After nearly a decade, blockchain is being taken seriously. But what is it and will it solve any of shipping’s problems?
The shipping industry seems to be on a constant hunt for the next best thing, its silver bullet. Five years ago shipowners and the maritime media were getting hot under the collar with the ecoships that yards and designers were trring to sell as the savior of shipping. And then, just as fuel prices dropped and the ecoship fad dwindled, a new business tool emerged: Big data.
Big data rapidly evolved into talk about digital services, and talk about algoriths, automation and thanks to some blue sky thinkers in the leading tech firms, autonomous ships.
On top of that another potential magical solution has emerged, Blockchain.
The idea of blockchain is not new. It emerged in in the public consciousness in 2008 when the co-called crypto-currency Bitcoin hit the news.
Nearly ten years later blockchain remains an emerging technology. It can be built according to the specifications of users needing digital databases. There is no single blockchain platform or software, rather, a plethora of solutions being created based on the basic principles inherent to blockchain.
It has begun to emerge as a potential solution for not only the financial industry, but also other sectors including shipping.
In its simplest form blockchain is a digital ledger that its proponents say cannot be hacked. That claim itself may make it a prime target for hackers, but the key here is that blockchain is a series self-created blocks of data that allows two counter-parties to do business without an intermediary such as a broker.
It is in short, one of the technologies that some say underpins the idea of industrial disruption, not only in the financial markets, but the energy sector and the maritime and shipping markets.
Maurice Meehan is one of the co-founders of Blockchain Labs for Open Collaboration (BLOC) in Copenhagen, Denmark, an organization targeting the use of blockchain in the shipping and maritime sectors.
The Blue Block
Establishing Bloc in Copenhagen is not perhaps so strange. Like other parts of the developed world, Scandinavians are becoming ever less dependent on printed or minted money and using online or digital banking for almost every transaction. Bloomberg reported late last year that the Danish Central Bank is considering using blockchain to create a virtual Krone to increase oversight, reduce crime and of course, save the expense of having to actually mint notes and coins. If Denmark gets a crypto-Krone, it is not difficult to see blockchain spreading to the Blue-Denmark, the name for the country’s maritime cluster.
Meehan believes the time has come to look at the real tangible uses for blockchain in the highly commercial, contract based world of shipping, and stop talking about it as a future silver bullet. There are, he says, many possible tangible uses for blockchain in the industry.
That’s why he launched BLOC with a couple of other ex-AP Moller Maersk colleauges, the shipping giant that recently come out with timely news about a quiet two year blockchain experiment with IBM.
While companies like Microsoft and IBM have developed blockchain services, a version of software as a service for developers, Meehan believes the true value for the commercial use of blockchain is in creating a transparent trusted open source solutions.
He and his team got a grant for 18 months research by the Danish Maritime Forum to look at real world business applications within the maritime sector.
It might be, he says, that blockchain provides a solution to enable better charter party contracts, and organisations like Bimco could find a new secure solution that could cut administrative burden.
Maersk says it has demonstrated a potential in the contract chain in the container industry.
But while there are emerging uses that could reveal radical new opportunities for forward thinking organisations, blockchain itself is still evolving.
It is after all a software programme, or rather a type of programme. So, will these systems need upgrading in a way that one finds with smartphone apps, computer programmes and other firmware found on today’s onboard or office based systems?
Changing the chain
“When we use the term ‘blockchain’ we are actually referring to several different configurations and protocols that comprise the ecosystem of blockchains,” says Deanna MacDonald, another BLOC co-Founder, and also its Chief Executive.
She highlights for example that one open-source, public blockchain-based distributed system known as Ethereum is run on an entirely different set of protocols and validation mechanisms than does the blockchain system behind Bitcoin.
“Therefore, to think of blockchain as a one stop solution that will evolve and continually be updated similar to software would be over simplifying,” she says.
“That isn’t to say that this ecosystem and the suite of blockchain based solutions will not have to adapt and evolve over time, but rather there is no one solution, no one blockchain and no one update to run.”
She adds that there will be different blockchains for different uses, depending on application and sector.
Interoperability and standardisation of the common elements of these blockchains will be crucial to the development and widespread application of the technology as new blockchains emerge to solve specific problems inherent to the use case or customer.
While the maritime and logistics sectors look at blockchain with hopeful expectancy, and its advocates talk about its disruptive potential, the reality will likely be that this potential will emerge rapidly, pushed by entrepreneurs in the industry that are willing to take the risk and reap the reward. It’s not so much one single magic bullet, but a barrel full of smaller ones.
