T3 Series: Blockchain Use Case in Supply Chain

At a very basic level, blockchains are shared databases that store and
verify information in a cryptographically secure way. It is monitored
and organized by a peer-to-peer blockchain network, which also serves
as a secure ledger of transactions, e.g., buying, selling, and transferring.
One can think of a blockchain as a Google spreadsheet, except that
instead of being hosted on Google’s servers, blockchains are
maintained by a network of computers all over the world. These
computers (sometimes called miners or validators) are responsible for
storing their own copies of the database, adding and verifying new
entries, and securing the database against hackers.
A cryptocurrency is an encrypted data string that denotes a unit of
currency.

Crypto, as we know it today, has a significant environmental impact,
but it’s hard to measure exactly how significant. Many frequently cited
statistics come from industry groups, and it’s hard to find trustworthy,
independent data and analysis.

In these essays, Varsha Appaji, a 2021 SMU graduate, and a Research
Associate at the Federal Reserve Bank of San Francisco -and a former
student Research Analyst in the Hunt Institute- looks at the impact of
blockchain technology and its impact on major issues facing society
for better and for worse.

. . .

Blockchain is already revolutionizing supply chain management with its characteristic ability to track huge amounts of data in real-time in a way that is transparent, verifiable, and immutable. Ultimately, this leads to a supply chain environment that is less vulnerable to corruption and cuts out many additional procurement, transportation, inventory, and quality costs.

With a more traceable and efficient network, blockchain could make data-informed logistics much more powerful since goods can be tracked from the source through the global distribution system. Logistics data could be maintained and updated between organizations with lower transaction costs. This could make ethical and environmentally responsible labor practices easier to enforce since even large businesses could be held accountable through the public blockchain. Additionally, insurance companies, banks and credit providers already have their eye on blockchain for financial capital flow management. To learn more about use cases for blockchain in supply chains, read IBM’s brief write-up here.

Blockchain is even being used to fight the blood diamond trade. 

Supply Chain for Nonprofits 

  • Blockchain could provide transparency and accountability in things like tracking donations
  • Blockchain’s token market could be used to fundraise. Organizations like SupPorter, Inc. are making “Blockchain Enabled Donation Processing Systems” for faster and more transparent donating
  • NGOs can implement blockchain in several ways, like making digital payments via tokens or making exchanges between service users and providers more frictionless ​

Cons 

  • Moving to a blockchain system would require a tech overhaul: to implement blockchain into their supply chain, organizations need to heavily invest in a brand new technology system so that every part of the system can support the software and computing capabilities necessary to communicate with the rest of the system
  • Just like the issues with storing identity data on the blockchain, any sensitive information remains susceptible to security breaches and hackers at this stage of blockchain’s evolution

For a video overview of blockchain, watch “Blockchain Applications for Social Impact” here.

Written by Varsha Appaji ’21

Edited by Chris Kelley

To read more about the Hunt Institute’s work to develop future-focused solutions to some of the world’s biggest problems, please click here. For the latest news on the Hunt Institute, follow our social media accounts on LinkedIn. We invite you to listen to our Podcast called Sages & Seekers. If you are considering engaging with the Institute, you can donate, or sign-up for our newsletter by emailing huntinstitute@smu.edu.

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