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Blockchains can help supply payments, but only with scalability

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Capital that’s tied up in the world’s supply chains worldwide represents two-thirds of global GDP; processing supply chain payments efficiently is a real problem that can have significant results for both producers along the supply chain as well as end consumers.

A blockchain-based network that supports them must be flexible, durable and, above all, easily scalable.

The ability of a network to productively scale is one of the most important factors in determining its operability. Scaling refers to a network’s ability to grow while still maintaining its original efficiency and security. This challenge is particularly heightened by the application of blockchain to addressing issues in global supply chains.

While blockchain-based supply chain solutions primarily focus on the quality assurance through a product’s life cycle in the supply chain, it is less clear how this quality assurance is realized. After all, not every person has a technical background to understand concepts like “bundles” and “meta data.”

In clear terms, we can break down what happens every time an object on the supply chain is recorded by the network.

First, the object must be monitored by some type of hardware sensor at some stage of its supply chain journey. Second, once a product — let’s say a bottle of extra-virgin olive oil — has been connected to a sensor — a simple temperature monitor, for example — the data recorded by that sensor is transmitted in real time to a node on the network.

Importantly, the way in which the network records the product that it is tracing is by recording every piece of data as either an “asset” or an “event.” An “asset” is basically the digital ID of a product being monitored. In this case, the physical product would be an actual bottle of extra- virgin olive oil, while a specific “asset” would digitally represent it on the network. Assets refer to a unique physical or logical object in the supply chain.

Meanwhile, an “event” refers to the conditions of an “asset” during its journey in the supply chain. In the example above, this would pertain to the temperature of the extra-virgin olive oil. More simply however, an “event” is basically the “what,” “‘when,” “where” or “why” of a product. All “events” are recorded by the hardware sensors accompanying the specific products throughout the supply chain.

Third, after receiving the data from a sensor, the node then prepares the data from the sensor for the blockchain by generating a special “hash” that refers to certain “meta data.”

Thus, the meta data of the original bottle of extra-virgin olive oil, and its corresponding temperature at a specific time would thus be accessible to any designated party (a consumer, an insurance company, etc.).

Such a process seems to be pretty straightforward, especially with our simple example of one bottle of extra-virgin olive oil undergoing one event. But what happens to the network when there are millions of assets and events being sent every second? How can all of the data be validated in an efficient manner without slowing down the network?

The necessary ingredient to create a scalable blockchain-based supply chain network is a consensus algorithm that can quickly validate the transactions being made. With increased scalability, more and more consumer products can be verified and monitored every second. As such, a scalable supply chain network is essential for creating an efficient and sustainable solution that consumers can depend upon.

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