Blockchain Supply Chain SS Unit Wattal

BLOCK CHAIN SUPPLY CHAIN SS UNIL WATTAL

To understand the power of blockchain systems, and the things they can do, it is important to distinguish between three things that are commonly muddled up, namely the bitcoin currency, the specific blockchain that underpins it, and the idea of blockchains in general. According to Economist (2015), blockchain is a technology that permits transactions to be recorded—cryptographically chaining blocks in order—allowing the resulting ledger to be accessed by different servers, with the information stored in a manner that can never be deleted. It is essentially a digital distributed ledger that is stored and maintained on multiple systems belonging to multiple entities sharing identical information (Deloitte).

The history of blockchain begins with Bitcoin, which was the first demonstrable use of the technology. There are different types of blockchains: public or permissionless blockchains, where anyone who wants to participate can see all transactions, offering transparency and open access; and private or permissioned blockchains, which are closed systems accessible only to a select group with permission, often used for enterprise purposes.

Some key features of blockchain technology include its ability to let parties agree on the system’s state without requiring mutual trust, the absence of a need for a single trusted arbiter, and its nature as a hash chain with added features such as validity conditions and mechanisms for resolving disagreements. The proliferation of blockchains presents a challenge for traditional trust-based systems, as it reduces reliance on centralized authorities.

Bitcoin, introduced as a protocol supporting a decentralized, pseudo-anonymous, peer-to-peer digital currency, operates through a publicly disclosed ledger stored in a blockchain. It employs a reward-driven consensus mechanism known as “mining,” based on “Proofs of Work,” to secure the network. Bitcoin aims to create a scare token economy with an eventual cap of approximately 21 million bitcoins.

Beyond cryptocurrencies, blockchain has diverse applications such as supply chain management, online advertising, smart contracts, and voting systems. The benefits of blockchain include its consistency, democratic nature, security, accuracy, privacy, permanence, quick updates, and smart contract capabilities. Despite these advantages, barriers to adoption remain, including hype, regulatory challenges, cybersecurity concerns, ease of use issues, and a lack of widespread understanding.

In the context of supply chains, blockchain addresses key challenges such as margin erosion, demand variability, ripple effects, supply chain risk management, lack of end-to-end visibility, and technological obsolescence. Its applications in supply chain include ensuring traceability, facilitating international trade, maintaining continuity of information, enabling data analytics, providing visibility, supporting digital contracts and payments, and reducing check fraud and gaming.

Examples of blockchain implementation in supply chains include 300 Cubits, which uses blockchain for the shipping industry; BanQu, providing payment solutions for small businesses; Bext360, focused on social sustainability; and Walmart’s food distribution system, which leverages blockchain for food traceability and safety.

In small group research exercises, students are encouraged to explore additional examples of blockchain use in supply chains and consider how combining blockchain with Internet of Things (IoT) technology can enhance supply chain operations. Summarizing these analyses, along with group member names, should be shared on the course blog.

Paper For Above instruction

Blockchain technology has revolutionized the way transactions and data management are conducted across various industries, notably in supply chain management. Its unique features, including decentralization, transparency, security, and immutability, make it a promising solution to longstanding issues in supply chains, such as lack of traceability, inefficiencies, and fraud.

At its core, blockchain is a cryptographic technology that enables recording transactions in a chain of blocks, where each block is linked to the previous one through cryptographic hashes. This structure ensures that once data is entered, it cannot be altered or deleted without consensus, providing a secure and transparent ledger accessible to multiple parties. Unlike traditional centralized systems, blockchain distributes data across many servers, reducing the risk of fraud or single points of failure (Nakamoto, 2008).

The evolution of blockchain began with Bitcoin, introduced by the pseudonymous Satoshi Nakamoto in 2008, which demonstrated blockchain’s capability as a decentralized digital currency or cryptocurrency (Nakamoto, 2008). Since then, various types of blockchain systems have emerged. Public (permissionless) blockchains, such as Bitcoin and Ethereum, are open to anyone and foster transparency and decentralization. Conversely, private (permissioned) blockchains are restricted to selected participants, often used within organizations or consortia for private, efficient transactions with controlled access (Crosby et al., 2016).

One salient feature of blockchain is its ability to facilitate consensus among mutually distrustful parties. Traditional systems rely on trusted third parties, such as banks or clearinghouses, to verify transactions. Blockchain replaces this trust with cryptographic proofs and consensus algorithms like Proof of Work (PoW) or Proof of Stake (PoS). These mechanisms allow participants to agree on the state of the ledger, thus ensuring data integrity and security without centralized oversight (Satoshi, 2008; Buterin, 2013).

Beyond cryptocurrencies, blockchain’s potential extends to various sectors. In supply chains, blockchain enhances transparency by providing a tamper-proof record of product origin, movement, and handling. This traceability improves food safety, authenticity verification, and ethical sourcing, addressing issues such as fraud and contamination (Kouhizadeh et al., 2021). Smart contracts, self-executing contracts with terms embedded in code, automate transactions and reduce reliance on intermediaries, increasing efficiency and reducing costs (Szabo, 1997).

Blockchain’s benefits are substantial. Its security features protect against cyber threats and fraud, while its transparency promotes trust among participants. The permanence of records ensures data integrity over time. When integrated with IoT devices, blockchain can enable real-time tracking and validation of goods, further enhancing supply chain reliability and responsiveness (Makhdoom et al., 2020). Blockchain also supports privacy through permissioned networks, where access is restricted to authorized users, balancing transparency and confidentiality.

Despite its promises, blockchain adoption faces obstacles. The hype surrounding its potential may lead to unrealistic expectations. Regulatory uncertainty, cybersecurity risks, user-unfriendliness, and limited understanding pose significant hurdles for widespread implementation (Ali et al., 2020). Additionally, scalability remains a challenge; current blockchain networks can struggle to handle high transaction volumes efficiently (Xie et al., 2020).

In supply chain contexts, blockchain solutions address critical challenges. For example, 300 Cubits applies blockchain for secure documentation in shipping, improving efficiency and traceability (300 Cubits, 2021). BanQu enables small businesses in developing economies to access financial services through blockchain-based identity and payment systems (BanQu, 2020). Bext360 leverages blockchain to promote social sustainability by ensuring ethical sourcing practices (Bext360, 2021). Walmart’s integration of blockchain for food safety exemplifies how traceability can protect consumers and reduce food fraud (Walmart, 2019).

Technological synergies, particularly combining blockchain with IoT, further enhance supply chain capabilities. IoT sensors can provide real-time data on location, temperature, and humidity, which then gets securely recorded on the blockchain for auditability. This combination ensures data transparency, reduces fraud, and improves responsiveness to disruptions (Makhdoom et al., 2020).

In conclusion, blockchain offers transformative potential for supply chains by increasing transparency, security, and efficiency. Overcoming current barriers requires collaborative efforts among industry stakeholders, regulators, and technology providers to develop scalable, user-friendly, and secure solutions. Future advancements in integration with IoT and artificial intelligence hold the promise of creating intelligent, autonomous supply chains capable of real-time decision-making and problem-solving, ultimately leading to more resilient and sustainable global supply networks.

References

• Ali, M., et al. (2020). "Blockchain technology for supply chain management: A review and analysis of its potential." International Journal of Production Research, 1-19.
• Bext360. (2021). "Blockchain solutions for social sustainability." Retrieved from https://bext360.com
• BanQu. (2020). "Blockchain-based financial inclusion for small businesses." Retrieved from https://banqu.com
• Crosby, M., et al. (2016). "Blockchain technology: Beyond bitcoin." Applied Innovation Review, 2, 6-10.
• Makhdoom, I., et al. (2020). "Blockchain-enabled Internet of Things for healthcare." IEEE Access, 8, 55504-55516.
• Nakamoto, S. (2008). "Bitcoin: A peer-to-peer electronic cash system." Available at https://bitcoin.org/bitcoin.pdf
• Satoshi. (2008). "Bitcoin whitepaper." Available at https://bitcoin.org/bitcoin.pdf
• Szabo, N. (1997). "The idea of smart contracts." Nick Szabo's Papers & Concise Tutorials, 1994-2006.
• Xie, R., et al. (2020). "Scalability challenges of blockchain technology." Journal of Network and Computer Applications, 168, 102794.
• Walmart. (2019). "Using blockchain for food safety." Retrieved from https://corporate.walmart.com