New technologies always work on the premise of revolutionising the market, and you don’t have to go far back in time to recognise their impacts. The Internet, for example, has transformed the way we communicate and conduct business. Bearing this in mind, the interest of companies in Blockchain technology is understandable. This technology has the same disruptive potential as the Internet had.
1. What is Blockchain?
Blockchain is a technology in which access is made to a distributed and decentralised digital ledger for recording information that cannot be modified. It is a basic technology with several application possibilities.
The first known application was in the financial market, with the emergence of bitcoin. However, other segments also stand out. There are already Blockchain innovations in logistics, in the insurance market, among other segments.
2. How does Blockchain work?
To use Blockchain, you must understand how it works. The mechanism enables data validation with distributed network processing on private and shared computers. In other words, any online asset transaction is made only between two or more agents, without the intervention of a regulatory agency.
How Blockchain Works
In addition, the information is only exchanged and validated following consensus between the two parties involved. In a transaction, for example, each agent interested in accomplishing it has an encrypted code. Only when the two or more codes come together is the information block assembled for the transfer to take place.
To help you understand the process, consider the following steps:
- Beginning of transaction: when two agents decide to initiate an exchange.
- Block creation: when the transfer is pooled and enters the network of shared computer chain.
- Verification: a set of rules is defined for participating computers to assess and calculate the transaction. Verification only happens after consensus among those involved.
- Cryptography: the verified block is encrypted and recorded.
- Execution: the transfer is carried out between the parties involved.
Blockchain’s purpose is to streamline the processes of any online activity. It is also significantly safer, since the codes used in the transactions are complex, to the point of rendering a transfer irreversible, thereby avoiding fraud.
Transparency, credibility, agility and efficiency. For these reasons, the mechanism is gaining increasing importance in the business world.
3. The main benefits of Blockchain
As a recent innovation, few people know about and understand Blockchain. The market is still studying and testing its applications, which may cause some organisations to resist making an investment in this new technology.
Using Blockchain confers a competitive advantage for the business, and, in addition, those barriers need to be broken. Among its main benefits, we can highlight:
- more reliable operations;
- more democratic transactions;
- process optimisation;
- ease of coordination between companies;
- recording of the data in chronological order;
- cost reductions.
Some companies, particularly in the financial sector, have already investing in the mechanism and are enjoying these advantages. This is the case for Nasdaq, the American automated stock exchange which is focused on technology. The company started to maintain records with Blockchain associated to LINQ, a cloud management tool that controls and issues shares of a particular company.
After the technology was implemented, auditing costs and red tape reduced. Other recognised gains were a more transparent verification process and a greater inviolability of the data of each company.
4. The impact of Blockchain on businesses
Blockchain is not only changing the economic sector. Other segments, such as logistics, are also benefitting from the technology. Since it is a market that involves cross-company trading, this database model can help improve processes.
Imagine a company located in São Paulo. It needs to deliver a product to a customer in Uberlândia, in the interior of Minas Gerais. Currently, the logistics process is as follows:
Delivery example using Blockchain
In the above example, four companies were involved in this single delivery alone. It is difficult to establish who, among those organisations, is responsible for the material and at what time. Suppose the shipment is stolen in one of the shipping steps: how can the responsible party be determined in order to refund the customer? It is complicated in a process such as this, and as a consequence there is a high chance of losing information on longer journeys.
With Blockchain, the delivery tracking context changes. All companies access the same network and are able to verify the information directly from the source. In addition, any decision concerning freight transportation, such as the route and the freight rate, among other aspects, is taken from a consensus. The customer can more accurately track the delivery of his product, since the validated information does not change.
Delivery example using Blockchain
By introducing this technology into logistics, the steps required for shipping the product produce two significant results: cost reduction and wealth of information.
What is Intelipost doing?
We are currently engaged in:
- CThe creation of the blockchain for fractional logistics in Brazil;
- The creation of Smart Contracts of this blockchain;
- Forming partnerships with other players in the market;
- Making advances in technology and governance standards.
Our total commitment to this technology is already bearing fruit. Here are some examples:
- The IBM SmartCamp award for new technologies;
- The first Blockchain Hackathon with IBM in Brazil;
- The development of market standards in conjunction with ABRALOG;
- The presence of a Blockchain community in logistics;
- Creation of the first event focus on fractional logistics in Brazil using Blockchain. See more details about the results:
Logistics Tech Challenge - Blockchain Edition
There is no question that Blockchain technology has much to offer when it comes to process optimisation, but we recognise the need to collaborate with partners who are interested in evolving with us.