- An “internet of assets” created by producing digital entities of products
- A global network for supply chain stakeholders
- A data standard that works in all cases
Blockchain and supply chains
Supply chains are messy
Global (or national) supply chains are a complex network of companies and stakeholders, each involved in producing or handling a product. Each of these organizations implements their own type of internal software systems or ERP systems fit for their specific production process, resulting in fragmentation or data silos.
It is vital that many different stakeholders have access to this information, including customers, suppliers, government authorities, and even the end consumer. Companies that are already future thinking or relatively more innovative than the paper-based solutions often start by setting up various API’s and allowing external parties to read from those API’s. This is very costly and complex as it only allows one to one sharing of data, requiring each organization to integrate 100’s of API’s, one for each of their supply chain business partners. In this situation, there is no data standard that allows any company to simply join this system, nor does it allow for traceability from “farm to fork”. One could set up a common database to which each company sends its data, but who would manage it, where would it be hosted, what about governments?
The result? Supply chains are a black box.
There are two important ways we can in create a system that solves these issues and improves global supply chains and production:
- Harnessing the latest technology and infrastructure
- Building common rules & data standards into the system
The emergence of Web3, provides the solution
Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency Bitcoin. The identity of Satoshi Nakamoto remains unknown to date. The invention of blockchain for Bitcoin made it the first digital currency to solve the double-spending problem (a potential flaw in digital currencies, where a digital token could be duplicated or falsified and used multiple times) without the need for a trusted authority or central server to verify each coin. This design has inspired other applications and blockchains that are readable by the public and are widely used by cryptocurrencies. In the case of Bitcoin, it is considered a type of payment network and only used for financial transactions….
In 2013 Ethereum was proposed by programmer Vitalik Buterin. In 2014, development was crowdfunded, and the network went live with an initial supply of 72 million coins on 30 July 2015. ETH (the cryptocurrency of Ethereum) has its use as a digital currency, and some argue a store of value. The Ethereum network also makes it possible to create and run decentralized applications (dApps ) and smart contracts.
Ethereum opened up the technology for many other applications aside from financial transactions through smart contracts. Ethereum does this by building what is essentially the ultimate abstract foundational layer: a blockchain with a built-in Turing-complete programming language, allowing anyone to write smart contracts and decentralized applications where they can create their own rules for ownership, transaction formats, and state transition functions.
The platform allows developers to build and operate decentralized applications that users can interact with. Decentralized finance (DeFi) applications provide a broad array of financial services without the need for typical financial intermediaries, such as brokerages, exchanges, or banks, allowing cryptocurrency users to borrow against their holdings or lend them out for interest.
Over the past few years, this technology and its evolution have led us to leverage this technology and create our own Unova blockchain, which is designed for supply chains but can also handle any other use case in the same way the Ethereum network can.
2. Distributed network
In a distributed network, no single entity is responsible for managing the system or validating the truth. It is a trustless infrastructure that allows the network to reach consensus without needing a central authority. Instead, each participant hosts a blockchain node that includes everything needed to be part of the network.
These connections create the Unova Virtual Machine (UVM), or one single entity maintained by connected computers running an Unova node.
The protocol itself exists solely for the purpose of keeping the continuous, uninterrupted, and immutable operation of the UVM; it’s the environment in which all accounts and smart contracts live. At any given block in the chain, the network has one and only one ‘canonical’ state, and the UVM is what defines the rules for computing a new valid state from block to block.
3. Smart contracts
By creating and deploying smart contracts on the network that can be called by distributed applications (dApps ), the rules are always defined and uniform for each user of these smart contracts. This allows for creating an infrastructure with dApps that are specific for the data exchange use case setting the basis for the future of global trade and supply chain automation.
We have created multiple out-of-the-box available smart contracts, but it will also be possible to develop and deploy your own for whatever use case.
Learn more about smart contracts
4. Crypto economic model
To make a fully decentralized public infrastructure run, it is essential that the miners operating a node get rewarded for their services (executing smart contracts and any other transaction and managing the blockchain). Therefore, the network needs to be its own entity with its own crypto-economic pricing model.
Learn more about the crypto economic model
With Web3, people, machines & businesses can trade value, information & work with global counterpart they don’t know or explicitly trust without an intermediary. The most important evolution enabled by Web3 is the minimization of trust required for coordinating on a global scale. This marks a move towards trusting all constituents of a network implicitly rather than needing to trust everyone explicitly and/or seeking to achieve trust extrinsically.
Decentralized data architecture is changing how the web works, moving the internet into a new era, building the path towards common data standards and rules, allowing for a decentralized infrastructure to run applications that understand the data to manage all supply chains.
This is essential for creating global cross-border data exchange where companies don’t need to trust each other to manage their data.
Learn more about the difference between Web2 vs Web3
Common rules & data standards
To create a system that works with any product, any company, and any product-related data, it is essential to create a very flexible data model. This way, any company can onboard and decide to share the data they are collecting internally.
The smart contracts used by the Type-2 (enterprise) nodes and dApps have specific rules in terms of code they need to execute, allowing the system to run as if it was one computer even though it is a network.
Whenever a company wishes to distribute data, it needs to be first created in its own Type-2 (enterprise) node hosted by the company itself via the API that is part of the node and installed through the NOP (node onboarding package). After this, it can be distributed to the other nodes in the network.
Read the API documentation here to understand how to create digital entities for products going through your supply chain.