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LETTERS: Blockchain a vital tool for logistics industry

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Blockchain technology combines chain of custody control with the transparency of immutable record-keeping. FILE PHOTO | NMG

As international trade and logistics continue to develop, more proficient methods are being established to enable effective service delivery and value transference.

It is essential to note that communication flow and logistics are essential aspects that form the backbone of the transfer of goods, services and value.

Blockchain technology is bringing another façade to the logistics industry in areas such as transparency and efficient tracking. It has been argued that one of the main issues with chain of custody is knowing when property changes ownership or custodianship.

Shipping anything is a sequence of custody handovers and therefore having an immutable record of chain of custody transaction makes it impossible to lose track of who is responsible for a shipment during each transfer and transaction.

Existing courier services often track packages along their route, but such methods are imperfect. Some processes and records are mutable. Blockchain technology combines chain of custody control with the transparency of immutable record-keeping.

This creates an ecosystem that deters malicious actors, as they will eventually become known due to system transparency.

Efficiency isn’t the actual selling point of blockchains for the logistics industry. Research has shown that plenty of other options outside of blockchain can provide more efficient systems.

What blockchain does offer, however, is a way to make systems more transparent, more robust and less dependent on intermediaries.

There is a constant battle over the imperfections of shipping. Tracking the chain of custody when it is passing through so many hands begins to break down. There is no perfect way to find who is responsible for the break in the chain. Blockchain fixes this issue by implementing technology that decreases the potential of fraudulent action and creates better transparency with immutable record-keeping.

“Connected devices revolving around the Internet of Everything (IoE) need a higher level of security. Blockchain technology is a matchless solution in this regard because it provides the best protection through distributed ledgers, advanced encryption, smart-contracts and reduced intermediaries. As a result, this will tackle corruption, ransomware, theft, premium-fees and tracking issues.” This is an opinion expressed by industry leaders that have embraced the blockchain technology.

But what is blockchain? By allowing digital information to be distributed but not copied, Blockchain technology has created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.

Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.

Information held on a blockchain exists as a shared - and continually reconciled - database.

This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt.

Hosted by masses of computers simultaneously, its data is accessible to anyone on the internet. Consumers increasingly want to know that the ethical claims companies make about their products are real.

READ: Blockchain technology to weed out land brokers

Distributed ledgers provide an easy way to certify that the backstories of the things we buy are genuine. Transparency comes with blockchain-based timestamping of a date and location - that corresponds to a product number.

Are we there yet in Kenya? How will our industries fit into fast-paced global supply chains that evolve by the minute?

In fact, how many of us even fathom the mechanisms surrounding the workings and volatility of cryptocurrencies yet they are the future medium for business transactions?

If you take away all the noise around cryptocurrencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions.

This may seem ordinary, but, believe it or not: this is exactly how you can define a currency. The movement of putting freedom and control into the customer’s hands will be an upward trend that many will begin to use to their advantage.

As blockchain technology continues to find traction among industry insiders in the logistics sector, the potential for adoption in Kenya should continue to grow as well.

Jack Bwana, Trade, Logistics & Supply Chain Consultant.