Understanding Blockchain Technology and its Impact on Procurement
The invention of internet in the mid – 1990s, had a revolutionary impact on communication technology. Blockchain is the next disrupted invention since the internet. It has the potential of redefining the future of commerce.
Procurement professionals like you and me need not know the working model of the blockchain technology in details. It is all very technical. However, it is important for us to understand the concept on a whole. The blockchain has some of the exceptional features that will be a breakthrough and will add tremendous value to procurement.
So what is Blockchain?
Let us try to understand the Blockchain in simple language before jumping to the actual definition.
When we receive money from someone, we usually don’t suspect it to be a fraud. What if someone sends you the money online on a mail? We don’t trust it in the first go do we? Some third party has to authenticate the currency that has been transferred. Our bank does exactly the same thing by keeping a track that no one is cheating by sending the money that they don’t have. The bank keeps a track of all the information about how much money an individual has and deducts it from his account after each transaction. For this it charges a fees and it becomes expensive for all the transaction collectively.
With blockchian we can save all these transaction fees because it uses peer to peer software technology. The most accurate and simple description would be that it is a platform where transaction can be made and recorded on a secure digital ledger. It is different from the traditional technology because it is not based on a central ledger. Here all the participating stakeholders are allowed to make and record the transactions. Since each node maintaining a copy of the ledger, the decentralized network prevents a single point of failure or fraud.
The reason why blockchain is so valued is because of the way the data is recorded and linked to the database. It is a technology which protects the integrity of the digital piece of information. All the computers participating in the blockchain network stores and verifies the data, making it robust in the first go. Every new data that is added or new transaction is linked to the previous one and is notified to all the users. This makes it impossible to alter the data in anyway. And since all the data are recorded, the system becomes transparent. Also there is no specific or single authority.
Therefore when it comes to blockchain, you can trust the data blindly.
Even though the blockchain technology is in its nascent stage, it has been attracting a great deal of attention over the last twelve months for being the most disruptive technology without borders, which is likely to impact and reshape the entire supply chain and procurement functions soon.
The need to both understand and adapt to these new developments is crucial for survival. Download our whitepaper, “The CPO Guide to Transformative Technology: Blockchain Technology” which will demystify the technology and define its role in making e-procurement more effective & fool proof.
- Understand how Blockchain works
- Common apprehensions about Blockchain
- Benefits of Blockchain to Procurement
- Impact of Blockchain on Procurement Future