Blockchain – the revolutionary technology

The Bitcoin cryptocurrency caused a veritable hysteria in the media last year. By contrast, retail has fairly quietly gone about investigating potential applications for the underlying blockchain technology. And this technology can solve intrinsic problems in the procurement and distribution of goods.

Blockchain – everybody is talking about it, but no-one knows how it works. The most famous use case of the technology is the Bitcoin cryptocurrency. And we can use this example to explain a blockchain.

Essentially it’s a database, comparable with a ledger. The blockchain does not “sit” on a server, but works in a distributed fashion. The transactions are structured chronologically and in blocks. In doing so, each block builds upon the preceding one. The blocks are joined to each other like links in a chain, which is where the name comes from. Once a block is full, a new one is created that contains a checksum relating to the previous block.

Each transaction thus builds on the previous block and confirms its accuracy. If a user undertakes manipulations, the checksum will no longer be accurate and the manipulation will be discovered. The same principle applies to the deletion of data. The chain would be interrupted.

These are two major aspects that make the use of blockchain interesting for companies. Documentation is seamless and forgery-proof. And because the ledger is based on several systems, one participant cannot outsmart the others.

Proof of origin and authenticity by blockchain

In retail, including online retail, proof of origin for goods, the monitoring of the supply chain and authenticity are important. And blockchain can help out in these situations.

The LVMH group, which includes luxury brands such as Louis Vuitton and Christian Dior, is planning to launch its own blockchain solution with the codename Aura that other companies would also be invited to use. Luxury goods are coveted, making them attractive for fraudsters. By using blockchain, customers and intermediaries can seamlessly trace the origin of a product. Authenticity is therefore proven. And the proof comes in a different form to a printed certificate that could also be faked.

In food retailing, other aspects have major significance. Proof of origin (e.g. for meat) or the documentation of a seamless cold chain are two examples here. With blockchain and components from the Internet of things, monitoring is simplified and becomes more transparent. Walmart, for example, is investing heavily in these areas in the USA, and the Chinese retail giant Alibaba is undertaking similar steps.

Blockchain providing impetus for digitization

The introduction of blockchain technology will accelerate digitization in companies. This is because in order to use blockchain, processes must be digitized. In instances where staff currently work tediously using lists, all persons involved will receive access to digital data. Instead of cobbling together a product’s supply chain from different sources, all of the information will be available at the touch of a button.

Swiss Post and Swisscom building Swiss infrastructure

Reports about the Bitcoin cryptocurrency often give the false impression that any user can use a blockchain. The participants in blockchains used in the business world will be limited to the companies involved.

The importance of blockchain to retail will increase. Not every retailer or manufacturer will want to build the technology themselves. For this reason, Swiss Post and Swisscom are building infrastructure for blockchain applications for Switzerland. The two partners also stand for the highest level of security and trust.