What the heck is a blockchain?

What the heck is blockchain? A chain with square links? A steel ring around your neighborhood?

The word pops up among logistics types a lot lately. “Blockchain is coming. It’s going to be big. It’s going to change everything!” they say.

Well, maybe.

You might have heard of blockchain in the context of bitcoin or other digital money. In fact, blockchain underlies bitcoin by recording every bitcoin transaction around the entire planet. Whenever bitcoin is exchanged for anything, that sale, loan, or whatever is recorded (anonymously) and available for the world to see.

How does blockchain or bitcoin actually create value? You’ll need someone a lot smarter than me to explain that.

But in transportation, blockchain will be a way to record different kinds of transactions or events – anything from a location ping to proof of delivery to your settlement check. Those records will be searchable, super-secure, and will track any business process – a shipment, for example – from start to finish.

In transportation, blockchains will probably not be public. They’ll be shared within groups of companies doing business together. Walmart has assembled such a group hoping to increase the safety of food products, for example.

Say someone gets sick after eating a Wal-Mart berry. Wal-Mart can remove the berries at the individual store, but where are the rest of those berries and where did they originate? That can take days to learn from an old-fashioned paper trail. If the berries were purchased, shipped, and distributed with blockchain, that information can be found in seconds.

So blockchain is essentially software that creates computer files. The files(called blocks) are individually tagged, time-stamped, and stored in chronological order in what amounts to the ultimate breadcrumb trail(the chain).

Maybe the most important things to understand about the model in business is that everyone in a blockchain group is linked on the internet (or private network) and each has his own copy of the block chain. Whenever anything is added or otherwise changed anywhere in the blockchain, every copy of that chain is automatically updated. Everybody in the chain sees exactly the same information, and that in formation cannot be changed.

So everybody sees the same thing. So what?

The idea is that when it’s clear to the entire blockchain community that the conditions of a sale have been met, for example, there can be no disputes. The bill should be paid.

In logistics, carriers hope it can indisputably document detention and completed deliveries. Shippers hope it can document exceptions or late arrivals. Brokers hope it can remove any doubt about the rate confirmation to the carrier or the amount being charged to the shipper.

Of course, the chain can be quickly searched so that information can be verified in a hurry, and it will be possible to attach document, photos, and other files to blockchain transactions. So for some companies, blockchain could replace their other document archives.

Introduced in 2013, blockchain is still in its earliest stages and is far from a mature standard. But there are big bucks behind it and companies like IBM and Microsoft have waded into the field selling the concept hard.

Actually the entire business world is watching blockchain’s evolution, perhaps more so than any emerging technology since the internet itself. On the other hand, increasingly inventive hackers may find vulnerabilities that will render the technology useless.

What will blockchain mean for drivers? Directly, very little. The job should not change in any substantial way.

But then, who in 2007 knew the iPhone would change the world?