Blockchain is the best mechanism currently available to address problems in the supply chain, said Fantom Foundation senior advisor Dai-Kyu Kim. His comments come at a turbulent time for the global supply chain.
Joining EximChain CEO Hope, Hope Liu, Kim attended a discussion at the TechCrunch in Shenzhen on November 20, focusing on blockchain applications to improve the global supply chain.
Within the technology world, the security of core production and distribution processes has recently been challenged with "spy chip" titles from compromised supply chains. Health risks also derive from incorrect practices, the recent vaccine scandal in China, where 900,000 faulty inoculations have been distributed across the country, is an excellent example.
According to Liu, the blockchain in the supply chain allows trust among individuals in the system without the need for intermediaries. "When we buy something from South Africa, you have no idea who that person is," Liu said. Blockchain creates a verification system through consensus mechanisms, in which the individual users of the blockchain verify the records that are created on it.
The production and distribution of materials, products and services that are used every day depend on this intricate network of systems and subsystems. Despite living in an increasingly automated world, they are controlled manually, resulting in waste and inefficiency.
"A large supply chain generates millions of emails, hundreds of hours of phone calls and tons of documents," Kim said, adding that blockchain could minimize some of these inefficiencies using smart contracts.
But there are difficulties. Blockchain for the supply chain should be able to track a huge number of items, requiring volumes of transactions that go to millions, beyond the capabilities of today's technology.
In addition, as supply chain companies adopt blockchain technologies more frequently, the number of blockchains will increase, resulting in interoperability issues across platforms.
Kim says these problems have already been worked out. "In the third generation, blockchain interoperability is one of the key features that is being incorporated into it. It does not mean it will work, but it will be better than [previous] generation blockchains, "he said.
Liu said further experiments should be encouraged. "Any effort in the implementation of the blockchain, we should encourage it anyway because at least this is a learning experience in what will be scalable and what is not".