Blockchain is Not Only Confined to Bitcoin Trading
One company may be wholly dependent on the knowledge and expertise of a supplier located in another country, or an investment bank might need to heed the demands of its Chinese regulators. Websites like bitalpha-ai.com offer trading features like artificial intelligence, trading bots, market analysis, live customer, and much more for bitcoin traders. Blockchain technology is being proffered to enhance accountability in a rush to digitize businesses, but it will not make them more global or complex.
It allows all participants in a transaction to track goods as they move from one party to another. Moreover, it allows those parties to be impossibly transparent in the process, meaning that all participants can now access specific information without needing a central authority.
To begin to make sense of the Blockchain hype, we need to differentiate between how blockchain technology has been applied – and how companies might apply it in the future. In this version of the blockchain, the participants in a transaction are all known to each other.
It means the data stored on the blockchain is confined to that transaction alone. Many people have a misconception in the cryptocurrency ecosystem that blockchain is merely confined to cryptocurrency trading; however, blockchain’s use cases are massive in every industry, especially in the supply chain.
Anyone assuming embracing blockchain will suddenly make their supply chain more global or complex has got it wrong. Supply chains are inherently local. A global supply chain is as likely to exist as a truly global one – and neither of these scenarios describes blockchain use in finance and tech. Supply chains essentially begin with a transaction between two parties, perhaps an assembly plant and a manufacturer of cars. It can then become a chain of transactions between the plant, the manufacturer and its suppliers.
As for complexity, this is not caused by blockchain use but rather by making supply chains more complex. By using blockchain to improve accountability, supply chains may become more complex – you may need the same information from multiple parties to make decisions about the goods you buy. But this is simply an effect of making supply chains more transparent, not an inherent benefit of blockchain technology.
For example, if you want to track the sale of your car from its assembly plant to your local dealer, all transactions will be recorded on a blockchain for it to be possible for that sale to be traced back. Of course, this can also be done by people for other asset classes – such as gold or oil – but at a cost – the data is bulky and not particularly useful for tracking other products or services.
Why is Blockchain Being Applied in a Permissioned Database Way?
It is primarily applied this way because it is quicker and cheaper than traditional databases. The companies implementing blockchain-based databases have already invested heavily in traditional databases; changing these would be expensive. An alternative would be to develop a blockchain-based solution from scratch, but the high development costs mean this is not a viable solution. By allocating the same data to their new and old systems, they can take advantage of the benefits of both technologies at once. Another benefit of using traditional databases for supply chain tracking is that they have been proven reliable repeatedly.
Which Technologies are Being Used in Finance and the Supply Chain?
Blockchain tech is being applied in financial services as distributed ledgers, which can be considered a “permissioned” blockchain. Participants in this type of network need to be known to each other before they will allow information to be stored on their ledger. In some instances, such as with multinational banks where different countries have different banking laws, permissioned ledgers are necessary. The aim of permissioned ledgers is not to make trade more complex – it is simply a tool for banks to comply with regulations from differing jurisdictions.
Real Life Implications of Blockchain in Different Industries:
Blockchain has been very slowly adopted in the retail industry. But the adoption seems to be more of a hype than reality. Another reason for slow adoption is that many retailers still don’t trust the technology for storing information about their products, even though it is safer and more secure than any of their existing systems.
It is painfully evident how much work needs to be done before “blockchain” can be considered viable when it comes to improving supply chain processes, but this is not due to a lack of desire on behalf of the retailers. Banks and other financial institutions remain hesitant to bring blockchain technology on board. Hence, most companies still use old-fashioned databases to store and track information about goods in their supply chains.