Since the invention of blockchain technology, a lot of speculations and concerns have revolved around the mysterious creator of Bitcoin and the underlying technology. Its early days saw some skepticism about the true nature of the reliability of the technology, yet time has proven its disruptive nature.
Many industries are already reaping the value of blockchain, the first institutional Fear of Missing Out (FOMO) in 2017 and 2018 saw some industry giants like JPMorgan exploring possible ways of deploying this technology to increase efficiency and reduce costs. Today, virtually all spheres of human endeavor seem to be taking advantage of its capabilities. The raw material industry is no exception.
The raw material and extraction industry is one of the oldest professions, its as old as man. Material trading is one of the essential driving forces behind globalization, covering the procurement and resale of commodities as diverse as agricultural products, ores, and energy in the form of oil and gas.
Josip Heit, a multi-millionaire and veteran entrepreneur who has built many startups into multinational conglomerates, is known for regularly sharing his thoughts around the blockchain and mining industry.
Currently, he is the CEO and chairman of “Gold Standard Banking Corporation AG”, Chairman of the Board of “Karatbars International GmbH” in Germany, “GSB Money in the UK”, “GSB Gold Standard Finance Europe Se” in Lichtenstein and “GSB Finance Fund” in Luxembourg.
Today, he is sharing his thoughts on how the core foundations of the supply chain in the raw material and extraction industry can be improved through blockchain.
According to Heit, “one major challenge in this space is the traceability of the supply chain network. Lack of transparency in the supply network incurs some level of losses and makes it increasingly difficult to track materials from the mining farm through various stages of the supply network down to the final destination. Among other impending challenges, blockchain succinctly provides an excellent solution.”
How Blockchain Can Improve the Supply Chain Across the Raw Materials Industries
In the past, the sector has relied heavily on paper to validate transactions. This translates into relatively long processes: letters of credit, dispatch slips, inspection and quality reports, and other guarantee certificates must be received, validated, and returned. The challenge with the traditional approach is that it brings a considerable amount of delays, additional costs, and varying levels of risk.
Heit noted that, “by providing a novel way to record, transmit, and share data, these issues faced by the supply chain industry can be adequately addressed through an efficient blockchain protocol.”
Blockchain, as a distributed information registry, makes it possible to store and transmit information in a digitized chain of coded and authenticated transaction blocks. The decentralized nature of blockchain makes it possible for everyone to add further information at any time.
A tamper-proof electronic registry and its immutable nature reduce the imminent occurrence of theft and manipulations, thereby fostering data integrity and a high level of transparency and efficiency. “This will positively impact everything from the extraction farm to the end-user or final product,” Heit further reinstated.
Ultimately, the technology could keep track of the movement of raw materials at various stages of business operations, including where each piece of material is being extracted from, where it was processed and stored. This generally reduces processing time and saves costs by automating each process.
Equally, the advent of smart contracts brought a lot of possibilities in implementing digital signatures. Smart contracts work by enforcing an automatic trigger of a transaction once a certain number of previously defined conditions have been met and validated. By relying on this protocol, the numerous and complex procedures in the sector can be efficiently automated in a timely manner.
The challenge faced with the traditional supply chain technology is that it’s not capable of integrating data across every partner in the process at once and in real-time. In contrast, blockchains are built as a distributed ledger that maintains a unique and transparent data repository. This makes it possible for each party in the network to contribute new data while maintaining their integrity independently.
The essence of this is that it enables all information stored on a blockchain to provide swift access to all parties involved in the network, so one contracting company can easily verify the information being broadcasted by another. It keeps all parties satisfied as all information and data are transmitted efficiently and securely.
In conclusion, Heit affirmed that a lot could be achieved with blockchain, when rightly utilized, it has endless possibilities. Many industrial giants may argue about its long term credibility. However, the technology is already transforming business in lots of different ways, from production and processing to logistics and accountability. Its application is limited by our inability to put it to proper use.