By now, everyone in our industry will have heard of Blockchain technology, the most famous implementation of which would be Bitcoin. However, today I don’t want to talk specifically Bitcoin, but rather its underlying technology.
A Blockchain runs on a “distributed ledger” network, which simply translates as a series of distributed databases, or nodes, in more technical terms. Each node contains a copy of all available stored transactional data and plays a role in deciding if new incoming transactions are “worthy” of being added to the chain of transactional data.
Proof of Work vs. Proof of Stake
This idea of “worthy” transactions is important here as this is where all nodes decide according to a given mathematical algorithm (e.g. Hashing/Encryption) whether incoming transactions, accumulated in blocks of a predetermined size in bytes, are considered valid. If 51% of all nodes agree a new block is valid, it is added to the chain. This consensus function is called “Proof of Work”.
Alternatively, one could opt for a “Proof of Stake” consensus function, where the node with the highest fraction of holdings (expressed in the number of crypto coins) gets to decide which block is added to the chain next.
But Blockchain technology still has two important problems yet to be solved; namely scalability and privacy.
Scalability is an issue because current existing Blockchains can only process between three and twenty transactions per second.
Let’s say we want to keep track of all shipment changes on our Twill platform using Blockchain. This means we can only process up to 20 shipment updates per second. Any more than that will force us to create a queue.
Now for ocean freight, this low amount of transactions should not cause much trouble as users don’t need to be updated the very second something happens with their shipment.
Having to queue updates for a few minutes is no big deal. But if we look at the number of updates required for all types of freight forwarding and perhaps other forms of freight transport combined, queueing transactions for over an hour or more might result in more serious delays.
The second problem for Blockchain is privacy. Now, the technology was created with several key features in mind: transparency, decentralization and immutability.
But all transactions taking place within a Blockchain are visible to the entire network. So, if any given seller sells a shipment of goods/containers to any given buyer, this transaction is known to all nodes. This means that all competitors who might share a node within the same Blockchain now know this transaction has taken place.
The entire history of transactions, in this case, is copied on all nodes, so every transaction that happened on the Blockchain is known to everyone in the network, thereby making your transactions and business practices visible to the whole network!
In addition to this, information stored in the Blockchain cannot be altered. So, despite a loss of privacy, this does give users ultimate traceability and transparency.
It remains to be seen just where Blockchain technology will end up in the development landscape at Twill.
Perhaps we will be able to use it as a form of event-sourcing, to serve as our own source of audit trailing in order to validate what goes on behind the curtain to the outside world?
Or perhaps a more ambitious use of Blockchain technology would be where container shipments can be paid in Twill coins, where our exchange rate is decided by supply and demand of container loads at certain ports?
It certainly sounds exciting…
– William van den Bosch, Twill Software Engineer