“With every project
we do at Aratus,
security is always
on the agenda.”

Friso Bakker, CEO Aratus.

Cost savings and trust with the use of blockchain, but what about security?

blockchain and the logistics sectorIt was only a matter of time and here it is: an article about blockchain. Is it something that will shape the future of the logistics industry or has it already made its appearance? And is blockchain also relevant for your organization? And what about the safety of such solutions? Questions, questions, questions. Let’s start by briefly explaining what blockchain is exactly, because we know it mainly from the coverage of crypto currencies like the Bitcoin, which may have some negative connotation. The technology, however, goes much further and is very interesting, for example where it comes to decentralized security and cost savings.

What is blockchain?

To explain what blockchain is, this form of data management can best be compared to a spreadsheet as you know it from Microsoft Excel. The universal ledger of the blockchain is nothing more than a list of data as you know it from a spreadsheet. This spreadsheet is publicly accessible. It is a list of data where everyone who participates receives an exact copy of that list and can view its contents. Anyone in possession of this spreadsheet can also make changes to the database. When a change is made to the spreadsheet, this change is immediately transferred to all other copies of this list. The result is that everyone always looks at the same list of data. This happens real-time and therefore everywhere in the world.

When you work with Google Drive you have probably worked with Google sheets which works in the same way. There is one important difference, however, and this makes blockchains unique: a blockchain can only add new rules to the bottom of the list. So you can not make changes to previously added rules. The cryptographic software ensures the checking of the additions and the rejection of mutations on existing rules. This check takes place in a decentralized manner and requires considerable computing power from the network.

Blockchain and logistics

For the supply chain, this means that blockchain is a method for creating a digital ledger for transactions programmed to capture every interaction and every element of value, from economic transactions to whom a shipment has been viewed, and what manufacturers produce and add to the supply chain.

Smart contracts supported by blockchain can follow a shipment continuously, from production to final delivery, and different contractual elements can be executed when a next step in the process is reached. This includes the transfer of rights and responsibilities / obligations as goods move, set payment terms for delivery that automate payment and a verifiable chain of events when a process is completed. This whole process is thus recorded so that all those involved can view it but can not change it.

Cost savings through the use of blockchain

An interesting possibility for the growth of blockchain is in the area of ​​new alliances where more companies use the same space and containers on container ships. We are already seeing more and more that both transports and warehouses are temporarily (partially) let. The distributed general ledger of blockchain could make it easier for everyone to share documentation about what is on a ship or in a shared warehouse and what is in a container, thereby easing both storage and transit. The port of Antwerp started a blockchain for container release in 2017 that is meant to make intermediaries redundant and to accelerate the transfer of transports.

“With our blockchain platform, the right truck driver is given permission to load a particular container, without the process being intercepted or unnecessarily delayed, and our blockchain platform uses a distributed network so that the transaction can only be executed if there is consensus between all the participating parties”, according to Nico Wauters, the CEO of T-Mining.

Trust is good, control is better

There is an active look at the security issues, but for now it still seems that this concerns partial solutions for various incidents. Unfortunately, all these different pieces of the puzzle have not yet been brought together in a good total solution. Blockchain technology requires extremely careful procedures, which need to be more implemented even more careful.

The ultimate goal is a well-secured blockchain technology, where all possibilities and applications can be exploited and the now known criminal activities are definitively excluded. With recent criminal activities including malware attacks on, among others, Maersk and the hack by Somali pirates on a sea transport company, the demand for solid total solutions is growing.

Few simple basic tips to secure blockchain

  1. Every new coding layer to be applied must be set up carefully and be adequately secured.
  2. Make security an integral part of the development process and prevent it from becoming the well-known closing entry in the budget.
  3. Do not underestimate the risk of insider-attacks (decentralized). Multi-signatures, electronic signatures of several persons, which are necessary to carry out a transaction.
  4. Protect the server that manages the cryptocurrency as much as possible from other systems. This way this server only needs to contain API calls for transactions. This prevents an attacker who gains access to the web server from having immediate access to the wallet with cryptocurrency.

One of the major forces of the blockchain is the decentralized control. Each party involved is certain that he has the latest information and that this information is identical to the information of all other parties involved. This ensures trust among all parties involved, but also requires good protocols and security.

Now, we all know that the logistics sector is not always at the forefront of embracing new technology and only time will tell if blockchain will become a fixed value in the logistics sector.