In this article, we’ll discuss the application of Blockchain in intralogistics, a promising technology that will play a role in the future of the industry. Many experts already consider it a new revolution due to the advantages it already offers in everyday business, especially in the logistics supply chain.
How does Blockchain work?
Blockchain was born in 2008 with the Bitcoin cryptocurrency and was popularized by Satoshi Nakamoto, whose identity has not been fully clarified.
One of the main objectives of Blockchain technology is to answer the following question: “How can anonymous internet users send money to each other without a central server?”
The solution has been to store payment or transaction histories not on a single server, but on many individual computers (nodes) distributed across the internet. But how can fake payment histories be prevented from circulating on individual computers? Nakamoto solved this security and trust problem (with Bitcoin) by storing (many) transaction data in blocks that are connected or chained together by so-called hashes. Each block of data receives its own seal of proof, the so-called hash value. Each newly generated block contains the hash value of the previous block and also its own new hash value, which in turn becomes part of the next block. With each new block, the existing blockchain is verified and is therefore tamper-proof. This chain is distributed as a copy on many computers and is constantly synchronized via a global network. Any attempt to manipulate one or more copies of the blockchain would therefore be immediately noticeable. How do you prevent any computer from simply adding a new block of data to the blockchain? Nakamoto had an answer for that too. The nodes have to solve a computationally intensive problem and thus provide proof of work. The hash of each block header must be less than a certain value. The node must find the correct hash by testing it (mining). Only then can it add a new block.
Michael Henke of Fraunhofer IML generally defines a blockchain as “a shared, trusted, and validated record of transactions that can be viewed by any member of the network, but cannot be tampered with by anyone else: an encrypted, protected, tamper-proof, and decentralized database, and therefore the perfect place to store values, identities, agreements, property rights, or credentials.”
So, going back to the beginning, Blockchain is a growing list of records, called blocks, that are securely linked together using cryptography. Each block contains a cryptographic hash code of the previous one, a timestamp, and a transaction data item. Therefore, blockchains are resistant to modification of their data because, once recorded, the data in a given block cannot be altered without altering all subsequent blocks. Blockchains are typically managed by a peer-to-peer network for use as a publicly distributed ledger, where nodes collectively adhere to a protocol to communicate and validate new blocks. Although blockchain records are not immutable, as forks are possible, blockchains can be considered secure by design and are an example of a distributed computing system with high Byzantine fault tolerance.
What is the application of Blockchain in logistics?
The core value of logistics is the ability to manage the flow of things between the point of origin and the point of consumption to meet the needs of customers or businesses. Resources managed in logistics can include tangible goods such as materials, equipment, and supplies, as well as food and other consumables.
Therefore, one of the main activities is controlling the flow of products, tracking the positions of goods, exchanging product SKUs between different parts of the supply chain, and others. Given the increasing complexity of the Internet of Things, the needs of supply chain actors, and the need for autonomous financial flow contracts, centrally controlled systems will eventually no longer be sufficient, and decentralized blockchain technology and smart contracts will be necessary.
The market predicts the following for the future: “At some point, customers will only buy products whose creation process is completely transparent. Customer desire will become the driving force behind development, and eventually the question of whether a product is a product will no longer arise.”