Blockchain Explained

Blockchain may be one of the most misunderstood buzzwords of 2018. In conferences, meetings, and seminars, I am frequently pulled into discussions about the application of this new technology and its implications on different industries. As the Chief Technical Officer of Doorways, I am particularly interested in how blockchain may be applied to the supply chain to revolutionize the way we track and store data. In order to fully understand the potential impact, let’s take a look at how blockchain works.

The idea for blockchain originated in 1991 when two researchers were searching for a way to permanently store timestamp data. They required a data storage system that would be unchanging, permanent, and easily accessible. The true value of blockchain lies in the fulfillment of this requirement. Blockchain is a way to permanently and securely store data. Marc Baskin, CEO and founder of Cryptokist, describes blockchain in its simplest form as a “database, like Microsoft Excel, but its attributes make it a superior product that eventually nearly all business models can take advantage of.”

The structure to make blockchain possible is surprisingly simple. As the name implies, blockchain is a chain of data blocks referred to as nodes. Each node contains a chunk of data and a link to the following node. When connected in this way these nodes form a chain of data. What is revolutionary about this technology is how the information is stored. Utilizing a concept known as decentralization, copies of data are distributed to many different computers, removing the burden of security from one central location by distributing it to many different locations.

To understand the value of a decentralized storage system, let’s examine how a supply chain business would traditionally store data without the use of blockchain. Supply chains are notoriously complex to track, as the creation of one product may depend on a variety of suppliers who in turn have their own list of suppliers. Supply chain transactions are similar to monetary ones: after the supplier provides a product to the customer the transaction should be recorded in a permanent and unchanging way.

This is why our team decided to utilize blockchain to build Doorways, a platform that disrupts supplier diversity. Supply chain businesses are the perfect candidates for blockchain technology. Without blockchain, supply chain data is recorded and stored in a single database or, in some cases, a long and winding paper trail. Records can be lost, altered, or otherwise made invalid. This is where blockchain can help. Instead of storing all supply chain information in one location, blockchain distributes copies of its data among a variety of sources. If a rogue element attempts to alter the data within the blockchain, it must also alter this data among the majority of computers that are storing this information, a task considered to be impossible. This makes blockchain one of the safest ways to permanently store information.

Businesses everywhere are considering blockchain technology and beginning to understand its impact. Data storage, real estate, and medical record keeping are just a few other industries exploring applications for blockchain. While blockchain’s full potential is still nascent, it is sure to impact business for years to come.

Resources

A Simple Explanation on How Blockchain Works - Paul Dughi

Bitcoin & Blockchain Explained for Normal People - Glen Elkins

How Does Blockchain Work in 7 Steps - A clear and simple explanation - Jimi S.

What is a Blockchain for a Software Developer—A Not So Complicated Explanation of the Technology - Diego Barahona

What Is Blockchain and What Does It Do? - David Roe