Bitcoin, the experimental digital currency that is one of a number of cryptocurrencies, has been in the headlines over the past few years for a number of reasons. While the unpredictable value of and association with the criminal underworld make Bitcoin an undesirable investment for most banks, businesses and investors, its most valuable contribution may be the introduction of blockchain technology.
Some experts like Rebecca Hofmann, founder and director of the OOC Blockchain Forum and the chairman of the OOC Blockchain Consortium, believe the technology has the potential to revolutionize the way businesses collaborate and interact.
First, Hofmann believes it's important to begin with a general understanding of what blockchain is. It is a string of digital information, similar to a serial number or code. The string is divided into smaller bits of information called "blocks," and the blocks are sequentially chained together. Each block represents a transaction, and every time a new transaction is recorded, it creates a new block that's added onto the end of the chain. In addition to adding a new block to the chain with every transaction, each new iteration of the full blockchain is distributed to every user.
While the implementation of blockchain in business-to-business interactions is still in its early stages, the technology enables parties to track the exchange of goods and services by using the blockchain code as a secure and real-time ledger. "It really does help with the external interactions of business with multiple business parties," Hofmann said. "We [businesses] don't do anything alone. Suppliers and vendors are needed to make it all happen from beginning to end."
A 19-year veteran of the energy industry, Hofmann leads the blockchain digitalization strategy for Equinor. She stumbled upon blockchain while attending a conference in place of a colleague originally scheduled to attend. Her conversations about blockchain continued beyond the conference, eventually leading to the formation of the OOC Blockchain Consortium.
Hofmann and the OOC have identified several areas where blockchain can potentially be a major benefit with regard to land management, finance, operations and data management.
One of the current initiatives of the OOC Blockchain Consortium is to test blockchain implementation in the area of trucking/shipping. The goal of this particular use case is to not only test whether blockchain actually works, but also to examine what cost, time and resource efficiencies can be gained.
"You don't have to have somebody in the field to collect paper truck tickets and sign them, which then must be reconciled with an invoice, after which someone else has to sign and approve that invoice," Hofmann said.
With blockchain, the payment reconciliation process would be greatly consolidated. Instead of dealing with a paper process where one person gives a signed ticket to someone else and that person submits it to accounts payable to process and mail a paper check, the companies agree in advance to remit payments according to the transactions recorded by the blockchain. Because all of the participants will use the same data source, the chances of fraud are reduced.
"What we are now seeing and able to prove is that by using systematic field validation sensors, automatic payments can be triggered without manual manipulation," Hofmann reported. "What blockchain is allowing us to do is collaborate outside our four walls and actually look at the process as a complete whole."
The OOC Blockchain Consortium continues to investigate and test this technology in new ways and cases. Although many questions are still unanswered, the results so far are promising.
For more information, visit www.oocblockchain.com.
