By Sherree DeCovny, Co-founder and Research Principal, Chain Business Insights, LLC
Participants on a blockchain have a copy of a transaction ledger mutually agreed upon by consensus. Blockchains typically support smart contracts, pieces of computer code that automatically perform business functions such as verifying and executing the terms of a supplier contract. On a blockchain, smart contracts simulate a trusted third party and enable trusted relationships to be created between various parties.
In a supply chain context, external changes could affect the terms of a contract such as the failure of a refrigeration system that ruins a shipment. To this end, smart contracts could possibly incorporate external data inputs from the IoT such as light, pressure, humidity, shock, temperature and other variables.
Three criteria can help you begin to evaluate whether it makes sense to use smart contracts in your supply chain:
So let’s say you decide to automate through the use of smart contracts. How do you work with technologists to turn a physical paper contract into a smart contract?
By Sherree DeCovny, Co-Founder and Research Principal
Global supply chains can be extremely complex, often involving many people, companies, nations and IT systems. With malicious attacks on the rise, the world’s companies can be categorized as those that have been hacked and those that will be hacked.
Blockchain is potentially a new paradigm for supply chain security, but it also presents new challenges for security. So how can participants on a blockchain secure information, and what might the underlying consensus architecture look like?
The starting point is to ensure data is secure, and access is well controlled, properly permissioned and appropriately granted.
Consensus refers to how the computers maintain the blockchain and come to a general agreement on how the information is propagated in that distributed ledger. Within that environment, it’s possible to set up a firewall, and behind that a permissioned blockchain environment comprising different entities
Permissioned blockchains generally require some kind of authorization to access them, and perhaps include different access levels, such as read-only or read/write. Such authorizations are granted by an oversight function that is either controlled by one participant or several participants working in concert. Hence some level of relationship and trust is assumed between participants.
By Pete Harris, Co-Founder and Research Principal
Speaking at a financial conference organized by Bloomberg, Blythe Masters once famously described a blockchain at its simplest level as “nothing much more than a fancy kind of database.” A former executive of investment bank JPMorgan Chase, Masters was tapped to be CEO of Digital Asset Holdings, one of the early startups looking to reinvent financial markets using the technology.
So what is a blockchain, what makes it fancy, and how does it compare to a “standard” database?
For starters, people frequently refer to “the blockchain”, but that terminology is inaccurate. Blockchain is a class of software technology that is composed of other technologies including data storage and distribution via the internet, data synchronization, cryptography and identity.
As the name implies, blockchains are typically a time-ordered collection of data blocks that are linked together using cryptographic techniques. Changing the content of any single block breaks the cryptographic linkage, making the modification very transparent. Moreover, recreating the linkages to hide a modification is extremely onerous and impractical.
Many types and implementations of blockchains already exist today, and more are emerging. While blockchains share a common design philosophy, the various flavors of blockchain have particular capabilities and properties that make them suitable for specific use cases.