Redesigning Trust: Blockchain for Supply Chains(weforum.org)
weforum.org
Redesigning Trust: Blockchain for Supply Chains
https://www.weforum.org/projects/redesigning-trust
46 comments
Yeah I agree that blockchains look attractive for handling the ownership problem, but I don't believe they are necessary for cases like this. A well designed open protocol would do the job just as well.
Blockchains are for cases where double spending needs to be prevented. It seems to me that logictics merely needs to broadcast assertions by the participants. Kind of like certificate transparency.
Blockchains are for cases where double spending needs to be prevented. It seems to me that logictics merely needs to broadcast assertions by the participants. Kind of like certificate transparency.
In every supply chain there is a owner, the channel master. Basically the guy that controls it, directly and the farther out it get indirectly. Until a new party is the channel master for that part of the network.
Besides the issues of matching goods to information the transparency that is necessary for a true fully integrated supply chain as envisioned or necessary for blockchain to work won't be accepted by any player. Si ply because everything from markets to customers to potential BoMs and production efficiency can be derived by any party in the chain. And that is not even without looking at processes which is different story all together.
I don’t see a specific need of a “blockchain” feature for this usecase.
Uber didn’t need decentralization to coordinate drivers and clients. Aws/Postgres can handle the fault tolerance. FedEx already does this.
Uber didn’t need decentralization to coordinate drivers and clients. Aws/Postgres can handle the fault tolerance. FedEx already does this.
I agree, there is no need for a blockchain. But, that explanation is what has been proposed as the justification for using one.
I would counter also that neither of your examples are actually supply chains. FedEx is part of a supply chain, but only a single member. the chain includes the manufacturer, wholesaler, etc. Uber also doesn't have a supply chain with its drivers. It is not running a supply chain for that purpose, it is a marketplace.
I would counter also that neither of your examples are actually supply chains. FedEx is part of a supply chain, but only a single member. the chain includes the manufacturer, wholesaler, etc. Uber also doesn't have a supply chain with its drivers. It is not running a supply chain for that purpose, it is a marketplace.
Quite a few times I've heard the line that blockchain can revolutionize supply chains, but I still don't understand it. Since you're dealing with physical goods, you're relying on the participants of the system to enter data truthfully and accurately, which defeats the purpose of a "trustless" data store like blockchain.
You're missing the IoT component. The devices themselves do the data "entry" on the blockchain so the whole system is automated, distributed and tamper proof (assuming you don't hack the devices, of course).
That just punts on the problem. It's basically not solvable - at some point you have to trust humans anyway.
The only reason this works well for, say, bitcoins, is that they are a digital "asset" created on the chain themselves. Everything else trying to tie a physical asset to a chain has the same problem, you can't do it without relying on trust outside the system.
The only reason this works well for, say, bitcoins, is that they are a digital "asset" created on the chain themselves. Everything else trying to tie a physical asset to a chain has the same problem, you can't do it without relying on trust outside the system.
I think you're fundamentally correct, but with the caveat that trust inside the system can be the basis for trust outside the system via Zahavian signalling and/or escrow. As a simple dumb example, if an institution sends a million dollars to a burn address then I can probably trust that institution to handle half a million dollars in assets at a time without screwing over their customers (if they didn't intend to act fairly and make back that money over time through sustainable business practices they wouldn't have burned it in the first place). It's trickier than that -- you have to consider whether this is a sunk cost in a given context, if all customers are on the same page about what assets the institution is handling, etc. -- but the basic idea is there. Escrow is more clever than a burn pile, but could lead to some weird situations where one side attempts to extort the other for most of the escrow's value, and simply making both sides pony up doesn't obviously solve this (though it goes a long way).
Sure, but you have to trust less humans. You only need to trust the source, without needing to trust the middle-men.
So in case of e.g. a fridge the source would be some copper mine in Africa and the other end be Amazon Logistics that delivers the fridge to your house? When you draw the line somewhere else the issue to be solved it balancing transparency, trust, willingness of the channel master to share information and the tendency for powerful entities to form.
> Everything else trying to tie a physical asset to a chain has the same problem
Agree that “blockchain for supply chain” is inherently flawed. But there are hypothetical (if currently unfeasible) use cases. For example, derive a cryptographic key from a carcass’ DNA. Now you have a good physical-digital nexus. Or, for electronics, measure some random and hard-to-replicate analog jitter.
Agree that “blockchain for supply chain” is inherently flawed. But there are hypothetical (if currently unfeasible) use cases. For example, derive a cryptographic key from a carcass’ DNA. Now you have a good physical-digital nexus. Or, for electronics, measure some random and hard-to-replicate analog jitter.
>so the whole system is automated, distributed and tamper proof
No it's not. It all still depends on people honestly and accurately implementing the IoT component. It's just pushing the problem back a step.
All of these schemes ultimately fail because they face two challenges that inherently involved messy humanity and physical reality: the oracle problem and the enforcement problem.
No it's not. It all still depends on people honestly and accurately implementing the IoT component. It's just pushing the problem back a step.
All of these schemes ultimately fail because they face two challenges that inherently involved messy humanity and physical reality: the oracle problem and the enforcement problem.
If you have a tamper-proof, automated, and distributed, 100% trusted devices providing statistics for your supply chain, why do you even need blockchain?
I dunno, this seems like the one-time pad thingy. If you had a mechanism to transfer a 10GB one-time pad to your friend in a secure manner... why not transfer your 10GB of "protected" data in that secure manner instead? Just because a technical solution "technically works" doesn't mean its useful.
I dunno, this seems like the one-time pad thingy. If you had a mechanism to transfer a 10GB one-time pad to your friend in a secure manner... why not transfer your 10GB of "protected" data in that secure manner instead? Just because a technical solution "technically works" doesn't mean its useful.
The OTP has the benefit that you can delay the 10GB transfer until later. For instance, you might be able to transfer 10GB safely today, but tomorrow you or your friend might go off to a dangerous place and you can no longer do the transfer and the data you want to transfer can only be generated after going into the dangerous place.
That all said, I still don't know what problem blockchain solves. Other than crypto-currency.
That all said, I still don't know what problem blockchain solves. Other than crypto-currency.
But the IoT device will have to be attached to the actual good. How can you know the device is attached to the actual good and not something else?
But if you have to trust that the devices aren’t hacked why can’t you just use a database and give each device a private key?
This is the key question to any blockchain-for-X proposal: explain why you can't just use a secured database. My personal suspicion is that all commercial activity already requires enough trust that using a secured database is tenable and vastly easier.
The biggest issue I see is to match the virtual information, Blockchain or not, with the physical goods. Once this link is broken Blockchain is definitely dead in that environment.
And once you solved that problem Blockchain doesn't that much value.
And once you solved that problem Blockchain doesn't that much value.
How can you ensure the devices are not hacked though? If someone has physical access them, would it be possible to limit them from tempering with them?
That article is not telling anything. No real use case, not concrete problems that can be solved. From that source I would have expected more.
My thoughts: Supply Chain collaboration is the hardest thing to achieve, not last because internal opposition has to be overcome first. The tricky part? Who benefits from the efficiency gains?
Also, in case a certain company or Supply Chain is able to benefit from a potential Blockchain application (I don't see any yet) it will be so far ahead of anyone else already that Blockchain wouldn't level anything. And those that are not there yet aren't able to benefit from digital solutions. Because their processes and culture aren't their yet. As a result the gap will only become bigger and not smaller.
That being said, as long as Blockchain for SCM is not solving the problem of constantly matching physical and virtual flows without jeopardizing the data and information of every party involved it won't work.
My thoughts: Supply Chain collaboration is the hardest thing to achieve, not last because internal opposition has to be overcome first. The tricky part? Who benefits from the efficiency gains?
Also, in case a certain company or Supply Chain is able to benefit from a potential Blockchain application (I don't see any yet) it will be so far ahead of anyone else already that Blockchain wouldn't level anything. And those that are not there yet aren't able to benefit from digital solutions. Because their processes and culture aren't their yet. As a result the gap will only become bigger and not smaller.
That being said, as long as Blockchain for SCM is not solving the problem of constantly matching physical and virtual flows without jeopardizing the data and information of every party involved it won't work.
The details are in the "related reports" at the bottom. This is the main page for the project.
Edit pdfs:
- http://www3.weforum.org/docs/WEF_Introduction_to_Blockchain_...
- http://www3.weforum.org/docs/WEF_Trustworthy_Verification_of...
Edit pdfs:
- http://www3.weforum.org/docs/WEF_Introduction_to_Blockchain_...
- http://www3.weforum.org/docs/WEF_Trustworthy_Verification_of...
Then I stand corrected and I have some literature for the weekend!
An unfortunately representative sample of the utter nonsense "blockchain consultants" produce.
1. "Blockchain for X" where X is something the client cares about.
2. Blockchain is revolutionary, but blockchain is also complex. See what I did there?
3. I guess not. FOMO! FOMO! FOMO!
4. Gather your stakeholders for a series of working groups where we'll figure out what blockchain can do for you.
5. I refuse to reveal even one problem calling specifically for the magical Blockchain. Nor will I give you one single specific solution made possible by only this new technology in your industry.
These pitches are targeted at people who have long since hung up their spurs for the greener pastures of corner offices.
Funny in a way the first 20 times I saw it, but now this is really getting old.
1. "Blockchain for X" where X is something the client cares about.
2. Blockchain is revolutionary, but blockchain is also complex. See what I did there?
3. I guess not. FOMO! FOMO! FOMO!
4. Gather your stakeholders for a series of working groups where we'll figure out what blockchain can do for you.
5. I refuse to reveal even one problem calling specifically for the magical Blockchain. Nor will I give you one single specific solution made possible by only this new technology in your industry.
These pitches are targeted at people who have long since hung up their spurs for the greener pastures of corner offices.
Funny in a way the first 20 times I saw it, but now this is really getting old.
I don't remember who first said it but blockchain has exactly one killer feature, Bitcoin. If you try to adapt it anywhere else you're probably abusing the tech.
I would argue that Ethereum smart contracts are much more useful than bitcoin itself. PoW, on the other hand, is a complete waste of resources.
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Smart contracts are stupid for a variety of reasons, the biggest one is that the main feature of contracts is not automatic and literal enforcement.
>I don't remember who first said it but blockchain has exactly one killer feature, Bitcoin.
So zero killer features, then.
So zero killer features, then.
I saw another very interesting use that I don't fully understand from a technical perspective, but it basically promised to accurately report position-at-time, via a system of transponders.
The use case is, I can tell when Fedex or the local pizza place is lying to me about my delivery being 30 minutes away, or half a mile down the street, or whether the delivery driver actually attempted to physically deliver my package to my door at 5:47pm or not. (Or Ikea can verify that their subcontracted delivery driver actually got the couch to the buyer on Sunday, or both Uber and I can know exactly where I was dropped off and picked up and when, etc., etc., without either party being able to lie about it.)
A friend of mine agreed that the idea was good, but looked into their implementation and said it was a horrorshow.
The use case is, I can tell when Fedex or the local pizza place is lying to me about my delivery being 30 minutes away, or half a mile down the street, or whether the delivery driver actually attempted to physically deliver my package to my door at 5:47pm or not. (Or Ikea can verify that their subcontracted delivery driver actually got the couch to the buyer on Sunday, or both Uber and I can know exactly where I was dropped off and picked up and when, etc., etc., without either party being able to lie about it.)
A friend of mine agreed that the idea was good, but looked into their implementation and said it was a horrorshow.
Well, that is already working pretty well. E.g. large carriers are using that in their operations, one of the distinctions between those and small time operators. One of the biggest benefits of this is the electronic proof of delivery. Just how Blockchain would help with I didn't get yet.
I think they slathered some "blockchain" on it, when they probably meant to say "cryptography"; the big value-add was that the records were tamper-proof - there was somehow no way to claim you were dropping a package off at my house when you were actually miles away.
Not sure how it worked, though. :(
Not sure how it worked, though. :(
Read up on Namecoin and see if you still agree with that statement. Blockchain for DNS is a pretty brilliant solution, IMO.
Except that you don't have any solution for preventing squatting or other kinds of domain abuse. By design, they place this system above the court system. I'm pretty sure this is only appealing to some kind of anarcho-technologists.
This is Case #1 in "You Do Not Need Blockchain: Eight Popular Use Cases And Why They Do Not Work": https://blog.smartdec.net/you-do-not-need-blockchain-eight-p...
The article does a good job of explaining why blockchain doesn't add anything meaningful for this use (and other ones).
The article does a good job of explaining why blockchain doesn't add anything meaningful for this use (and other ones).
The article talks about how blockchain is good at handling money transactions but in the same breath says that logic doesn't apply to supply chain management? Their analogy was extremely weak. Secondly, smart contracts? Does the author not know smart contracts are applied to supply chain as well?
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I bet they give up half way through and use a hosted database instead
https://www.goland.org/off_chain_storage_and_the_enterprise/
This is a great article outlining several cases where blockchains are being applied to solve supply chain issues ineffectively.
Yaron's assessment finds that
Key repudiation resistance is the only real compelling case where a blockchain is the right tool for the supply chain. This is not to say that there aren't valuable uses for blockchains within the context of more hyrid solutions.
"The block chain does some amazing things but accomplishing those goals comes at a very real cost. Byzantine attacks are a pain and require lots of resources to deal with. So if we don’t need to survive them then we don’t need the block chain. This article isn’t about saying the block chain is bad. It is about saying that we should use the right tool for the right problem. If your block chain application is based on off chain storage then there is a non-trivial probability that you may not actually need the block chain. It’s worth at least thinking about".
This is a great article outlining several cases where blockchains are being applied to solve supply chain issues ineffectively.
Yaron's assessment finds that
Key repudiation resistance is the only real compelling case where a blockchain is the right tool for the supply chain. This is not to say that there aren't valuable uses for blockchains within the context of more hyrid solutions.
"The block chain does some amazing things but accomplishing those goals comes at a very real cost. Byzantine attacks are a pain and require lots of resources to deal with. So if we don’t need to survive them then we don’t need the block chain. This article isn’t about saying the block chain is bad. It is about saying that we should use the right tool for the right problem. If your block chain application is based on off chain storage then there is a non-trivial probability that you may not actually need the block chain. It’s worth at least thinking about".
There is this company that implemented land sale management - I think in Georgia (the country) - and if you go to their website, they just tout what technologies they use. We use Rust! It's type-safe! That's the kind of people who will try to sell you blockchain. Blockchain, obviously will solve all your problems.
I honestly cannot think of another more overhyped and useless technology right now.
I honestly cannot think of another more overhyped and useless technology right now.
I feel like "blockchain" must be a mental shorthand for something different to these people, and that they are not all delusional and insane. What am I missing?
They mention there are 'misaligned interests' in supply chains, but I am not sure what interests are misaligned?
A producer is interested in maximizing profit.
A consumer is interested in maximizing value.
Both parties may act to further their own interests at the expense of the other's interests.
Both parties may act to further their own interests at the expense of the other's interests.
This is the same conflict in every marketplace exchange, and something a blockchain doesn't address.
Right on top of my head? A dozen plus :-) I just don't see how Blockchain would solve any of those.
The problem is that everyone in the supply chain knows that better data would improve their operations, but nobody is willing to cede control of a centralized system so that everyone's data can been coordinated and managed. The semi-adversarial relationship that exists due to commercial terms means that no member of a supply chain wants to give up more data than they have to to a central entity.
Alternatively, the problem can also be viewed as a dimensions problem. In reality, there is no natural "owner" of a supply chain. pick any member of the supply chain, and put it at the center, and the data that it needs, and collects will be a different set of characteristics than all the others. there is obviously useful data that spans the whole supply chain, but for each member, the way that data is grouped, pivoted, counted, and accounted for can be different.
Perfect data entry into a system could solve the latter problems, and coupled with differential privacy or other masking functions, you can enter lots of a data into a system and each member of the supply chain should be able to manage their business better, which in turn improves the performance of the whole system.
The blockchain component is really only for the function of solving the system-ownership prisoner's dilemma. Effectively, each member of the supply chain owns the system, but its decentralized nature means that also no single member owns it. A blockchain helps create a system for managing a supply chain when there isn't an owner of the supply chain.