One of the other aspects of Blockchain technology is its ability to be used to define so-called ‘smart contracts’. These are agreements, or contracts, which have embedded business rules that can exist and operate independently of any centralised control. They can act as the system of record confirming ownership, operational lifecycle and any related stores of value.
The principle behind them is that they are essentially ‘self-executing’ in that they are defined similarly to a computer application (or app). This means they are stored on the system and execute according to the various rules that are embedded within them. Because they are stored on a blockchain, it is very difficult (if not impossible) to tamper or subvert the transactions related to the contract.
One example of their use might be the registration of an asset identified by a smart contract. Depending on how the contract is defined, the contract will record how the asset is used, who rents it, and it can also deduct and store small amounts of value from each transaction. This provides the means to cover costs of repair or provide a return for the ultimate owners of the asset. Due to the decentralised nature of the smart contract, it is not ‘owned’ by any one party, its related information only exists on the Blockchain.
In this regard and as an example, Blockchain-based smart contracts might control fleets of autonomous delivery vehicles that are available for use in urban areas by anyone. They could be rented, operated and funded independently of any company, available on demand as a general resource. This approach echoes the rise of cloud computing environments that provide a general platform that can be rented and used as required.
Blockchain-based platforms are now available that support the construction of applications that utilise the technology. The most well-known at present is Ethereum. This is a very flexible open source platform that any developer can use to create, build and deploy decentralised applications. It supports digital currencies like Bitcoin, but also has its own; Ether.
The Bitcoin blockchain technology can only support the peer to peer electronic cash and payments system. However, the Ethereum blockchain can support any decentralised application, particularly smart contracts.
As these and other technologies are adopted by organisations across the industry, their capabilities to streamline and accelerate information flow are hard to ignore. The general acceptance of a neutral third-party technology platform that is available to anyone, recording inventory, order and shipment transactions, will be the point of transformation.
Any platform such as this, that is not controlled by a single commercial entity and provides blockchain based transaction records that are immune to tampering (absent the availability of computing capabilities that have yet to be invented), and may very well restructure the industry.
Author: Ken Lyon
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