This article has been written by Deepa Vijay pursuing a Remote freelancing and profile building program from Skill Arbitrage.

This article has been edited and published by Shashwat Kaushik.

Introduction 

In this era of technology, our world is growing and developing faster than ever before. Modern technologies have changed many aspects of human lives and at the beginning of the 20th century, technology started to make our lives easier. Massive infrastructure projects like railways connecting cities, the invention of flights, revolutionary changes in communication systems by laying telecom cables, and new procedures in agriculture. In the 21st century, technology is even better and is driving even more dramatic changes in our lives. Each sector has its own impact on it. One sector that benefits from technological improvements is the economy. It makes the payment method advanced and makes online shopping and sending money overseas easier. Even though our technologies are improving and developing, the security of our transactions has been a concern. This is where blockchain technology comes in. Blockchain has been associated with cryptocurrencies and NFTs. The third-party has been an integral part of the traditional way of doing business. Usually, this third party will be the banks. When we send money overseas, it will pass through an intermediary and not instantaneously, and the third parties charge a commission or service charge for the transfer.

Blockchain technology 

Blockchain technology is a decentralised, tamper-proof ledger developed in a cryptographic manner. It is designed to store data in blocks linked together in a chain to create trust in accurate, secure, timeless, and speedy transactions. This data is unalterable or tampered with. It cannot be deleted or modified. As a result, the processes of transactions, payments, accounts, and the creation of immutable ledgers for all these are far better through blockchain technology. This system has a built-in mechanism to prevent unauthorised transaction entries and create consistency in the transactions. In simpler words, as a Google spreadsheet is shared among the numerous computers in a network, this digital ledger shares the details of each transaction. The fascinating angle is that anybody can view the data, but they can’t modify or corrupt it.

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Characteristics of blockchain technology

Let’s discuss the key characteristics of blockchain technology that make it a game-changer for businesses worldwide.

Transparency and traceability

A blockchain is a transparent sheet of information. Every transaction is recorded on an immutable ledger that can be accessed by all relevant parties. This level of transparency not only reduces fraud but also enhances trust among participants in a network.

Security

Cryptographic techniques ensure the security of transactions, providing a high level of trust in the system. Data is stored in a decentralised ledger, making it nearly impossible for malicious actors to tamper with it.

Decentralisation

It operates on a decentralised network of computers, removing the need for a central authority. By using blockchain technology, we can avoid depending on intermediaries like banks and other sources, and it decentralises every financial service. Money lending, borrowing, and trading have become secured and time-stamped.

Transparency

The entire transaction history of a blockchain is visible to every participant. Transparency ensures accountability and fosters user trust. Participants are more likely to trust the system since they can trace the origin and end of the asset.

Immutable

An immutable and tamper-proof record can provide a high level of security and trust. As blockchain provides a permanent and unchangeable network via a collection of nodes, the records of transactions on the ledger can no longer be tampered with.

Consensus mechanism

A blockchain network uses consensus algorithms to agree on the validity of transactions, maintaining a consistent and shared ledger across all nodes. It is a crucial component in blockchain networks, ensuring that all nodes in the network agree on the state of the system. It is responsible for validating and confirming transactions, maintaining the integrity of the blockchain, and preventing issues like double-spending. There are several consensus mechanisms, each with its own advantages and trade-offs.

Anonymity

While transactions are transparent, the identity of the participant can remain pseudonymous, providing a level of privacy. In most blockchain networks, users are represented by cryptographic addresses rather than personal information. This pseudonymous nature helps conceal their real-world identities. Some cryptocurrencies are specifically designed to enhance privacy.

Potential of blockchain

Blockchain technology has incredible capabilities across numerous industries because of its unique functions and abilities. Let’s discuss a few key areas where blockchain technology holds promise.

Smart contracts

Smart contracts can handle financial transactions automatically. The transparency of the records ensures tracing of the origin, journey, and status of the products. As smart contracts are programmed to execute automatically, when specific conditions are met, the actions take place. Smart contracts automate and administer the terms of the agreement, reducing the need for intermediaries and minimising the risk of fraud.

Smart contracts automate and administer the terms of the agreement, reducing the need for intermediaries and minimising the risk of fraud.

Healthcare

The decentralised nature of blockchain technology helps maintain the integrity of patient records, ensuring the accuracy of medical information. It can assist in the exchange of standardised protocol data between different healthcare systems. Healthcare providers may share patient data more easily and efficiently as a result of this interoperability. Blockchain technology helps improve identity management by offering safe and secure methods of patient identity verification. Lowering fraud and providing correct patient data between healthcare procedures effectively through blockchain technology. Pharmaceutical supply chains can be tracked using blockchain technology, guaranteeing the integrity and legitimacy of the products. This increases the patient’s safety by stopping the fake medications.

Finance and banking

Blockchain technology offers a decentralised, transparent, and safe infrastructure that has the potential to revolutionise some areas of banking and finance. Blockchain technology facilitates faster and more effective cross-border transactions. Decentralised finance systems use blockchain technology to deliver finance services directly to customers, eliminating the need for intermediaries.

Voting system

Blockchain technology can offer safe and distant online voting, helping voters cast their votes whenever it is convenient for them. Military personnel, absentee voters, and people who live in locations without physical polling places may find this very helpful. The decentralised and distributed nature of blockchain permits real-time updating of the election.  This helps with quicker and more transparent reporting of election outcomes.

Supply chain management

Blockchain can offer end-to-end visibility and transparency, reducing fraud and errors, tracking products from manufacturing to delivery, and ensuring the authenticity and quality of products. It can eradicate manual reconciliation procedures and various ledgers and streamline data administration.

Blockchain for supply chain transparency

Blockchain is a decentralised and immutable technology. It seems that blockchain can monitor and report transactions and has limitless potential to impact our business. The capability of blockchain to track, verify, and monitor the data can positively impact the process and the information to be managed. The most important aspects of blockchain technology are immutability and consensus. Blockchain technology also enables the tracking of assets and information in the supply chain. It has the most intellectual tracking and transparency system that we have seen to date. It has the most intellectual tracking and transparency system that we have seen to date. In times of conflict and unrest, blockchain technology can create trust where there has been distrust and enable secure transactions and information exchange.

Strategic benefits offered by blockchain for supply chain transparency

Increased efficiency

Blockchain provides an unchangeable record book that every participant in the supply chain can access. The most fascinating thing about this is that  it is decentralised and transparent, and all parties can access it in real time. Efficiency in blockchain means less waste of time. It simplifies the processes and ensures a secure way of completion. With blockchain, we can trace our products to ensure their quality and authenticity. Blockchain acts like a shield against counterfeiting. A payment would trigger when a shipment reaches a location without any delay, which adds to the fact that blockchain diffuses the need for intermediaries altogether.

Reduce risk

Blockchains’ cryptographic data hinders attempts at fraud and keeps transactions locked and secure from deceitful endeavours. The risk mainly originates from four channels in the supply chain system. They are sourcing, transporting, processing, and distributing. With blockchain, automated smart contracts act as unwavering protection. Tracking products becomes an impenetrable task and visibility and accountability become more transparent. Vulnerabilities like counterfeiting and unauthorised modification became a thing of the past.

Enhanced trust

Decentralisation becomes the foundation of trust. In a supply chain system, multiple stakeholders, processes, and transactions happen. A transparent chain of records ensures every step is visible. Blockchain’s immutable ledger prevents compromises and stands as  proof of integrity. Trust is crucial at every step of the process and among stakeholders to establish effective operations and efficient delivery. With blockchain technology, every transaction is time-stamped and linked to the previous transactions. It helps to create an immutable audit system that allows all participants to verify the entries in real-time.

Improved collaboration

In a traditional supply chain system, the responsibilities of multiple participants vary. Some are suppliers, distributors, retailers, and customers. Everyone has their own particular way of keeping records and processing them. This system often leads to conflicts, misunderstandings and fraud. With blockchain technology, we can overcome these unnecessary conflicts and insecurities. Here, we can certainly say that blockchain works as a mediator among the participants. It brings all the participants together on a single platform, fostering collaboration without any usual conflicts. Blockchain builds trust among the members by enabling every process and decision to be visible to everyone. This collaboration allows effective and efficient management in the supply chain.

Conclusion

In supply chain management, the impact of blockchain technology is beyond our judgement. Blockchain technology can bring immense changes and evolution to supply chain technology. Transparency leads to better decision-making, improved efficiency, etc. It is a fact that there are a lot of technical obstacles to overcome before it becomes the norm. This not only speeds up the processes but also cuts-down on cost, delay, and conflicts. Overall, it feels like the supply chain has a bright future to look forward to.

References

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