Blockchain, how does it work?
Blockchain is above all a distributed ledger technology, which aims to create a network between different actors who can share secure, engaging and auditable information.
To do so, this database has a rather special structure:
· The added information is collected in “blocks”, these are linked (or chained) to each other, in the order in which they are created. The illustration by a physical image would be that these blocks are somehow stacked, without further structuring of the data;
· Blockchain is a distributed database, meaning that any information added in one of the copies of the database (called a “node”) is automatically copied to all the other “nodes”, via a specific protocol integrated into this database;
· All added information is stamped by the node that adds it, by an electronic signature mechanism. This makes it possible to freeze the sender, date, and content of each piece of information.
Thanks to this sequencing of blocks, modifying past information leads to an inconsistency with the following blocks, and this inconsistency is extremely easy and quick to detect. In practice, if someone with a copy of this blockchain database modifies a past record, the inconsistency generated will be reflected on all nodes and will, therefore, be detected by all network participants. The corollary is therefore that unless an agreement is reached between the majority of network participants, no past information can be modified retrospectively.
Thus, fraud through modifying a past record becomes impossible because it is visible to all. This, therefore, creates the basis for an information audit system, which can be conducted by each of the participants independently.
Blockchain for traceability: tangible assets
In the context of supply chain traceability, other interesting features are possible with a blockchain-based information-sharing network.
· On the one hand, confidentiality: information can be audited by everyone without them knowing the content of this information;
· Then progressivity: each new participant will see his node automatically synchronized with past information, so we can gradually add the different stakeholders without disrupting all;
· Finally, deployment: the distributed nature of the database makes it possible to connect each node independently to each of the participant’s systems (ERP, WMS, etc.). This is different from integrating the actor’s systems to a large centralized solution, it is difficult to achieve, even more, difficult to maintain and evolve.
We often hear the question:
“Do we really need something as complicated as a blockchain for supply chain traceability? “.
This is a strange question because technically speaking, blockchain is overall simpler than many other technologies, including other databases. In addition, a blockchain network greatly simplifies the issue of end-to-end traceability, allowing for a viable deployment scheme and traceability auditability.
However, if blockchain technology has a real potential to build traceability adapted to modern challenges, achieving its potential depends entirely on the network created by the distribution of the different nodes (see our article on the subject). The question is no longer about blockchain technology, but its operational implementation and the truly decentralized nature of the network, which will make it possible to obtain, or not, the differentiating properties of the technology.
By Sébastien Gaïde, cofounder & CTO @Tilkal
Are you planning, or do you have a blockchain-based traceability project? Or simply want to explore the subject further? Read our article “Blockchain: no nodes, no control… »