There has been a lot of interest shown in blockchain for supply chain and blockchain for manufacturing in particular in recent months and even at Consensus. Since SyncFab has been focused on this space since as early as 2013 we decided to dedicate a series to the subject of Industry 4.0 and Blockchain for Supply Chain and manufacturers to describe what we are working on. This is the first in the series.
Big data, the internet of Things (IoT) or Industrial IoT (IIoT), smart factories, artificial intelligence (AI). And now, blockchain. For small and medium-sized manufacturing companies, precision parts suppliers, CNC shops, and entrepreneurs, processing and evaluating new technologies can be an overwhelming situation that results in a slowing down, not speeding up, of an operation.
Of all the technologies available, blockchain offers the easiest path to adoption and lowest cost to improve any business.
The blockchain is a distributed ledger technology (DLT) that records and verifies transactions in a permanent, digital record that makes it both secure and transparent. While it is the platform created to buy, sell, and store cryptocurrency, like Bitcoin, it can be applied to track any transaction or asset.
Let’s Break it Down
Many manufacturers, procurement, CNC machine shops, precision parts suppliers, and new product entrepreneurs got into business because of a love of understanding how things work. Whether you’re an engineer, business person or innovator, you’re probably interested in getting a better grasp on the blockchain.
Let’s have a look at what blockchain is and what it means for manufacturers.
What is Distributed Ledger Technology?
Distributed ledgers are digital logs that use independent computers (called nodes) to record and share transaction data and then regularly synchronize the data. Transaction data is grouped into blocks, and as each block is completed, it is added to the chain where it becomes a timestamped record that can’t be altered or removed.
How does Blockchain Record and Verify Transactions?
Blockchain uses relatively simple, open-source algorithms written to record a transaction. This digital file, or ledger entry, isn’t stored in a single computer or at a central data center. Instead, it’s distributed and duplicated on a network of connected, private computers or nodes across the world. It is this network of connected computers that maintain and secure the ledger.
To verify transactions, a program is used, called a wallet, that allows you to store, view, and track your deals. Wallets are protected by a unique pair of a private key and a public key using cryptography. Both private and public keys are required to access a wallet. Keys generate a digital signature unique to each transaction request that nodes use to check the source and authenticity. Blockchain only holds recorded transactions. Only wallet owners can analyze and verify all transactions that ever take place connected to the wallet.
Because blockchain is duplicated across a network and records only the facts of any agreement between two entities, transactions are “peer-to-peer” and don’t require a central entity or middleman to coordinate.
Yes, there is more to this topic and you can learn more from many sources, including how blockchain works.
How is Blockchain Secure?
Transactions logged are grouped into blocks, and each block is protected by an irreversible cryptographic hash function that nodes work to solve using complex mathematics and superfast computing. The node that solves the problem has the right to add the block to the chain that already exists in the blockchain network. This process is called mining and further stabilizes the network.
Once added to the blockchain, transaction data cannot be altered or removed. It is an entry into the digital ledger that is protected by both the blockchain process and the robustness of an entire, decentralized, and distributed network of computers. Transaction data is logged in minutes, is transparent, requires no third-party, and is of little cost.
Learn more about blockchain security.
While blockchain technology may feel complicated at its core, it is actually a relatively simple use of available digital technology, software algorithms, and a network of independent gatekeepers. This perfect storm of collaborators and mechanisms creates an environment of great possibility for industries around the world.
SyncFab’s Smart Manufacturing Blockchain is an easy-to-use, secure order system for smaller manufacturers to get the parts they need, innovators to get prototypes, products, and parts built, and operators to earn MFG Tokens by filling all otherwise idle capacity.
Learn more how SyncFab Smart Manufacturing Blockchain is a straightforward way for you to get going with blockchain and take your business to the next level.
Image credit: Deloitte University Press