There was a time not too long ago when the buzz around Bitcoin – and crypto currencies in general – was almost too loud to ignore. Even for the most conservative investors wanted in on the action, driving the price per coin up to an astronomical $20,000 by the end of 2017.
These days the hype has mostly died down. As of April 2020, Bitcoin hovers around $7000 with relative consistency.
The most obvious explanation for the overall petering out of the crypto craze is the general state of the global financial markets. One of the luxuries of robust economies – like that of the last decade – is confidence. Well diversified investors feel they can hedge against something riskier like crypto, which promised to be a vehicle for massive cultural and infrastructural financial change still years in the making.
Initial investment in crypto was just that – a wager that decentralized, digital currency would put the dollar out to pasture. As for the near ten-year run of coinbase market trading fervor that followed? That was about herd behavior – the same sort of volatile, speculative trading you find in penny stock subreddits.
We are seeing something similar now with so many Americans at home day trading as a result of the coronavirus. But for the time being, both informed investment in coins and ancillary bandwagon fanaticism have wavered. There are few bulls in cryptocurrency.
These days if you’re genuinely invested for the long-term it’s in a few companies with long records of prosperity – the ones you know will still be around and reporting earnings when financial markets are on the other side of the current downturn.
While there is surely still a dedicated community of crypto followers somewhere out there, financial news is far less littered with newly issued coins than it was two years ago. This is not because digitized currency is a failed proposition. Not at all. Plenty of people have gotten rich trading Bitcoin, Ethereum, Litecoin and the like.
But it is also true that crypto investors who made real money mostly speculated their wealth into existence. No coin has proven its value because none – not even Bitcoin – circulates at the scale of the American dollar. Cash is still king.
Perhaps that is part of the reason for the fast decline in popularity of various coins as investment vehicles. Uncertainty breeds uncertainty. A global health crisis, massive unemployment, and a volatile stock market have even the most extreme crypto zealots second guessing the future of digitized currency.
But regardless of what’s in store for the coins themselves, no one can deny the extreme value of and many potential use cases for blockchain technology. This is especially true in supply chain services where recounting the path of product inventory can be a harrowing proposition.
The Blockchain for Dummies
So, what in the world is the blockchain? This is an important question and one that is not easily answered in a way that makes sense. Here goes nothing…
Blockchain is a digital system for tracking and recording information regarding value exchanges. Information is stored in batches (blocks) that are linked together in a chronological fashion to form a continuous line (chain). In other words, it is a living timeline that follows the path of a commodity – a digital paper trail, if you will.
If you make a change to information recorded in a particular block, it is not rewritten. Rather, a new block is created and added to the chain to reflect the change. It’s a non destructive way to track data changes over time.
For many, the notion of the blockchain is almost synonymous with Bitcoin, in part because it was initially established to serve as the coin’s digital ledger. But thinking about blockchain in this way is counterproductive. The association to crypto is confusing and the system starts to feel a bit extraterrestrial. In truth, the concept of blockchain is pretty accessible. People get it when they know what it is. In fact, they’ve “gotten it” for years as blockchain is based on the centuries old financial ledger method.
Here is another way to think it – a higher level definition from technology gurus and co-authors of the 2016 book Blockchain Revolution, Don and Alex Tapscott: “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
It is the last part – the piece about the blockchain’s ability to record “virtually everything of value” – that is important here. The transactional ledger for Bitcoin has inspired countless other applications for blockchain ranging from those that seem most befitting like fin tech, to more creative integrations like energy trading, music distribution, insurance sharing and more.
The Benefits of Blockchain Technology for Supply Chain Services
In all of these use cases, the real value of blockchain technology is its ability to ensure security and transparency, and the supply chain is no exception. But the notion of “secure transparency” seems almost oxymoronic, right?
To make sense of this, it’s important to stay focused on the idea of decentralization – the many “links” in a blockchain. In supply chain industries, for instance, transactional links would include sourcing, manufacturing, marketing, in addition to the actual sale (not to mention fulfillment, parcel delivery, etc.). All of these are a part of the blockchain documenting the path of a single product purchase and each is also a unique part of the network.
Once you consider how many players touch the ball before the customer carries it over the goal line, you start to get a better sense of the size of the network we’re talking about. The bigger the network, the more unique systems must agree to validate a potential change in ledger data.
There’s more. Combined with Internet of Things infrastructure (IoT), blockchain can support the secure tracking of locations and conditions of products.
IoT refers to the interrelated computing devices, mechanical and digital machines provided with unique identifiers and the ability to transfer data over a network. These are tools that tell retail shoppers how much of something is left in stock and where it is coming from. Based on these and a combination of other factors, IoT will project delivery dates, and enable customers to track the exact location of a purchase after purchase.
According to Alexandra Rehak, an analyst at global technology research firm Omdia, the integration of IoT and blockchain helps verify product provenance. The encrypted, unchangeable records create trusted relationships between suppliers and buyers, right down to the brand customer.
One of the biggest contributors to that improved experience is the assurance that they are getting exactly what they are paying for. Manufacturers of branded goods are able to use blockchain to track component parts and prevent gray market items from slipping into the supply chain.
Blockchain enabled traceability has had the largest impact on food and grocery supply chains. In September 2018, Walmart launched its Food Traceability Initiative after a large outbreak of E. coli in romaine lettuce and Salmonella in various products, from eggs to breakfast cereal, rocked the grocery industry.
Walmart gave leafy green suppliers a year to optimize visibility and tracking from store shelves back to the farm. The tracing information outlined included where greens were grown, when they were harvested, and the supply chain flow that occurred prior to reaching Walmart locations. Tejas Bhatt, senior director, Global Food Safety Innovation at Walmart said that a majority of Walmart’s leafy green suppliers now use blockchain technology.
“We believe we can better protect customers from outbreaks by being more proactive than reactive to issues in the supply chain,” said Bhatt in an email interview. “We want to enhance the customer shopping experience by delivering safe, fresh quality foods whether they shop in store or online with Walmart.”
The retailer’s system for produce tracking has become something of a standard bearer for supply chains hoping to integrate blockchain technology with IoT. IoT sensors monitor and control the various devices in the fleets of containers hauling the greens and Walmart is now working on tracking temperatures and other factors that point to the possibility of compromised freshness and quality.
These days, Walmart is utilizing blockchain and IoT across multiple produce types to much success, even despite the COVID-19 pandemic. In light of this, the company has expanded its efforts to other parts of the business, including merchandising, sourcing, technology, and trade. Most recently, Walmart is working with U.S. Customs and Border Protection Agency on an adapted system of blockchain tracking that would facilitate faster flow of goods across borders.