In a previous post, Fernanda talked about how companies like Walmart, Maersk and BHP Billiton are already using blockchain in their supply chains, and how tech giants like IBM and Microsoft, as well as many other startups are moving to build their own systems. In fact, every day I come across new news about this technology, whether in the field of supply chain leaders or not. I'm sure you are too.
The news usually conveys the message that the blockchain has the potential to solve many of our current problems: greater visibility and trust in supply chains, transparency in voting, decentralized cloud computing, trustworthiness of assets, authentication of documents, greater transparency in government, better usability of devices IoT (Internet of Things), end of banks as we know them today…
ok the blockchain has the potential to change our lives for the better. But what is this technology, and how does it work in practice? Where did this idea come from, and why is it so revolutionary? Who's the owner? Does the technology have no points of failure? These are some of the questions that come to mind, and when we go looking for answers, we end up coming across more unfamiliar terms or complex definitions, at least from the point of view of someone who is not an expert on the subject.
Figure 1 – Terms you come across when trying to understand the blockchain
Source: ILOS
The terms can be intimidating. This certainly happened to me, but the simplest way I've found to understand what the blockchain was to start by understanding the problem that this technology solves.
Today, through Internet, we manage to communicate directly with whoever we want, without the need for an intermediary, right? If today I am here in Rio de Janeiro, but you are in São Paulo, and you ask me to send you a Powerpoint presentation, for example, I will simply open my email and send you a copy of the attached file. But what if you asked me for money, like R$100, for example? Today, I am unable to transfer this money to you directly. To do this, I need to resort to a bank, which acts as a trusted intermediary entity. By trust, I mean that we (me, you and the rest of society) believe that the bank will guarantee that the R$100 will leave my account and enter yours.
However, the money does not physically leave one account and go to another, right? The transfer of value occurs through the updating of official information records: the record that R$100 left my account, and the record that R$100 entered your account, which came from me. For this to be done directly, from me to you, without the intermediary of a third party, we would need to establish the same type of trust that we have in banks today. The big problem with digital transactions is to guarantee the “character” of the transactions. Think of that Powerpoint file I sent you. I could have made 1.000 copies of it and sent it to 1.000 people besides you. Now think about the R$100. It would be a big problem if I could spend that money endlessly.
This problem is known as the “double-spending problem”. double spending), and it is a big problem that remained unresolved for some time, but which has been resolved by blockchain. O blockchain emerged as the technology behind the transaction of bitcoins (decentralized digital currency presented in 2008), and its operation involves elements of computer science and cryptography, as well as concepts of game theory. A common analogy is that bitcoins are for the blockchain in the same way that email is to the internet. In a simplified way, the blockchain makes digital transactions feasible.
If banks are centralized institutions that control this “trust game”, as we put our faith in them, what blockchain decentralizes this control, and works with the concept of consensus. “Decentralized” means that everyone has a copy of the same database. And the "consensus" means that if I somehow try to spoof (change) the data, it will not be compatible (will not sync) with the data of everyone else participating in the network, and therefore the spoof attempt will fail. Hence the possibility of applying the blockchain in all those examples cited at the beginning of this post, as the technology sets out to solve the basic “trust” problem.
But you might be wondering: what if most people get together to change the data? In this situation, there will be consensus on fraud, and if there is consensus, fraud can happen, right? Well, this subject, more about the functioning of the blockchain, and more details on how the Supply Chain Management may be affected, stay for the next posts. For now, let's end with a definition: "one can understand the blockchain as a large database (an accounting book) that holds permanent records of all digital transactions (whether cash or any other asset). However, instead of being controlled by a central entity (such as a bank), it works through a decentralized network of copies of this information, validated by consensus”.
If you are interested in the subject, and want other explanations, I recommend the post from Nik Custodio: Explain Bitcoin Like I'm Five and Article by Daniel Jeffries: Why Everyone Missed the Most Important Invention in the Last 500 Years.
References:
ComputerWorld – Everything you wanted to know about blockchain but were afraid to ask.http://computerworld.com.br/tudo-o-que-voce-queria-saber-sobre-blockchain-e-tinha-receio-de-perguntar>
Nik Custodio – Explain Bitcoin Like I'm Five.https://medium.com/@nik5ter/explain-bitcoin-like-im-five-73b4257ac833>
Daniel Jeffries – Why Everyone Missed the Most Important Invention in the Last 500 Years. <https://hackernoon.com/why-everyone-missed-the-most-important-invention-in-the-last-500-years-c90b0151c169>
Thatiana Nomi
5 years of experience in consulting projects in Logistics and Supply Chain. Worked on logistics network optimization projects, service cost, logistics master plan, inventory policy definition, sales forecast, S&OP (Sales and Operations Planning) and transportation planning and management.
