Blockchain, the technology that enabled the creation of bitcoins and shook up global financial systems, may one day be disrupting supply chain operations as well. Ginny Rommety, CEO and chairwoman of IBM, has predicted that blockchain has the potential to transform transactions in the way that the Internet transformed communications. That could include all transactions and movements along the supply chain.
The IBM blockchain website defines the technology as “a shared, immutable ledger for recording the history of transactions.” There is no central repository for this transactional history; data, stored in blocks, is distributed across a network of computers. The blockchain is not controlled by any one entity in the network; any participant who has the right keys can add information to it. Each time participants record transactions, they create new blocks that others can read but that no one can alter.
At the center of blockchain is complex encryption technology and verification of data through the use of two keys, one public, one private. Anyone who has the public key can see the record of transactions on the blockchain. But network members also have their own unique private key. With that private key, they can secure (hide) data they want to include on the blockchain but don’t want to publicly share.
Before a participant can record a new transaction on a blockchain, the blockchain software must verify the validity of the combination of their public and private keys through mathematical problems (algorithms). The other participants in the network must also accept and verify that the data is valid before it goes on the blockchain. Once the transaction is recorded, the publicly-shared details of the transaction are visible to everyone with an app to read it. (Some blockchain networks are permissioned, so the blockchain transactions are available only to those granted access to the public information.) But no one, including the network participant who added the information, will be able to change or remove that block of data once it is part of the blockchain.
By Mary Lou Jay