The business world is buzzing with talk of how blockchain will change business forever. Logistics, in particular, is a prime candidate for change due to blockchain, as the process inherently involves many parties. Transferring goods is highly complex, because it happens across parties and modes, and includes a seemingly endless amount of paperwork such as invoices, packing letters, bills of lading, certificates of origin, and more. A single shipment can involve hundreds of transactions across parties and geographic boundaries, making it an ideal case for blockchain.

But before applying the technology to logistic processes, let’s first start by understanding the function of blockchain. Blockchain is a shared, tamper-resistant digital ledger that provides a near real-time record of things such as transactions, records of ownership, locations, values, state of goods, etc. The ledger is shared among parties which brings transparency to the supply chain, because everyone is equally informed about things like the location, carrier, condition, and documentation relating to a shipment. Smart contracts can further automate many transactions based on other transactions, such as triggering a change in ownership titles when a payment is made.

Given this potential, many companies are exploring blockchain projects, as the technology can help simplify, secure and streamline the sharing of data, and provide transparency across the supply chain.

However, Gartner estimates that most blockchain projects will stall and never reach production due to various reasons, including “technological immaturity, lack of standards, overly ambitious scope, and a general misunderstanding of blockchain’s ability to support supply chain.”

Blockchain certainly has challenges when it comes to supply chain even despite the aforementioned benefits. This is largely because early versions of blockchain has several key flaws including:

  • Lack of Scalability –Currently, Bitcoin manages about 7 transactions per second, and Ethereum about 20 transactions per second. This will have to improve significantly to support the speed and complexity of today’s global trade and logistics.
  • Lack of Confidentiality – On public blockchains everyone can read everything. This limits both the number of companies willing to join a blockchain and the amount of information that they are likely to share.

Permissioned blockchains attempt to solve this with an access-by-permission-only model as did another “micro-communities” approach that only allowed those parties involved in a particular transaction to have access to a particular blockchain.

However, and as my colleague Ranjit Notani explained, both of these strategies failed because neither approach proved satisfactory.

Enter Blockchain 2.0 and the Advent of the Hybrid Blockchain

At its core, blockchain is really a decentralized form of a multiparty network. Modern multiparty networks have been around for a while and have already solved many of the problems that have inhibited blockchain’s adoption. Today, a multiparty network is often used to orchestrate a blockchain network, and thus overcome the limitations of blockchain while enjoying its benefits.

Operating as an “orchestrator”, the network writes sliced and hashed intersections of multiparty data to blockchain networks like Ethereum and Hyperledger Fabric. Once done, all parties can read the verified record on the blockchain, but only the ones they are party to.

Multiparty networks have all the key elements missing from blockchain 1.0, including:

  • Scalability – using a scalable grid architecture, multiparty network support tens of thousands of trading partners and the transaction volume that entails.
  • Confidentiality – because they are built using multiparty permissions frameworks with granular and role-based permissions to ensure secure data access.
  • Functionality – by providing powerful, multiparty apps such as logistics management that run on the network and write to a blockchain.
  • Community Master Data Management (MDM) – that manages and synchronizes data across different systems and parties to ensure data is trusted.

Combined, these features enable powerful functionality that can support all parties, including buyers, sellers, fulfillment, and logistics partners via a shared app. This allows all parties to transact while showing only the relevant authorized slice of the data to each partner.

Today, these hybrid blockchain-enabled networks are providing a real-time, shared, single version of the truth at the core of the business community. They eliminate data discrepancies, delays, and costs, while leveraging blockchain’s strong, decentralized, and trusted network. Best of all, it supports powerful new functionality such as chain of custody apps that run on the hybrid network. These shared apps empower shippers, carriers, freight forwarders, 3PLs/4PLs and other partners to track and manage orders and shipments, and collaboratively plan and execute across all stages of the supply chain, in a trusted, transparent, yet confidential environment. Considering the strategic role logistics play in business, how an organization approaches logistics can often dictate its overall success or failure. Blockchain enabled networks are creating an unprecedented advantage by greatly speeding how goods are moved throughout the supply chain by taking the guesswork out of process and ensuring all partners are operating on the same page.

About the Author:
MaryAnn Holder is Chief Marketing Officer at One Network Enterprises., a provider of the blockchain-enabled network platform, The Real Time Value Network. To learn more, visit https://www.onenetwork.com/ or follow us at @onenetwork.