Anyone who pays attention to global trade, supply chain or technology news will have read about the potential of blockchain to transform current business practices. Some articles extol blockchain’s capabilities and see it as the answer to supply chain visibility problem. Others believe that this is so much hot air and hype.
To find out more, Precision Software met with David Bradford and Michael Vincent of the Blockchain in Transport Alliance (BiTA). They discussed the potential uses of blockchain and what the alliance hopes to achieve.
In evangelizing our own products at TransRisk, which is now dba FreightWaves, we were looking at different ways of of incorporating blockchain and smart contracts into our own business. What we noticed was that you have these very disparate use cases of blockchain where two behemoth companies were trying to produce proof-of-concept for use of blockchain in logistics. In addition, we were listening to and experiencing the hype around blockchain and bouncing that off of all of our experience.
The idea of BiTA was born at a meeting on August 17th 2017. By the end of the day there were three members, but this had grown to 150 members by November. It started off with direct logistics participants. Membership grew with companies like UPS, Fedex — parcel shippers. Then LTL started to get involved, and international started to get involved.
After that there was interest from legal firms, financial houses, payments providers, and factoring companies — the regulatory requirements and all the different aspects that could be party to a smart contract on blockchain.
Now there are aroundt 400 members and almost 1,800 applicants from around the world. Membership includes worldwide shippers and global logistics companies.
The goal is to gather the thought leaders and those producing proof-of-concepts — like Maersk and IBM — to look at the use cases, strip away the hype, discuss areas of inefficiencies, or areas where improved efficiencies and accuracy are possible.
We also want to develop it in such a way that there are truly decentralized standards. These would be non-royalty based, non-monetized, non-commercialized that everyone can play with — like the IEEE.
You access the blockchain via the internet and with whomever you are dealing with. There is not a separate server. Blockchain works with keys and hashes. A hash algorithm turns any amount of data into a fixed-length hash. You get your key and you have to hold your key to your wallet. When you make a transaction you get the hash for that exact transaction. You prove who you are by having that key and having the correct hash.
You have to hold specific keys to affect certain parts of a contract. If you are the initiator of the contract or one of the principals, you would have overriding keys to the contract. But you couldn’t just upload a contract that deviates from the original. Hashes are created for a particular document or contract. If you change the document in any way, it will not produce the exact same hash. That is how documents are verified. It will baulk and you won’t be able to enter it into the blockchain. All parties will know that you have tried to load a bogus contract and it will be rejected.
You have rights within the contract to update aspects during the different waypoints as goods move. For example, you could suggest a change in price due to fuel. If all sides agree, then it becomes a legitimate contract.
There are different permissions within blockchain. This means there are ways to shield proprietary information as well as information that is only intended for specific partners within the transaction.
This are a number of different ways. One is just the fabric of the blockchain — there are open source public or private permissions. Here you have specific keys to the transaction that allow you to see specific information that is pertinent to your input to that transaction. Whether it is the shipper, the carrier, the ports, stevedoring, customs and so forth, they would see the specific information that is pertinent to them. In addition, they would also have enough of the general information for timings, efficiencies and volume flows and so forth. This comes through the IoT devices interacting with this transaction.
Furthermore, there are companies such as MTI in London which is working with the Port of Rotterdam and Liverpool for door-to-door shipments through blockchain. MTI is developing code products called adaptors. These take data from various different sources. They have an adaptor that can take any kind of API data, compact it and present it to the blockchain fabric. It is decompacted in such a way that it is compartmentalized. As a result, all the different players have the correct information at the correct time and the notifications for smooth movement of goods. It extracts all the information from the different IoT devices at different waypoints along the journey. It then compacts it and presents it to the consignee and shipper at finalization and whomever the financial institutions for the transactions. After that, it self arbitrates and the exchange of monies is self-executed.
With every transaction that occurs there is always something called a “genesis block”. This is where the first part of the transaction occurs. A hash comes out of it at the end when all parties reach agreement. Each subsequent transaction that occurs becomes a new block, and there is a new hash produced. If for example, freight has been picked up from the dock, there’s a new hash and a new block that occurs.
This means you can’t change what has occured because you’d have to change all those hashes. Once you are down to fourth block — the first, second and third are no longer necessary. Everything has already been proved so those blocks can be erased, although that may not be true for Bitcoin. The retention of the final contract would need to be kept according to current governing standards.
It can be done through different means. But in such a case, there would be more than one key for a transaction to occur and to gain access to the transaction. This opens the more expansive hurdle of HR policies and protocol within an organization. Secure access to specific information and systems for key personnel is essential now. It will be no different with the adoption of blockchain. There are many solutions being worked on, but to my knowledge most are in theory stage
Everyone owns the data equally.
Geolocation of assets does not require blockchain, but to use that geolocation within smart contracts, blockchain — and standards in blockchain — become very useful.
In order to make an entry to a contract you need the keys and the hashes. If one party presents a different contract after the transaction has been executed, it will not accept it. It has to be the exact same contract. When two parties execute a contract they both know the hash for that contract and can verify whether the contract is correct or fraudulent. This is not necessarily malicious. It could simply be that data was incorrectly entered. For example, someone could have fat fingered the price as $110,000 when the agreed figure was $100,000.
Deloitte will argue that $600 billion to $700 billion in the US is tied up in contracts that are already executed and fulfilled. It’s just sitting in ledgers as the parties arbitrate and argue whether something happened or not. With smart contracts and digital input along the waypoints, self arbitration and completion happens immediately.
If you think about a very simple transaction. Party A is sending goods to Party B and has agreed to use a particularly trucking line. Right now there are those who will come in and post false documents and make pickups. It happens all the time. Now the hash has to be presented so you know exactly who is picking up those goods.
Theoretically blockchain could drive new standards. The hope and goal of BiTA is to have the participants active enough in all these different areas as we move forward to make sure there isn’t change just for the sake of change or changes for a commercial outcome. The board and legal framework of BiTA is that the outcome of standards cannot be royalty driven or monetized.
One of the goals of BiTA is to produce these standards and be able to certify — and this will not be monetized — that companies are using the correct BiTA standards and are a legitimate company.
Yes. That’s correct.
You have different ports and port organizations as well as government agencies and academia getting involved in BiTA so it might certainly go along those line.