Retail and commodity main players are showing a growing interest in blockchain and are even developing their own solutions.
E-commerce and commodity titans are showing a growing interest in blockchain and are even developing their own solutions. This is great news for both blockchain technology groups and e-commerce consumers. The foundations for a successful relationship between blockchain developers and e-commerce managers exist and are actually obvious.
A lot of new projects are on the works, because blockchain companies are trying to solve the same problems that afflict supply chain activities and e-commerce. Zero-Knowledge Protocols are nothing new in the crypto world, but they are in the real economy. In the increasingly interconnected world we live in, new technologies like blockchain can offer enormous advantages.
Solutions which provide security to e-commerce consumers and protect their privacy and data are increasingly in demand. Blockchain is one of them. The technology is basically a public ledger that automatically – as well as safely and transparently — verifies and records a high volume of digital transactions. All the participants in the operations can be called into question to guarantee the correctness of the transactions or of the information shared in the database.
The Properties of Immutability and Transparency of Blockchain
In recent years, analysts have come to argue that most industries could benefit – more or less dramatically – from the use of distributed ledgers like blockchain. There are several cases of commercial use of this technology, with transactions that are automatically verified and organized by a decentralized platform that does not require the supervision of an entity or a central subject.
The most obvious examples of blockchain application is the banking and payment sector. But some of the ways by which companies – both large and small – are trying to harness the power of blockchain technologies, concern trade and supply chain in particular.
But even in the commodity trading industry – especially in the areas of agribusiness, energy and metals – the benefits can be enormous. In fact, the properties of transparency and immutability of blockchain technology make it useful for eliminating frauds in supply chain.
These are some of the main benefits of adopting blockchain technology:
- Reduce or eliminate fraud and errors
- Improve inventory management
- Minimize courier costs
- Reduce delays from paperwork
- Identify issues faster
- Increase consumer and partner trust
At the LME Week in London, a seminar on Liquidity, Technology and Market Structure session is on the agenda (on the 31st of October). When talking about the future of exchange technology, the panelists will certainly discuss the potential benefits of blockchain. Among the other debates worthy of note are two seminars about hot topics like the impact of ESG issues on the industry and the Electric Vehicle revolution.
More Secure and Transparent Transactions
One of the most talked-about aspects of the decentralized technology is that it allows a more secure and transparent control of operations. An area in which companies – both large and small – are trying to harness the power of blockchain technologies is trade — especially everything that relates to the supply chain.
In the case of this particular application, blockchain acts as a series of transactional nodes that allow products to be transferred and moved from the factory to the point of sale. Thanks to the technology on which crypto transactions are based, deals between different operators in a chain (from production to sale) can be documented in a decentralized register, thus reducing the costs of transcription, delays and possible human errors.
Several startups operating in the distributed ledger sector are experiencing the benefits of applying this technology to supply chain management. London-based Provenance, for instance, has developed a traceability system for materials and products globally.
The American startup Fluent offers an alternative platform for the management of financing and loans along the supply chain (Supply Chain Finance) that exploits the technology of invoice tokenisation. Finally, California-based Skuchain builds blockchain-based solutions for the collaborative B2B (Business to Business) trade and logistics market.
Blockchain can strengthen the weakest link in the supply chain
For some years now, blockchain is affecting the wine industry, as well. There are many examples of wine supply chains being tracked by the technology to ensure transparency. Consumers can check the authenticity of the product and the origin of every grape by scanning a barcode on the wine bottle.
Recently, tangible tokenized products have also been launched. In Buenos Aires, Argentina, Mike Barrow launched an open-source project called OpenVino. The team leader explained that there is no IT platform or actual company created, but simply a sort of certification process of a product that already exists.
Since the project runs on the blockchain, the system as it was conceived also has a token. OpenVino, in fact, uses the technology behind the crypto currency to “token” a physical good that you can hold in your hand and drink. By making wine a virtual “good”, everyone would be able to take part in the project. By buying tokens you end up improving the final product.
This is the novelty of Barrow’s idea: through the digital transformation of Costaflores, his winery in Argentina, he was able to lower costs, improve quality and guarantee the authenticity of the product. The fact that it is an open-source project allows you to share information and intellectual property on the product.
According to a recently published report by Northern Block, the weakest link of supply chain is the lack of transparency. It is the “elephant in the room” in the industry: everybody knows that even the most trusted consumer brands simply do not know enough about the provenance of the goods they make, but nobody wants to see it.
As a consequence, brands are inevitably becoming vulnerable to supply chain related risks as their global connections increase. In this context, blockchain technology can be of great help, as it can strengthen the weakest link in the chain. Many companies like IBM are already working on solutions to ensure that technology, which is already a disruptive agent in several industries, becomes a game changer in the supply chain industry.