What is a blockchain?
- In its simplest form, a blockchain is an accounting ledger which can store data on any real-world transaction of any kind.
- The unique feature in this ledger is the decentralised style and the data encryption which is highly resistant to tampering.
- This enables the blockchain to act as a trustworthy third party in applications ranging from property ownership and financial services to identity verification.
- And it can also perform on public basis, such as Bitcoin, or private, with a single entity operating a closed blockchain system.
What is the advantage of Blockchain in India?
- In India, blockchain can generate three tiers of impact across the supply chain network.
- Improving transparency – The reason why large logistics players haven’t deployed a centralised platform is due to less transparency, enormous on-boarding effort required, and data-privacy concerns.
- Blockchain could address these issues by the block chain’s plug-and-play capability which makes on-boarding less onerous.
- Large players can create their own private block chains with their suppliers, which results in the automation of paperwork and due diligence.
- These networks could then be repeatedly connected to each other to create exponentially larger networks, amplifying the benefits.
- Also the Blockchain’s structure, combining encryption and distribution, makes data far more secure and gives each blockchain participant far more control over its data.
- These capabilities increase the upside of joining a blockchain while dramatically reducing the downsides.
- Dispute resolution - The present supply-chain structure makes litigation for faulty or defective supply tedious and expensive, fraught with unreliable data.
- In a blockchain-enabled supply chain, each movement of the shipment can be tracked and logged in a way that all of the parties can trust, but with the data open only to them.
- “Smart” contracts could then penalise parties automatically from amounts held in escrow.
- Opportunities for SMEs - Estimates show that last-mile delivery accounts for 40-50 per cent of all logistics costs and SME vendors have proven their cost effectiveness in this domain.
- Blockchain provides a novel solution to build trust on the SMEs by on-boarding the SME vendors onto a blockchain platform where they can be assigned reputation ratings which track their performance.
- The customers could also have dozens of high-quality logistics options to choose from, all with the assurance that comes with performance track records that have been verified by blockchain.
- The potential impact is twofold by enabling SMEs to have a larger share in the supply chain market as well as help to increase the supply chain market by increasing demand as the addition of new players reduces prices.
Source: Business Line
