A blockchain is a distributed database that maintains an ever-growing list of data records secured from tampering or revision. It is decentralised, avoiding a single point of failure with the group working together to confirm legitimate new transactions. It is composed of data structure blocks where each block holds batches of individual transactions and the results of any blockchain executables. These blocks contain a timestamp and a link to a previous block. The blockchain therefore serves as a public ledger of transactions which cannot be reversed (or without great difficulty). Blockchain technology can, and is already transforming key aspects of society and industry.
How to perfect your blockchain strategy
Tracing manufacturing accessories
It could be argued that the most compelling use cases for blockchain are in areas such as cryptocurrencies, supply chain or harvesting unused computer processors, where in each case, all parties involved are untrusted and transactions must be immutable. But, within industry, manufacturing and infrastructure, there are plenty of areas in which this is needed.
For factories, blockchain can be used for tracing the source of manufacturing accessories. Here, for example, information on goods such as clearance certificates, origin, proof of purchase or a bill of lading can be made part of a block and be easily accessible to suppliers, transporters, buyers, regulators and auditors. However, many still argue that a properly implemented blockchain could lead to lower transaction, auditing and accounting costs. Plus, the addition of ‘smart contracts’ could automatically calculate new tariffs.
The pharmaceutical supply chain
A sector which is researching the use of blockchain in the supply chain is the pharmaceutical industry. Moving medicine through a supply chain in accordance with strict global regulations means item-level tracking. This is primarily to protect against the serious counterfeiting problem of medicines. In the US, the Food and Drug Administration (FDA), and in EMEA, the European Federation of Pharmaceutical Industries and Associations (EFPIA), all play a major part in standardisation of the pharmaceutical supply chain, which is tasked with delivering secure traceability of medicines worldwide. The main technologies used for this are 2-D Data Matrix bar codes, and Radio Frequency Identification (RFID) UHF passive tags. All of this data can be linked to the blockchain for decentralised verification.
Blockchain can help the pharmaceutical industry better manage its transactions and improve record keeping across the whole supply chain. This helps combat counterfeit drugs and makes compliance and traceability more efficient. The key property that blockchain has is that any recorded information is immutable. As blockchain is distributed and serving as an open ledger, the industry can trace a product through the whole supply chain and lifecycle.
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Blockchain for IoT
There are already blockchain-based Internet of Things (IoT) frameworks that include layers of access to keep out unauthorised devices from the network. Some enable IoT devices to send data to blockchain ledgers for inclusion in shared transactions with tamper-resistant records. It also validates the transaction through secure contracts.
A potential barrier to blockchain and IoT is that most IoT devices have a limited memory size and limited battery life along with restricted processors. Traditional ‘heavy’ cryptography is difficult to deploy on a typical sensor, hence the deployment of many insecure IoT devices. As such, IoT devices are more vulnerable to the ‘51% attack’ where hackers control 51% of the processing power in the blockchain. This also raises a more important point in that IoT devices may simply be too underpowered to be part of the blockchain.
The blockchain does require participating nodes to perform relatively complex computations in a ‘proof of work’. It is necessary for integrity of data. Blockchain has the potential to enable the IoT to finally provide true machine-to-machine interactions with automated price negotiations through smart contracts taking human preferences into consideration. This allows us to fulfil the final vision for a true IoT blockchain framework, which is IoT nodes verifying the validity of other IoT transactions without relying on a centralised authority, such as an IoT device monitoring soil conditions validating payments to the local water supply utility based on moisture readings.
As time goes on, these application areas will increase for society and industry, allowing the industry to move blockchain far beyond the coin.