Is Blockchain Technology In Your Company’s Future?

It is hard to pay attention to the flow of news today and not hear about Bitcoin. Every segment of the news media — even celebrity gossip — seems to have an interest in this radical remake of value exchange. Bitcoin gets the headlines, but the underlying technology — blockchain — is the real news. It is a quintessential foundational technology, and it will have a big impact on engineering, manufacturing, and construction processes.

Blockchain’s Fundamental Capabilities

Before I get into how blockchain will be a game changer, let’s review the technology’s fundamental capabilities. Blockchain is a peer-to-peer network sitting on top of the Internet, just as the World Wide Web or the email protocol does. It took 30 years for the set of technologies we call the Internet to transform our business and personal lives. I believe it won’t take blockchain as long, because it isn’t starting from scratch; the Internet it needs has already been deployed.

The World Wide Web, TCP/IP, and the LAMP stack (Linux, Apache, MySQL, and PHP), are foundational tools that companies like Google, Amazon, and eBay exploited for bilateral messaging. Blockchain will give the world bilateral records (financial, logistical, legal, etc.). It has the potential to streamline and reduce the cost of all forms of value transactions.

Value Transactions

What do we mean by a value transaction? The typical Adept user makes value transactions constantly. Submitting a Bill of Materials is a value transaction. The BOM is the basis for countless work processes. Choosing the right fitting in a machine design sets up value transactions. Can a part be trusted? Is it in stock? Does it meet safety and ethical requirements?

Blockchain is about much more than a new digital currency that might replace fiat money. This is a technology that improves every transaction which requires recordkeeping.

Record Keeping

Keeping records is a key function of business. Records tell the story of how the business operates and how it conducts relationships. Generally there is no one master ledger of these records; every department has its own set of books, so to speak. Adept is the recordkeeper for engineering, and other departments in your company have (we hope) similar tools to automate their processes and track their records. If you have partners (supply chain, subcontractors), they have records, too. Partners often need access to each other’s records, and they need to trust the information. There is an old one-liner that says the construction business is not design-bid-build but design-bid-build-sue.

Blockchain technology brings new characteristics to value transactions. The separate ledgers are replaced by an open distributed ledger, accessible to all parties and stored in a wide variety of locations. When a transaction occurs (manual or automated), the results are simultaneously and immediately posted in a thousand or hundred thousand different locations. The transaction is linked to every previous transaction using cryptographic algorithms, creating an unbroken, irreversible, and unhackable chain of record. (News about hacks related to Bitcoin are not about the blockchain but about separate systems and databases.)

Three specific attributes emerge: trustless exchange, immutable records, and open distribution. No single party controls the “database” of a blockchain. No user can rewrite or otherwise tamper with a record. All parties can see the work and use the information.

How Blockchain is Transforming All Industries

In the past two years, there has been an explosion of new blockchain products, promising to reinvent everything from booking flights to guaranteeing complex supply chains. Oracle is working with the Linux Foundation, for example, to create an open source blockchain called the Hyperledger. There are pilot projects in power plant design, international shipping, food provenance, parts authenticity, and several other fields with complex value transactions. A typical jumbo freighter crossing the ocean requires an average of 20,000 documents. The shipping industry is rife with poor tracking, low trust, document errors, and what shippers call the big three: Disputes, Detention, and Demurrage. There is great hope blockchain can do for the tracking and controlling of these complex value chains what Amazon has done for home shopping or Google has done for search.

How Blockchain Impacts the Engineering Industry

Closer to home, how can blockchain impact engineering? Supply chains and other value processes are based on trust. That trust is thoughtfully established and carefully managed. There are inspections, audits, and certifications. There are numerous manual interventions, and every month seems to bring a new regulation to follow. It all adds up to an expensive hidden trust tax. Modifying or replacing the existing systems with trustless, immutable, distributed open ledgers can automate trust and integrity.

Additional Resources

If you want to read more about how blockchain can reinvent engineering processes, here are some links:

Randall S. Newton is Managing Director of Consilia Vektor, a research and content development consultancy specializing in engineering and distributed ledger technology (DLT) industries. He has been a guest contributor to the Synergis Adept blog since 2014.