Blockchain, demystified

Blockchain, demystified

The history of the Indian transportation sector is one that has seen a tremendous amount of progress. As per the Economic Survey 2017-18 by the Ministry of Finance, Government of India, country’s transport and logistics industry — which is worth $160 billion — is likely to touch $215 billion in the next two years with a projected CAGR of 15-20 per cent during FY16-FY20. 
With the entry of blockchain technology, things are becoming interesting for the transportation sector. It helps in creating a well-connected and systematic network, while improving efficiency. In order to comprehend the amalgam of blockchain technology and India’s labyrinthine transportation industry, we’re going to need some context. We need an overview of the transportation industry and how blockchain as a technology can clarify its issues. 

What’s blockchain?
First, let’s clarify one thing: blockchain is not the same as Bitcoin. In fact, blockchain is a technology that powers Bitcoin. It is a shared digital ledger that is made up of blocks of data that are stored on a decentralised peer-to-peer network. This network of blocks is secured with cryptography and contains encrypted information that is hashed, making it impossible to alter. 
In order to modify or tamper with any information on the blocks, you would have to retroactively alter the entire chain and its replicas within the peer network. To top that, any such alterations have to be validated by the peers on the network reinforcing credibility. Furthermore, all transactions that are confirmed will be time-stamped to provide a full record of provenance.
Such a technology is characteristic of encrypted data and security, transparency, and efficiency. Given the advancements in technology, the transaction speed per second (tps) is 
being scaled exponentially. With this technology in place, the transportation industry in India can be streamlined and made more productive.

What it means for Indian transportation sector?
Indian transportation sector is not straightforward. If you think about it, it is the burgeoning of several modes and media of a multifaceted system. It does not only involve movement but also encompasses the mode of transport (vehicles), medium of transport (land, air and water and its maintenance), private and public sectors, logistics and movement of goods and/or people.
But why is it even worth mentioning? All these facets of the transportation sector have processes that face shortcomings without an efficient system to advance them. 
Today, the Indian logistics industry is going through a phase of transformation. Efforts by the Indian government and improvements in infrastructure along with the advent of a skilled workforce, has improved the country’s position from 54th in 2014 to 35th in 2016 in the World Bank Logistics Performance Index in terms of overall logistics performance. India can further improve its rankings if the existing infrastructure and cost inefficiencies —lack of seamless movement of goods across modes and poor integration with modern information technology — are addressed. Introduction of tech-based interventions will help the industry resolve these issues of procedural complexities, redundant documentation and involvement of several agencies at pit stops in a coherent manner. Due to its seamless and transparent nature, blockchain technology will offer holistic solutions to enable the transport industry to improve their efficiency and cut costs. We are in need of a smart, integrated solution that blockchain technology can offer solutions to challenges that the transport sector faces.

How to apply blockchain in transportation?
First, it can ensure data validity and freight tracking. For several years, organisations have been utilising the GPS technology to track and monitor freight hauling assets. Any information or data that was collated for further reference was through check calls and faxes which further advanced with the next wave of innovation: Electronic Data Interchange (EDI) and Application Program Interface (API).
Blockchain as a technology could clarify this process with efficiency. The collation of data can be streamlined and validated. Perhaps the best takeaway is the data entered cannot be tampered with, misinterpreted or altered without the consent or knowledge of those in the 
peer network. Secondly, smart contracts are a product of blockchain where one party transfers an asset or a currency into a programme. Such programme will automatically validate its transfer to the next party based on a certain condition. And the condition is that the completion of a certain task should be upheld by one of the parties. It will also determine the transfer of the 
said asset. In simple words, the transfer of payments will be automated based on the delivery of the task completed. Smart contracts in the transportation sector could improve productivity and the quality of work that materialises from it. 
Thirdly, it can improve efficiency in supply-chain management, which is the flow of goods and services. Real-time status tracking of the transit of goods and management of risk can be more efficient with minimal human errors. Blockchain can digitise the inventory and eliminate middlemen, with zero room for illicit activities and misappropriation of funds.

What’s the way forward?
Blockchain has the power to revolutionise the transportation industry intrinsically. This efficiency has not gone unnoticed, and there are some powerful industry adopters. In August 2018, a leading information technology and business process company from India agreed to 
join Blockchain in Transport Alliance (BiTA) to progress the development of blockchain 
standard and expedite blockchain adoption in the transport industry. BiTA as an industry group dedicated to providing a platform that explores and implements what blockchain technology has to offer to the transportation sector.
The development of blockchain technology is still in its nascent stages, however, even in its present capacity, it can turn the transportation industry into a stronghold with formidable security and high performing transactions. To encourage this movement in the transportation industry, blockchain technology requires successful implementation and strong, able partnerships. With all these factors in place, the possibilities are virtually limitless for the transportation industry to expand and grow.

By Rama Iyer, President, Eleven01