At first glance it is tempting to think of blockchain technology as being primarily concerned with enabling the store of value on a tamper-proof ledger that can be easily and cheaply updated to reflect the movement of value. Satoshi Nakamoto envisioned a peer-to-peer system of value transfer. He might not have anticipated that blockchain technology has been fruitfully used in the internet of things (IoT) to improve such things as supply chains.
The Internet of Things is a futuristic idea that has been around for a number of years now. We have a number of devices in our homes that use a network (such as a home wifi network) to communicate to people and other things. Devices talking to devices sounds like a dystopian vision but it actually has many practical advantages. Medical devices can alert other devices that there is a medical concern for a patient, the thermostat can tell the boiler that the house is getting cold, delivery driver vehicles can connect to radio networks to update its location and estimated arrival time.
People are eagerly adopting smart home technologies such as Circle cameras by Logitech that allow users to see their homes, their front doors, their pets and their children while they are away from the home. These types of technology are also examples of the Internet of Things providing services to customers.
In the business world one of the biggest challenges is managing supply chains. These are growing more complicated as we move to global economics. For instance, a car manufacturer will typically work with 30 partners and many more suppliers. Parts are made all over the world before converging on one manufacturing plant to be assembled and made into an automobile. There is a lot that can go wrong – the wrong part, damaged parts, stolen parts, wrong delivery addresses and so on. These problems are magnified in the case of the automobile industry by just-in-time supply chain models.
VeChain is one of a handful of companies offering blockchain solutions to supply chain management. It is called ‘VeChain’ because ‘Ve’ stands for ‘verify’. The verification is done by Near Field Communication (NFC) that uses a small chip that sends information over a few centimetres using high frequency radio. VeChain sells a variety of cheap NFC enhanced packing strips, tags, labels and even buttons that can be read by portable devices.
As products move from one location to the next and onto to the final destination, they are scanned by NFC readers (these are often smartphone apps) that up-date in real time logistical data. They can record not only location, but also temperature, humidity, speed of movement (if in transit) and even odours to detect if a perishable item is going off. This information is stored on an encrypted blockchain that cannot be corrupted and that can be assessed easily. Managers seeking to view the passage of an item in the supply chain uses VET, the native coin of VeChain to access the blockchain.
Moreover, NFC apps can also add information to NFC tags etc. to alert the blockchain of any damages or logistical errors. Thus, locating and redirecting a missing part that was ordered can be automated. This saves time and money for big companies with complex supply chains.
Another advantage of VeChain technology is that it provides proof of ownership, authentication and provenance. These attributes are especially useful in transporting valuable goods.
The disadvantage is that 100% intelligent supply chains are still the exception. Most use a combination of human and machine recording. Naturally, the human element of the combination is open to abuse as human nature is stubbornly prone to breaches of trust.
Once the consumer finally receives an item after its journey through the supply chain, he or she has the now defunct NFC tag. The challenge from an environmental point of view is how to recycle or reuse these tags. Nevertheless, VeChain has opened up exciting new possibilities for the internet of things and supply chain management.
