Blockchain gained popularity thanks to Bitcoin, the first decentralized cryptocurrency to gain prominence after its launch back in 2009. In November 2018, Bitcoin took a 37 percent nosedive, lowering the market value of cryptocurrencies by $70 billion. In 2019 alone, Bitcoin has undergone several more startling drops—most notably a $16 billion drop in a 24-hour period in January and another huge crash that took only an hour on February 24,, 2019, among Bitcoin, Ethereum, Litecoin, and other popular cryptocurrencies.
As stakeholders watch Bitcoin and other prominent blockchain brands struggle to remain stable, it’s easy to wonder about the future of blockchain as a whole. Blockchain is still in its infancy in the logistics sector, leaving many supply chain managers to wonder: What do Bitcoin crashes mean for supply chain blockchain programs?
The Supply Chain Blockchain Experiment
The truth is, volatility in cryptocurrency markets doesn’t mean that blockchain is doomed as a technology. Cryptocurrency is, after all, only one early experiment of the blockchain revolution. The fact remains that blockchain still holds great potential for global trade. A functional logistics blockchain network would mean that buyers, suppliers, and transportation providers can monitor trade via a distributed ledger that offers complete transparency.
Even if Bitcoin and every other cryptocurrency died tomorrow, the level of potential transparency blockchain can achieve for global transactions and shipments is simply too valuable to abandon so early on. According to IBM, blockchain for the supply chain holds the potential to increase the global GDP by 5 percent and increase trade volumes by 15 percent, which gives developers a very large financial incentive as well.
IBM and global shipping line Maersk have partnered up to offer TradeLens, a large blockchain pilot program for global trade stakeholders that includes an impressive list of nearly 100 large global ports, transportation providers, logistics companies, and other supply chain stakeholders.
Besides transparency, TradeLens and other early initiatives have revealed a wide range of benefits that blockchain can deliver to the supply chain sector. The most notable of these include:
- Past performance monitoring for all sides. With a distributed, unalterable ledger, businesses can make informed decisions about the partners they choose based on past performance.
- Better traceability of parts, components, and raw materials. Once blockchain becomes prominent among the supply chain, persistent problems ranging from conflict minerals to illegally sourced fish should become a thing of the past. Blockchain enables digital passports and other markers than can be used to verify the authenticity of each transaction.
- Fraud mitigation. With blockchain, no one party can go back in time and alter previous entries in the ledger. As such, honesty becomes mandatory as each party can track the creation of every document, invoice, and contract.
- Smart contracts. Blockchain enables parties to initiate, digitally sign, and enforce the terms of a contract. These contracts are programmed with an “if-then” functionality, forcing parties to adhere to each agreed upon step in the process. This significantly reduces costs spent on third parties, such as agents and litigators.
For these reasons and many more, blockchain in the supply chain will remain largely immune to the rises and falls of Bitcoin and other cryptocurrency empires. Business leaders will continue to pursue the value of blockchain in areas adjacent or unrelated to the financial sector for some time to come due to the tremendous potential the technology offers.
Wide-scale blockchain implementation probably won’t happen this year, or even next. As various trials and test programs conclude and the major players begin to collaborate on the formation of industry standards over the next several years, however, it seems likely that blockchain will find its place within the supply chain. These years of testing and development will be the key factor that sets supply chain blockchain initiatives apart from volatile cryptocurrency.
Innovate with the WSI Family of Companies
At WSI, we support the development of new and innovative technologies that will provide solutions to the problems faced by the supply chain every day. Much like innovations in blockchain, our proprietary technology solutions from 360data offer complete business visibility, helping our customers to identify and address problems and operate transparently. 360data is a continuing member of the Blockchain in Transport Alliance.
To learn more about products and services from 360data or WSI, please don’t hesitate to reach out. For more information about our technology solutions, please contact 360data online or call 920-707-3601. To learn about our warehousing and logistics solutions, please contact WSI online, or call us at 920-830-5000.
out how 360data can help streamline your transportation operation, please contact us.