It seems like I start out every article these days with a brief glimpse into the past—letting everyone know that I’m getting older, even though I don’t always like to admit it. But in this case, my age and what I’ve witnessed throughout my years on this planet is shedding light on new topics. In this particular case, it’s the topic of Blockchain and what the future holds for this emerging technology: a way to standardize yet another industry, this time around that of international manufacturing and shipping.
Interestingly enough, and this is where my younger years come into play, the idea of standardizing technology is nothing new. I grew up in the era of Beta versus VHS, then cassettes and CDs, then to MP3s. And, of course, there is the more modern examples: one needs to look no further than the cloud and all that modern IT has to offer.
Therefore, in the case of governments around the world calling for manufacturers and shipping companies to maintain better and more comprehensive oversight on chain of custody issues as parts and products move between borders, a single solution may in fact be on the rise.
The CIO of FedEx has recently suggested that Blockchain become the new de facto standard to make the technological single ledger the Holy Grail of the modern shipping age. The idea is to create mandated Blockchain standards that would be applied across borders to help border security officials create and track a single chain of custody. In essence, this would enable them to then track and identify goods and to block illegal items from entering their respective countries.
But why Blockchain? Although it may be most widely known for the technology that is tied to Bitcoin, it has now moved beyond its humble and sceptical beginnings—it’s now currently accepted as online payment by a number of retailers, including Dell, Microsoft, Shopify, Tesla, Whole Foods, and more.
This ongoing, albeit slow success, has allowed many people to study how Blockchain works. As it happens, the technology making things happen has been found to be exceptionally robust and highly extensible. Since its introduction, a number of new and existing businesses are currently developing new products based on Blockchain. In particular, the financial services sector is investing heavily in Blockchain startups and funding research initiatives worldwide.
It is a rare moment when the world’s largest banks, insurance companies and financial services companies, organizations that tend to be very conservative, start getting publicly excited about and begin investing in an emerging technology.
At its core, a Blockchain is a distributed database where all participating parties have access to the entire dataset. As the name suggests, the data is stored in blocks that are chained together. One or more transactions make up a block, which when bundled together with the fingerprint of the previous block are run though a complex mathematical process to create a block. This combination of strong cryptography and linking blocks of transactions in a chain makes for an exceptionally secure place to store records.
Other than handing over cash in a face-to-face transaction, say buying an apple at a roadside stand, almost every transaction made today is mediated by a third party: buying things with a debit or credit card, transferring money, registering a title for a property, or paying taxes. Almost everything we do has some kind of middleman to mediate between the two parties.
So, in the case of tracking goods across borders and ensuring that a chain of custody is maintained, Blockchain could be the clear winner. Of course, there is still a long way to go with legislation and consensus from governments around the world to make this standardization happen. And if the speed of government is any indication as to how quickly this may or may not happen, it’s anyone’s guess.
However, this is a challenge that needs to be met and a technology that stands at the ready. Now it’s just a matter of seeing what wins out and what the ultimate new “VHS” will be. 😉