Blockchain Supply Chains

Blockchain supply chains, the new application of this technology that allows companies to register information in an immutable database, guaranteeing them the trust that nobody can corrupt that information.

Companies like IBM especially focus on this kind of application. Companies that work together can use blockchain as a shared database that all of them can trust.

All the participants use a blockchain solution to register all their information, knowing that once the information is sent to the protocol there is no way it can be modified.

Usually, most of these solutions use private blockchains, like IBM‘s Hyperledger platform, which allows them to create smart contracts and develop Supply chains in an easy and effective way. Although private chains are not as secure as public chains, public chains are really expensive to maintain. The amount of data they can store is really low as the more formation you put in each transaction block, it becomes less decentralized and less secure.

Eventually, if all companies start to use this technology they will be able to connect to each other with complete trust knowing that the information cannot be corrupt, and can keep track of the state and processes of products of each company.

Garbage in garbage out

One of the main problems is that you have to trust all parties and devices feeding the information. As blockchain is a database, it does not solve hardware trust problems. In many projects that is exactly the problem, not the database. This had to stop both small and big blockchain developments aimed at creating Supply Chains.

This problem is kind of solved on digital resources, by using smart contracts you could secure the information from the source in some way. When supply chains become more complicated, you need to secure the digitization of the information of physical goods.

The problem with public blockchains

The problem is that the amount of information you can store in a transaction is small and it is also expensive. In order to achieve optimal decentralization, the information needs to be easy to spread across the network and in as many devices as possibles. Using small blocks of information allows many devices to run a node. If the requirements to run nodes go up, it will have a negative effect on the decentralization of the protocol.

This doesn’t mean that you can’t use a public chain for other purposes. Some companies use it to record contracts on blockchains that most likely will survive many years, like Bitcoin, Litecoin, Ethereum…

What they do is record a hash from the signed contract and add that in a blockchain transaction. Using cryptography and blockchain to secure and record the information on an immutable lawyer.

This is one case of companies actually using blockchain. I’m sure there are more, but it is really limited or the proposal does not solve anything that another kind of DB couldn’t. That’s the problem of people who want to start to work with blockchain tech, at some point they realize that they can solve the same problem with other decentralized solutions, basic cryptography or traditional databases.

This is why more companies are moving to private blockchains, with a lower level of decentralization that a public chain. Still a good option to secure the information between companies or even customers.

What is coming next?

Decentralizing big amounts of information is not easy, but as internet speed and hard drives capacities increases, more technologies will enable us to work with blockchain. The protocol will be able to manage greater amounts of data in less time.

Nobody really knows where this tech will find its boundaries, but it seems that a pro decentralization movement was born. More and more developers are focusing full time to develop solutions we never imagined and that are really awesome. As with any technology, the adoption will be exponential. It’s a good time to start to learn about the possibilities of blockchain beyond the financial transactions and get involved.

Transparency solutions for companies and governments are another solution that had grabbed a lot of attention lately. Some countries even started their own transparency protocols, where every transaction made by the government could be tracked publicly on a blockchain.

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