How can Blockchain technology be used to benefit industry?

Blockchain How can Blockchain technology be used to benefit industry?

24.06.2020 From Nigel Charig

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Blockchain is popularly associated with Bitcoin and other digital currencies. However, the technology’s verification and transparency aspects can also benefit many further applications in manufacturing and other industries.

Companies who are interested in using the Blockchain concept to build practical systems, several companies offer Blockchain-as-a-Service (BaaS) packages or alternative Blockchain development platforms.
(Source: gemeinfrei / Unsplash)

As organisations, businesses and individuals increasingly take advantage of the online services available to them, transaction volumes are inevitably increasing. The impact of the Corona virus and its curb on physical mobility has further accelerated the growth of this online approach.

However, this increasing transaction volume is also exposing the drawbacks of traditional transaction systems that rely on third parties such as banks. If such a centralised third party becomes compromised through fraud, cyberattacks or more innocent problems, then every user is put at risk. Systems are inefficient, with settlement times sometimes being excessive, due to duplication of effort and the need for third-party validation. Additionally, a large proportion of the world’s population. lacking access to bank accounts, needs parallel payment systems to conduct transactions.

Bitcoin - the best-known use case for Blockchain

Compared with this, digital currencies, starting with the launch of Bitcoin in 2009, offer an attractive alternative. Bitcoins are not issued by banks, and are not controlled by any central monetary authority. Rather than relying on such an authority to monitor, verify and approve transactions and manage the money supply, Bitcoin is enabled by a peer-to-peer computer network made up of its users’ machines.

Bitcoin has three key advantages over traditional transaction systems. It is cost-effective, as it eliminates the need for intermediaries. It is also efficient, as transaction information is recorded once and is available to all parties throughout the distributed network. Additionally, it is safe and secure, as the underlying ledger is tamper-evident. A transaction cannot be changed; it can only be reversed through another transaction, with both transactions being visible.

However, Bitcoin and other digital currencies are not processed directly by computer networks. Instead, they can be thought of as applications that run on an operating system, which is called Blockchain. And, as Blockchain is essentially a shared, immutable ledger containing information about transactions, it lends itself well to many commercial and industrial applications beyond digital currencies. Blockchain’s benefits of cost-effectiveness, efficiency, security, and transparency offer obvious value in many environments.

The basis of Blockchain’s security

Each group of transactions is called a block. Critically, though, the Blockchain ledger is duplicated across large numbers, typically thousands, of computers in a network. The network updates these computers, or nodes, every 10 minutes. So, information in a Blockchain exists as a shared and continually reconciled database. The database records are truly public and readily verifiable, and acceptable to anyone on the Internet.

Each transaction generates a hash code comprising a string of numbers and letters. Transactions are entered in the order in which they occurred. Order is very important, because the hash depends both on the current transaction and the one preceding it. The nodes check that a transaction has not been changed by inspecting the hash; even a small change to a transaction completes a completely new hash.

If a transaction is approved by a majority of the nodes then it is written into a block. Each block refers to the previous block; the block chain comprises all the blocks. So, blocks cannot be easily hacked or corrupted as altering any information on a block will require the hacker’s computer to overpower the entire network.

Blockchain and the manufacturing industry

In an interview with ZDNet, Gary Brooks, Chief Marketing Officer of global manufacturing and supply chain technology company Syncron said Blockchain is of particular interest to the manufacturing industry due to its benefits regarding verification and transparency.

“Manufacturers’ supply chains are sophisticated, complex organizations with a number of nuances that can make transparency and accountability challenging — especially when it comes to the logistics of building and shipping new equipment and service parts,” Brooks said. “This is particularly true as manufacturers shift from a transactional, break-fix model of after sale service — where a service part is replaced after it has already failed — to a subscription-based model that focuses on maximizing product uptime.”

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The Internet of things (IoT) is a system of interrelated computing devices, mechanical and digital machines provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. (Bild: Stock Adobe)

“In this case, manufacturers leverage IoT and predictive analytics in their service parts supply chain to proactively repair equipment before it ever breaks down,” the executive added. “Blockchain can provide an increased level of visibility into this process, as it would allow an entire global service supply chain to see when and where parts are moving to ensure the repair is made just in time.”

As data held within a Blockchain is decentralised and shared across nodes, the technology can be used to create and maintain a shared and continually-reconciled database.

Practical solutions

Businesses interested in using the Blockchain concept to build practical systems can use tools such as IBM’s Blockchain Platform. This provides a managed Blockchain-as-a-service (BaaS) package that allows developers to deploy Blockchain components in environments of their choice. Developers can build, operate, and grow their Blockchain networks with an offering that can be used from development through production.

Examples of IBM Blockchain applications include pharmaceuticals, diamond supply chains and food supply.

Plenty of alternative Blockchain development platforms are available. Microsoft Azure Blockchain Service, for example, is a fully-managed ledger service that enables users to grow and operate Blockchain networks at scale in Azure. GE Aviation’s Digital Group, for example, is using the service to streamline tracking of aircraft parts and reduce inefficiencies.

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