This article is the first of a three-part series from Rocket Industrial's own John Troemel which will explain what blockchain is and its effect on supply chain and distribution.
What is Blockchain?
Blockchain is emerging technology that permits companies to make and verify any transaction on networks in near real-time without a central point of control. Also known as Distribution Ledger Technology (DLT) the information can be public or private. It’s transparent, time-stamped, decentralized information about a transaction that nobody can remove. One blockchain contains the entire logged history of an asset. Everyone that participates with the asset has that transaction added to the blockchain.
For example, let’s consider how blockchain could work in the cheese industry. A cow is born, and the farmer adds the date of birth, the place it was born, the food the cow eats to the blockchain. After the cow is milked, a truck picks it up and transports it to a cheese factory. The truck driver adds the trucking information, the date it was picked up, the date it was delivered to the blockchain. Then, the cheese factory adds the date the milk was received, the temperature of the room it was in, the ingredients added to it… and on and on. Eventually, a few days later, when you’re at the grocery store, you could access the blockchain for the cheese and see exactly where the milk came from and all the information about the cow including the foods it ate and the vaccinations it received.
Algorithms are used to keep every blockchain copy in sync so the information is constantly distributed and shared, hence the term “distributed” or “shared” ledger. A blockchain can be created for an asset; an asset being anything capable of being owned or controlled to produce value. Assets can be tangible or intangible, such as a building, food product, mortgage, patent, or cash. With a shared block, any technology can report to the chain people, computers, IoT, VR, and so much more.
By design, no one party can modify, delete, or even append any record to the ledger without the consensus from others on the network. When someone wants to add to it, participants in the network—all of which have copies of the existing blockchain—run algorithms to evaluate and verify the proposed transaction. If most nodes agree that the transaction looks valid—that is, identifying information that matches the blockchain’s history—then the new transaction will be approved, and a new block added to the chain. Due to the consensus required to add a new block as well the multiple participants in the blockchain, there is no central point of control for the information.