Why Blockchain
Why we are using Blockchain to enable supply chain traceability.
Trust and traceability
The key to building trust with customers is to show full transparency in transactions happening on the platform. When there are multiple parties involved in sharing sensitive data among each other, Blockchain is the best means of all parties building trust in the system and trust among each other. Blockchain combines all the following points: a. Once data is entered, it cannot be tampered with. b. All data is fully traceable on the ledger.
In a centralized system, users will have to trust the operators of that system. This trust is eroding between customers and even the most trusted parties – Governments, facebook, google. Blockchain enables centralized operation, but with all parties trusting the fact that they are seeing the right version of the data, which is unique to the technology.
Move a product from finished goods to in-transit, and that transaction status will be updated for everyone, everywhere, within minutes, with full traceability back to the point of origin [1] is one of the main advantages of blockchain based traceability. This is why governments around the world are exploring blockchain for sharing sensitive citizen data, financial services companies are using blockchain for trusted transactions, worldwide supply chains are moving into blockchain.
Surveys have shown that close to 65% of banks will be using Blockchain in 2020, and supply chain usage of blockchain is growing at a AGR of 80%.
Security
Data security is one of the top priorities for companies and end customers. Blockchain provides in-built security for all transactions, meaning that historical data can never be tampered with. Blockchain provides verifiable security, meaning that users can verify that their data is shared in an encrypted form through the blockchain.
Smart contracts
Smart contracts are the most traceable, transparent, and efficient way of performing logic based transactions on data, and again showing a fully trusted way of getting to the end result through trusted data computations. Smart contracts are highly customizable, and can incorporate execution of any business logic quickly and efficiently across the blockchain.
For example, business logics such as approvals of refiners for the NSE gold standard based on data can be done using smart contracts, hence preventing disputes of refiners questioning an approval or rejection, since all processes are traceable and available for the refiner to see on the Blockchain.
Audit
Blockchains are the perfect tool for trusted real time audits of supply chains. With an asset class as valued as gold, to ensure that no wrong-doing or no faulty transactions take place, blockchains provide a real time view into the movement of gold across the country, hence is ideal for a regulator to use. Since data cannot be tampered or modified once entered into a Blockchain, the time, effort, and cost of audits drops for anyone wanting to audit the system. A dashboard based analysis of the blockchain (which is provided by our blockchain platform) makes the regulators’ audit more efficient.
Industry references:
• “Significant efforts and attempts are now being made to ensure that the origins of gold can be traced with certainty along its entire value chain. In the years to come, blockchain technology will probably be able to offer further valuable assistance here. Even the gold market, previously thought to be such an analogue world, will not be left untouched by digitalisation.” – gold.org report by board member of Deutsche bank.
• “Blockchain could be one of several technologies that could transform the gold supply chain, helping to track gold across every stage of production from ‘mine to vault.’ “ – MD markets at World Gold Council.
• “Through blockchains, companies gain a real-time digital ledger of transactions and movements for all participants in their supply chain network. But don’t let the simplicity of the tool overshadow how transformational it is.” - Paul Brody, EY Global Innovation Blockchain Leader [2]
• Nasdaq is “all in” on blockchain technology [3], using it for: a. Private securities issuances. b. Securely sharing KYC information. c. Putting all mutual fund transactions on an auditable ledger. d. Enabling a blockchain based payments system (similar to NPCI).
References:
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