Blockchain is a virtual, public ledger that records everything in a secure and transparent manner and this concept leads to greater transparency and improved data integrity for many businesses. Other potential advantages include enhanced security, improved traceability, increased efficiency and speed of transactions, and reduced costs.
To understand more, Digital Journal caught up with Angel Versetti, CEO of Ambrosus. Angel is a recognized blockchain authority and frequent speaker on innovation, technology, and economic development and his company, Ambrosus, is a decentralized IoT network designed for next-generation supply-chains.
Digital Journal: How important is blockchain set to be for businesses?
Angel Versetti: Blockchain is set to radically disrupt current business models. The reason for this is that blockchain is a flexible solution that businesses can utilize to improve efficiencies or to access new markets. In simple terms, when we ask how blockchain will revolutionize business, we are mainly referring to how blockchain can better store, secure, process and configure data that a business either needs to use immediately, or that functions as a placeholder of trust.
As such, if there is any business that is suffering from a lack of trust, heavy centralization, or general inefficiency, blockchain will be able to radically transform that industry. To mention a couple of business use cases: blockchain will first and foremost make finance and financial services easier, more accessible (global), and more trustworthy. In other industries, blockchain will help cut out middle men to allow for more efficient and accessible business models – this is especially the case in the entertainment industry, with development aid, and with online advertising and betting. Finally, blockchain will absolutely transform smart management of supply chains, farms, and cities by recording and configuring data in previously unimaginable ways; to improve logistics, brandtrust and product flows.
This latter point is exactly what Ambrosus uses a blockchain to do, in order to make supply chains more transparent, consumer oriented, and environmentally friendly.
DJ: What are the current weaknesses with supply chains?
Versetti: Supply chains today are responsible for moving the vast majority of foods, medicines, and commodities around the world. They are huge processes that can be exceedingly complex; a product might change hands seven to eight times before it arrives for consumer purchase. There are a number of significant weaknesses and challenges in modern supply chains. First among these is the difficulty of guaranteeing quality assurance of products.
As supply chains are so large, it is very easy to counterfeit or dilute products and pass them off as the original. Not only is this is bad for business, it is also a public safety concern. Secondly, in current supply chains data is ‘siloed’ between the various stakeholders. This means that there is not a smooth flow of information between the different actors involved, and as such, much time is wasted on managing supply chain logistics and making sure that all products can be accounted for in a timely manner. Thirdly, a lack of transparency in supply chain processes leads to bad business practices, whereby certain stakeholders (like farmers or producers) may be unfairly exploited.
This may even lead to global monopolies of entire industries. Another weakness arises when a lack of information and planning leads to inefficient and environmentally harmful management practices. In such a situation, companies do not have enough information to move their products as efficiently as they could, nor have they devised environmentally friendly recycling techniques. Finally, lack of planning and overall data management of supply chains is also a national security threat in the event of a natural disaster, cyber-attack, or any large scale disruption. On average, it is estimated that stores will be empty within 3 days in the event of a large-scale supply chain disruption.
DJ: How can blockchain improve supply chains?
Versetti: Blockchain brings trust, transparency, and accountability to the data it stores. In the context of supply chains, blockchain can help prove the quality of products, where they come from, how they were sourced, and where the product has traveled. For logistics purposes, blockchain can secure private data for companies, and allow them to interact with such data in real-time in order to plan their shipments more efficiently, to claim insurance, or to identify a problem and easily recall a product in question. For consumers, blockchain can help increase trust in specific products, as well as build brand awareness for businesses. On a deeper level, a public blockchain is a validator of truth; it helps prove that the information claimed in relation to a product or supply chain process is accurate and not fraudulent. Once this is known it is very easy to configure this trusted data in creative ways to save money, make business more fair, or to benefit the environment.
DJ: Are there any weaknesses?
Versetti:One point worth mentioning is that blockchain alone cannot guarantee that the data it validates from supply chains is true, unless the data comes from an encrypted or secure source. This requires the use of Internet of Things (IoT) technology. While many companies claim to provide a blockchain solution to supply chain problems, a real solution must be holistic: the smart devices used to record data also need to be secure, in order to trust that the data put onto the blockchain is reliable. This is exactly what Ambrosus does by custom designing and synchronizing smart objects to the Ambrosus blockchain. This creates an end-to-end solution so that all data used to prove the quality of a product or to help plan for supply chain disruptions can actually be validated as being true.
DJ: Are tokens needed for this?
Yes, tokens are necessary because they are the fundamental store of value in a decentralised and public blockchain. In order to create a transparent network that can be secured by anyone in the world, a token is necessary in order to allow other people to utilize the network in an accessible manner. Tokens can be programmed through smart contracts, and as such they allow for the configuration of the network where those who choose to participate have a stake and clear responsibilities. In simple terms, tokens help configure the ‘rules’ to operate or make use of a network. Depending on how you design the crypto-economics of a system, it is possible to provide different responsibilities to different stakeholders based upon their interests and financial resources. As an example, with Ambrosus (whose system was designed by Professor Roger Wattenhofer), depending on the amount of Amber staked, it’s possible to either secure the data put onto the network, upload data to the network, or validate the transactions that take place on the network. With tokens, when one correctly performs their specific operation on the network (as laid out ahead of time) they can be automatically rewarded for the services they have provided.
DJ: Are there non-token solutions?
Versetti:For a solution that does not use a token (i.e. that which is private rather than public or decentralised), there is no incentive to use the blockchain in an honest manner. In this scenario, a company can own all of the nodes on a blockchain, and change or alter the data put onto it at any time. As such, if you keep your blockchain private, you are pretty much just using a sophisticated database that should not be trusted by consumers or any type of professional agency. This is because the keys to the network are held by financially incentivized stakeholders, who cannot be held accountable for their actions.
DJ: What are the advantages for businesses and consumers from blockchains?
Versetti:For businesses, the advantage is that they can have full control over their data while also proving its authenticity and quality. The business becomes a placeholder of trust because they have put their information onto a public network that is verified by a number of different nodes – and not merely themselves. As such, businesses stand to build a better brand name, while also providing new and unique services to their customers. In the context of supply chain this would involve proving the origin of the products – that it all comes from certain geographical location, that it has been raised organically, and so on.
At the same time, consumers greatly benefit from a decentralized blockchain because they have the assurance that the data that is being marketed to them is accurate and truthful; since all of the data on a public blockchain has been validated by various node operators rather than by the company itself, consumers are able to trust that the products they have are actually what they claim to be. This is especially the case for high value products, foods and medicine. Beyond the supply chain, consumers greatly benefit from a decentralized network structure, whereby no central authority has the capability to censor or change the rules as they see fit.
DJ: What is the future potential for blockchain?
Versetti:It should also be mentioned that the full benefits of crypto-economics have not even scratched the surface of what they could be. Something that Ambrosus is currently looking into is the possibility of ‘bending’ industries of the global economy into one another through their crypto-economic model. As an example, consider if a large pharmaceutical company pays the Ambrosus Network to validate and store their data.
Then, imagine if a non-profit organization, acquired a node on the Ambrosus Network to secure that same data: a new stream of valuable data can effectively be created and transferred from the global pharmaceutical industry to the non-profit organization, simply because both make use of different utilities on the public network. The pharmaceutical company gets their data stored and validated, and the non-profit receives rewards from the network for making sure that such data is stored properly. Utility is effectively transferred from one area of the global economy, into another – seamlessly and with benefits for both parties involved.
In a follow-up interview, Angel Versetti focuses on supply chains and how blockchains can assist with scalability. See: “Q&A: Decentralized IoT networks help next-generation supply-chains.”