Thoughts After Dark answers the questions you have in the final moments before drifting off to sleep when a simple Google search turns into an hour-long exploration into how things are made and how they work. Your random late-night questions are answered here — even the ones you didn’t know you had.
Blockchain, like the Internet of Things (IoT) and non-fungible tokens (NFT), are frequently used buzzwords that can be hard to understand because they feel both ultra-modern and exclusive. While the concept of blockchain has been around since 1991, many of us still don’t fully understand how it works, even as it takes the manufacturing sector and supply chain by storm.
However, a new phase of the internet that relies heavily on blockchain is on the horizon (so experts say), so it’s time to get to the bottom of how blockchain works and how it might affect the future of manufacturing. Plus, how will this new internet differ from what we know today?
What Is Blockchain?
Blockchain was officially introduced in 2009 with the release of the Bitcoin cryptocurrency, although the concept dates back several decades.
Recently, there has been some controversy about the actual creator of Bitcoin. Craig Wright, an Australian computer scientist, claims to be Satoshi Nakamoto, the pseudonymous author of the 2008 white paper behind the world’s foundational cryptocurrency. The U.K. trial over the true inventor is expected to last the rest of February.
But what is blockchain? The most digestible definition comes from writer Claire Zulkey, who describes it as “essentially a Google Doc.” It’s a public ledger that anyone can opt into using.
“[I]nstead of using PayPal to pay for something, you buy it directly, and your purchase is written onto the ledger for anyone to check for all time,” Zulkey writes. Basically, instead of data being held in a single, centralized location, blockchain are stored in a decentralized network among all users.
The first thing the blockchain was used for was a new currency, Bitcoin, because, during the 2008 financial crisis, people didn’t like that they didn’t have control over their money once it was put in the bank. Blockchain allows people to store all exchanges publicly — essentially like a Google Doc.
While blockchain doesn’t have to be used for money, it is being used this way by many different companies. However, there are a few other ways the manufacturing industry is utilizing the technology.
How Can Manufacturers Use Blockchain?
Today’s manufacturers have to manage complex global supply chains. Without visibility and traceability, it would be nearly impossible — that’s where blockchain comes in. According to PwC, 24% of industrial manufacturing CEOs have plans to deploy the technology.
1. Improving Supply Chain Traceability
A blockchain can provide a detailed audit of all transactions made for specific components that comprise a whole product. This gives manufacturers complete visibility into the entire product lifecycle. Blockchain can also ensure manufacturers are utilizing trusted suppliers while also tracking the source of potential issues with a part.
2. Optimizing Data Security
A well-built blockchain has exceptional data security, where every purchase must be verified by multiple employees or managers before being added to the blockchain. If the blockchain is private, it is especially difficult to infiltrate.
3. Better Inventory Management
Manufacturers often rely on various suppliers to assemble hundreds or thousands of parts. Blockchain helps manufacturers track these parts before, during, and after production. For example, if there is a failure due to one part, blockchain makes it simpler to track down what happened and replace the part that caused the issue.
5 Manufacturing Companies Using Blockchain Technology
The blockchain has come a long way over the years, and a number of companies are taking advantage of it.
- Walmart: Uses IBM’s technology to back its supply chain, track its food orders from farmers, and give customers the ability to check the provenance of an item before purchasing.
- Ford: Uses blockchain technology to track materials like cobalt from suppliers to ensure the product is authentic to standardize quality.
- FDA: Uses blockchain to secure healthcare data and safeguard private client information.
- Siemens: Uses blockchain technology to bring innovation to the energy sector and make more sustainable energy systems.
- Delta Airlines: Uses blockchain technology to offer specialized chatbots to respond to customer questions more quickly.
Blockchain Will Power Web3
Blockchain is more than Bitcoin, supply chain management, and data security. In fact, it’s what the next phase of the internet will be built on: Web3.
Web3 is a move toward a decentralized internet, where, instead of relying on single servers and one centralized database, it runs entirely off of public ledgers. There is no set definition because Web3 is still a developing movement. Still, the overall goal is to empower users by giving them ownership of their personal data rather than big tech companies.
Zulkey notes that Web3’s number one goal is to “take back the internet from the Facebooks, Googles, and Amazons of the world.” This type of decentralized system would change how the Internet operates. We would no longer need tech companies or financial institutions to mediate online experiences.
There is one issue, though: Web3 might be a little too expensive to run right now. While blockchain enables cost-free transactions without intermediaries, it takes a lot of energy to run. Scalability is also an issue. The more people using Web3, the slower response times will be.
Experts agree, though, that Web3 is not an “if” but a “when.”
How Web3 Will Benefit Manufacturing Businesses
“When” Web3 is officially launched, it could do a lot of good for businesses, similar to how blockchain benefits manufacturers. It could:
- Improve security: Because blockchain’s ledger-based systems enable more secure transactions, businesses can better protect their data from cyberattacks and fraud.
- Offer faster transactions: Once Web3 has the energy to power it, blockchain technology can process payments much faster than traditional payment processes.
- Save money: Companies don’t have to spend money on servers because blockchain is centralized, so businesses can save money on transaction fees and related charges.
- Save time: Blockchain technology automates time-consuming tasks, which can improve workflows.
What’s Next?
There’s no launch date for Web3, and estimates range between five and 20 years. But with blockchain technology backing it, it will be interesting to see how this new phase of the internet plays out.
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