Leaders from the global supply chain and logistics industry, the world’s largest ports, blockchain start-ups, importers/exporters and civil society have partnered with more than 20 governments, to accelerate the use of blockchain responsibly and strategically across supply chains. The Blockchain in the Supply Chain project is a new initiative to help supply chain decision-makers cut through blockchain hype to ensure the emerging technology is utilized in a secure, responsible and inclusive way that benefits all stakeholders. Globally, the supply chain industry is fragmented – with many parties operating in silos. Blockchain presents a technology promise that would have far-reaching implications for global trade and supply chains – bringing standardization, alignment and transparency. But, the technology is prone to hype.
A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that any involved record cannot be altered retroactively, without the alteration of all subsequent blocks. This allows the participants to verify and audit transactions independently and relatively inexpensively. A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. They are authenticated by mass collaboration powered by collective self-interests. Such a design facilitates robust workflow where participants' uncertainty regarding data security is marginal. The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset. It confirms that each unit of value was transferred only once, solving the long-standing problem of double spending. A blockchain has been described as a value-exchange protocol. A blockchain can maintain title rights because, when properly set up to detail the exchange agreement, it provides a record that compels offer and acceptance. Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree. Each block includes the cryptographic hash of the prior block in the blockchain, linking the two. The linked blocks form a chain. This iterative process confirms the integrity of the previous block, all the way back to the original genesis block.
Sometimes separate blocks can be produced concurrently, creating a temporary fork. In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of the history so that one with a higher score can be selected over others. Blocks not selected for inclusion in the chain are called orphan blocks. Peers supporting the database have different versions of the history from time to time. They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version (usually the old version with a single new block added) they extend or overwrite their own database and retransmit the improvement to their peers. There is never an absolute guarantee that any particular entry will remain in the best version of the history forever. Blockchains are typically built to add the score of new blocks onto old blocks and are given incentives to extend with new blocks rather than overwrite old blocks. Therefore, the probability of an entry becoming superseded decreases exponentially as more blocks are built on top of it, eventually becoming very low. There are a number of methods that can be used to demonstrate a sufficient level of computation. Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner.
Blockchain has the potential to revolutionize a range of sectors where trust is needed among parties with misaligned interests. But it is precisely within these contexts that deploying such a new and complex technology can be the most difficult. Providing increased efficiency, transparency and interoperability across supply chains has been one of the most fertile areas for blockchain experimentation, illustrating both the opportunities and challenges in realizing the transformative potential of this technology. Over 100 organizations and experts have joined the project to co-design an open-source toolkit which will streamline the deployment of blockchain throughout a broad and diverse sector. A multistakeholder community, representing large shippers, supply chain providers and governments, will design governance frameworks to accelerate the most impactful uses of blockchain in port systems – in a way that is strategic, forward-thinking, and globally interoperable; and by which countries across the economic spectrum will be able to benefit. This team will release white papers each month focusing on the findings from the project community. The recommendations will include guidelines on data privacy, security, creation and use of data, public versus private platforms, interoperability, digital identity and signatures. Supporting an approach that considers the entire ecosystem promises to ensure an inclusive perspective and result that will benefit all stakeholders.
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