Session 17 – 19 Aug 19

Shekhar Chowdhury, Associate Professor, CHRIST

Blockchain
A Blockchain is simply a chain of blocks that contains information.

Blockchain technology is an open distributed ledger that can record transactions of

two parties securely and efficiently.

Blockchain is a technology that records, manages and confirms transactions, where

all the participants connected to the transactions hold the entire record of it,
through peer-to-peer verification of transactions, as opposed to a centralised
platform, where information needed to be passed over to any if required.
Blockchain Explained

Blockchain is a distributed database that holds records of digital data or events in

a way that makes them tamper-resistant.

While many users may access, inspect, or add to the data, they can’t change or
delete it. The original information stays put, leaving a permanent and public
information trail, or chain, of transactions (Investopedia).

In short, blockchain is a record-keeping mechanism that makes it easier and safer

for businesses to work together over the internet.
What is a Blockchain in simple terms?

Secured, Immutable Decentralized Shared ledger / database

▪ Ledger – Database of Transactions

▪ Shared – Common views across a network

▪ Decentralized – Broadly replicated and verified by different entities

▪ Cryptographically Secured – Using hashes / digital signature to secure the chain

▪ Immutable – Transactions never deleted or changed

Blockchain Fundamentals
➢ Originated from Bitcoin

▪ Building on existing technologies – Cryptography, hashing algorithms, proof-of-

work etc.
▪ Over 1000 cryptocurrencies exists today

➢ Bitcoin, Etherium, Hyperledger, Corda, Quorom, Plenum etc.

▪ Consensus Algorithms
▪ Public v/s Private v/s Permissioned Blockchains
▪ Smart Contracts

➢ Blockchain is used in concert with other technologies and components

When and Where is Blockchain Useful ?

➢ Lack of Trust
▪ Unknown Suppliers, Customers and Service Providers
➢ Many parties who need a single version of the truth
▪ Coordination of multiple parties, processes and assets needed
▪ Where disputes are common and resolution is expensive
▪ Proving authenticity and ownership
➢ Where multiple serial steps of paperwork slow things down
▪ Global trade document ( BL), financing across supply chain etc.
➢ Where fraud and data tampering is a problem
➢ Where reliable visibility of events across multiple parties has high value
▪ Recalls, chain of custody tracking, provenance
➢ Where auditability is important
▪ Regulated supply chain
▪ Socially responsible supply chain
Use Cases of Blockchain
➢ Financial Services

▪ Everything from improving the security of existing financial transactions to ordering

more stationary could be done via blockchain databases.

▪ The financial industry is set to be one of the biggest winners from implementing
blockchain solutions, though if cryptocurrencies and smart contract based loans do take
root, it could also be the biggest loser too.
➢ Healthcare

▪ Electronic medical records that could be accessed anywhere in the world simply
by a patient giving his/her authorization will revolutionize medical care.

▪ One example where this technology could actually save lives would be when
paramedics first respond to an emergency call. Even if the person was
unconscious, a key access such as a fingerprint or iris scan would allow the
paramedic to instantaneously see the person‘s entire medical history.

▪ This would allow them to identify problems faster and give medication without
risk of allergic reaction etc.
➢ Retail

▪ Stock levels and reorders could be processed through a database that is blockchain
based.

▪ Since an unalterable record could be kept for each stage of a product’s journey, from
the supply warehouse to the point of sale, a blockchain database would make the
whole process far more secure and efficient.
➢ Property

▪ Everything from your home to your phone could one day be recorded on a blockchain-
based digital property ledger.

▪ Since the ownership of the property in question would be recorded as an unalterable

block on the chain, the database would provide unquestionable proof of ownership.
➢ Blockchain Use Case in Supply Chain Management

▪ If blockchain technology allows us to more securely and transparently track

all types of transactions, imagine the possibilities it presents across the
supply chain.

▪ Every time a product changes hands, the transaction could be documented,

creating a permanent history of a product, from manufacture to sale. This could
dramatically reduce time delays, added costs, and human error that plague
transactions today.
Blockchain is touted to make end-to-end visibility a reality, change B2B communications
for good and automate complicated processes using smart contracts.

➢ Maintaining one version of the truth across the entire supply chain

➢ Empowering organizations to trace and track assets instantly as opposed to days or weeks.

➢ Making end-to-end supply chain visibility possible

Consider how Blockchain Technology could improve the following tasks in SCM

➢ Recording the quantity and transfer of assets - like pallets, trailers, containers, etc. - as they
move between supply chain nodes (Talking Logistics)

➢ Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related
documents

➢ Assigning or verifying certifications or certain properties of physical products; for example

determining if a food product is organic or fair trade (Provenance)

➢ Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc.

➢ Sharing information about manufacturing process, assembly, delivery, and maintenance of

products with suppliers and vendors
▪ When it comes to the need for efficient and reliable management of supply chains,
the cargo industry stands to benefit massively from blockchain. Each year trillions of dollars
of freight are transported globally, 90% of which is sent via ocean freight.

▪ Given that the major freight companies are among the largest businesses in the world, it is
amazing to discover that much of their supply chain processes are still done using paperwork.

▪ The processing of such paperwork is usually very time-consuming as it must all be done
manually, not to mention far riskier. A lost document could cause huge delays as the handlers
would need trace transaction documents by contacting the other party for copies etc.
▪ A blockchain database could almost completely automate the entire process, all the way
from the factory to the retailer.

▪ An initial block could be created for the goods as they leave the factory, thereby initiating
the blockchain.

▪ This block would detail the time, type, and quantity of goods, as well as the transport
company’s confirmation of goods received etc.

▪ A new block could then be added for each step of the journey until the goods finally reach
their destination.

▪ This process would not only make the whole process more secure but would also allow
companies to track their goods in real-time.

▪ Another added bonus of using a decentralized technology is that it helps prevent these
records being altered without authorization, as all parties have a record of the transaction.
▪ Another advantage of the use of blockchain technology in supply chains comes
though the ability to automate processes.

▪ Smart contracts could be set up between the various different parties involved in
the process which could be set to trigger predetermined actions to be taken once
a given set of criteria were met.

▪ When the goods arrive at the port and are marked as received, this event would
trigger an automatic payment being made to the shipping company. This would
streamline the whole process and allow companies to operate with fewer
administrative staff etc.
The Diamond Blockchain

➢ Diamond giant De Beers is another company

that has identified a specific need to apply
blockchain technology to its supply chains.
➢ De Beers has been mired in controversy
surrounding allegations that it was
involved in the illegal ’blood diamond’
industry.

▪ This blockchain solution will presumably record the weight and size of the stone, along with the
exact time, date, and location where a diamond was found. This blockchain ledger could then
be used to track the diamond all the way through the supply chain until it was finally sold to the
retailer.
▪ The problem of authenticating the location could be solved by using a smart GPS
device that would record the exact coordinates into the blockchain when a new
stone was found.

▪ Precise weight and stone dimensions could also be recorded to be used to help
ensure the authenticity of the stone.

Authenticity of Products Supplied

▪ Fake components finding their way into planes and vehicles, for example,
constitutes a real public health concern and has resulted in tragic accidents.
AREAS OF SUPPLY CHAIN MANAGEMENT THAT CAN BENEFIT FROM BLOCKCHAIN:

▪ Recording the type and quantity of goods being shipped

▪ Tracking orders
▪ Automation of processes such as payment
▪ Helping to prioritize orders
▪ Providing shipping information
▪ Preventing Fraud
▪ Increased Safety
▪ Authenticating goods