Blockchains for Blockheads. I think I finally get it.

This post originally appeared on the DC Velocity blog. See the original post at https://blogs.dcvelocity.com/public_sector_logistics/2017/11/blockchains-for-blockheads-i-think-i-finally-get-it.html

I think I finally understand blockchains. Blockchains are a concept that is creeping into the logistics literature. Pay attention; we might be looking at a fundamental shift in how business gets done.

I own a house. It is an interesting house, built three hundred years ago. Yup, the house is older than the United States. It was built in 1718 and is listed in the National Historic Register.

I’ve actually gone to the Registry of Deeds to read the file. It begins with a land grant from the king and that deed is in the file. The original homestead was huge, covering a big chunk of this side of town.

Obviously, I don’t live on an estate of hundreds of acres in suburban Boston. Instead, while I do live in the original house, the residence sits on about a ten thousand square foot plot that is all that remains of the original land grant. The rest of the estate has been peeled away over the years.

Starting from the bottom of the pile of documents at the Registry of Deeds, I can start with the deed from 1718. Stepping through transactional record, on paper, I can walk forward across the chain of actions. I can see every action that connects back through the pile to the original land grant, or block, all the way forward to the current deed on the top of the pile. The piece of paper at the top of the pile is my home.

What blockchain could do is take the paper in the file and make it digital and distributed. Once any transaction is encrypted and shared, there is no need for a central repository at the Registry of Deeds.  Copies of the chain could be shared virtually with all of the participants in the chain. 

Integrity is maintained by links among the copies of the transactions embedded in the chain residing with each participant: If any of the records get out of synch, the distributed technology flags the discrepancy.

Integrity is maintained by encryption: Anybody not involved in the transaction doesn’t have the key.

Integrity is maintained by an architecture that is inherently opaque: People can’t peer inside the transaction and understand what is happening, so hackers attempting crack a pile of encrypted records can’t find the on ramp to a successful hack.

Think of blockchains as information stored in stealth packets; you know that something is out there somewhere but you can’t see it so you can’t hack it.

I think I feel the world shifting. The financial community is leading the pack with block chain, and the supply chain is sure to follow. But we have a clash of the Titans coming. Should the government have the right and the power to read your transactions? Or do individuals have a right to transactional privacy? This is going to get interesting.