Blockchain technology: what it is and how it works
A blockchain is a linear chain of many interconnected blocks of information. In fact, it is a database that is securely protected by encryption and decentralization. This can be compared to a ledger that records transactions sequentially. Many people have only heard of blockchain in the context of cryptocurrencies, as it emerged as a technology that was used to launch Bitcoin (the foundation of the foundation, the first cryptocurrency). The concept was proposed by Satoshi Nakamoto (a pseudonym for a person or group of people) in 2008 and was first put into practice a year later. In the cryptocurrency market, blockchain has been used to ensure the privacy of transaction participants. The technology quickly caught on in other areas of activity as well.
The benefits of using blockchain in logistics
The logistics industry has huge potential: it was estimated at $8.1 trillion in 2017 and will nearly triple by 2023, according to Transparency Market Research. Despite the positive outlook for the event, logistics companies and retailers lost most of their profits due to poor organization. Complex and lengthy supply chains, cumbersome paperwork (often done manually), high probability of errors due to human factors, intermediary costs, cyber-attacks - these are all related to logistics issues.
The main difficulty is related to bureaucratic obstacles. This is especially true for international deliveries of containerized cargo involving a large number of countries, companies and government agencies, all of which have their own rules for document maintenance and accounting. For example, in the process of shipping refrigerated cargo from East Africa to the EU, around 30 participants were involved just to obtain a transport license and stamp it. Just imagine, the cost of processing documents can be 15% to 50% of the cost of physical shipping!
According to experts, blockchain is the only(!) technology that can remove these global trade barriers by creating a reliable and secure system for storing, processing, tracking and exchanging data between participants from all over the world. According to DHL, the use of blockchain in logistics has led to global success: it could help increase international trade by 15% and increase world GDP by 5%.
