The Blockchain Revolution In Logistics Explained
Logistics is yet another area where blockchain technology is proving invaluable.
Technological innovation is a crucial factor as the world of logistics encompasses detailed coordination of complex operations involving many people, facilities, and supplies.
Like the internet has transformed how we communicate and do business, blockchain technology is similarly disruptive.
This article reviews what the blockchain is and how it’s changing logistics.
Blockchain Technology – A Brief Overview
In layman’s terms, blockchain technology consists of accessing a distributed and decentralized database for recording information that cannot be modified. It is an essential technology with several application possibilities.
The first known application was in the financial market with the emergence of bitcoin. However, other segments have stood out. There are already Blockchain novelties in logistics, in the insurance market, among different features.
How does Blockchain work?
If you want to use blockchain technology, it is crucial to understand how it works.
The blockchain engine allows data validation with distributed network processing on different computers (nodes). That is, any transaction of an online asset is made only between two or more agents without the intervention of intermediaries. Furthermore, information is only exchanged and validated after consensus between the two parties involved (peer-to-peer system).
Each agent interested in carrying it out in a transaction has an encrypted code. Only when two or more codes come together is the block of information assembled, and the transfer occurs.
How is information validated on the Blockchain?
A transaction begins when two agents decide to start exchanging data and/or cryptocurrency. Then, it’s time for block creation, which is when the transfer is bundled and enters the shared computer chain network.
During the verification process, a set of rules is defined for nodes (validators) to evaluate the transaction. Verification only takes place after a consensus among those involved. Then, the process proceeds to encryption, in which the verified block is encrypted and written. Ultimately, the transaction is executed, and the transfer is carried out between the parties involved (P2P transaction).
Blockchain Benefits in Logistics
Blockchain aims to optimize the processes of any activity done online. It is also safer, as the complex codes used in transactions prevent information fraud.
Plus, blockchain technology is important in logistics as it provides the following:
- transparency of transactions
- credibility of operations
- agility and ease of coordination between companies and suppliers
- the efficiency of recording data in chronological order
- optimization of processes and the supply chain
- cost reduction
In logistics, there is a lot of negotiation and supply chain between several companies, which is why this database model can help improve processes within the sector. Knowing this, it’s easy to see why the cryptocurrency prices of blockchain projects in the logistics industry could have their own summer.
Blockchain Technology in Logistics – Example
Imagine a company located in Miami-Dade County, Florida. Let’s say this company needs to deliver a product to a customer in Richmond, Virginia.
The delivery tracking scenario changes by applying the blockchain within the logistics sector.
In this context, all companies access the same network and can verify the information directly from the source.
In addition, any decision regarding cargo transportation (e.g., route, shipping costs, etc.) is taken based on a consensus.
All data exchanges would be automatically validated by the Internet of Things (IoT) – a technology in which physical objects use intelligent sensors and could communicate with the carriers’ systems over the Internet.
As it is plain to see, it is undeniable that blockchain technology is one of the main trends for logistics and will have a significant impact on the future of companies in the sector.
For companies that want to ensure their competitiveness in the market in the long term, it is essential to keep up-to-date and open to adopting new technologies.
Blockchain technology has given more agility and transparency to specific logistics and supply chain operations, especially in cargo tracking services, vehicle management, and supplier control.
Additionally, blockchain technology offers high security for recorded data, as it cannot be changed by others with access.
Lastly, it offers greater agility by shortening processes. Instead of everyone involved having to talk to each other, they connect to the network and have access to the data they need in a more agile and transparent way. Blockchains will become prevalent everywhere in business from marketing and accounts to sales transactions.