MIT's Case refers to blockchain as a "truth machine," as it relies on highly decentralized networks of information and validation. Previously, "we had to rely on centralized institutions to deliver us their truth. We might audit Apple's quarterly results every three months, but with this assumption that their record is truth. And then we built everything on top of that. But the blockchain is a decentralized mechanism for arriving at that, removing the capacity of these big gatekeepers to set what that truth is.... If we get to this point where the record of transactions is universally recognized at any given time to be absolutely accurate, and we have real-time accurate data, you don't need audits. You don't need quarterly reports. I think this is potentially the most disruptive technology we've encountered in a while."