Last year marked the public rise of the blockchain era with the associated cryptocurrencies being booming and values rising through the roof. Even though Blockchain technology has been around for multiple years, 2017 made blockchain technology famous, partly because of the huge amount of media attention. However, this year can be seen as a huge hit to the reputation of blockchain technology due to the devaluation of the currency. Still, loads of projects believe in the blockchain and the potential of the technology behind it. Or as our current Minister for Foreign Trade and Development Cooperation says liked to put it “Blockchain might just be the biggest technological breakthrough since the internet.”
Blockchain might just be the biggest technological breakthrough since the internet.Sigrid Kaag, 2018
But what is a blockchain and what is blockchain technology? In hard terms it is a decentralised consensus algorithm. In layman’s terms that means that Blockchain is a public register in which transactions between multiple users belonging to the same network are stored in a secure, verifiable and permanent way. In a certain way your privacy is also guaranteed as you are granted a pseudonym in the form of a code. This code can be seen as your identification number in the blockchain. If this is not enough explanation for you, or if you would like some bit of extra explanation you could watch the videos below.
Should we use it?
Blockchain technology was the biggest thing last year due to the massive rise of cryptocurrency. Cryptocoins, such as Bitcoin, Ethereum or Stellar just to name a few, all have a different form of blockchain technology behind the scenes. However there are some doubts that simply arise by looking at the numbers and facts of the most well known representative of blockchain: Bitcoin.
Safety – Bloomberg estimate that almost 15% of all Bitcoins have been stolen. With the current amount of Bitcoin available that would amount to 2.586.819 Bitcoins or a sloppy $18.754.000.000.
Speed – Bitcoin transactions can take anywhere from 9 minutes to 9 days as they only allow 7 transactions per second. To compare: Visa does 24.000 per second.
Cost – Digicominist has a great index showing the energy consumption of Cryptocurrency. Currently Bitcoin uses as much energy in a year as Austria. With each transaction costing 906 kilowatt hours, to compare: Visa transactions cost around 0,002 kilowatt hours.
Privacy – We talked about how everyone has a code to represent themselves. However, these codes do not anonymise they are just a pseudonym. Two recent articles stated many ways you can easily find the personal information of the person behind the number.
The basis of blockchain technology is safe, if anyone can deny certain fraudulent transactions than there won’t be any tampering. Additionally, besides Bitcoin there are many other cryptocurrencies which are fast and potentially safer as well. However, until the technologies behind those become more popular there will be a limit to the applicability of blockchain technology.
Do we use it?
As students and professionals in the supply chain market, the first thing that comes to mind when thinking about blockchain applicability would be the collaboration between IBM and Maersk: Tradelens. Maersk is experimenting with the technology in order to replace the paperwork that comes alongside loading and unloading ships. In the current situation paperwork needs up to 30 signs and stamps in order to get approved, which is undoable in a timebound market. Added to that is the fact that if a single document is lost, the load of a ship will have to be stopped for several days. You get the picture: massive delays.
If tradelens can fix this problem for Maersk, which is possible as they are collaborating with numerous ports and big names in the industry, than that would be one of the few successful blockchain stories. Because, as Deloitte researched, of the 86.000 blockchain projects 92% of them were shut down at the end of 2017. I am personally hoping for success, it would lead all of us in a new era of digitalization, something the logistic industry is in great need of.
References in order of appearence
- Bloomberg: https://www.bloomberg.com/news/articles/2018-01-18/hackers-have-walked-off-with-about-14-of-big-digital-currencies
- Digicominist: https://digiconomist.net/bitcoin-energy-consumption
- Research 1: https://arxiv.org/pdf/1801.07501.pdf
- Research 2: https://arxiv.org/abs/1708.04748
- Deloitte: https://www2.deloitte.com/insights/us/en/industry/financial-services/evolution-of-blockchain-github-platform.html