The electricity required for one bitcoin trade could power a house for a month ©123RF
The electricity required for one bitcoin trade could power a house for a month ©123RF

Six things wrong with blockchain

Patricia Friedel outlines the challenges that need to be addressed

Blockchain has the potential to radically change supply chains, making them more secure, transparent and cost effective. Examples of usage include Walmart tracing pork, shipping firm Maersk working with IBM on cross-border transactions and Johnson & Johnson (J&J) trialling it in temperature controls for pharmaceuticals.

Speaking at ProcureCon Europe, J&J associate director of strategic sourcing Patricia Friedel said blockchain can “strengthen traceability, reduce IT costs and replace manual processes”. But “is blockchain really the unicorn we’ve all been looking for?” No, she says. There are challenges that need to be overcome before it can go mainstream. They are:

1. It is not clear how different blockchains will talk to each other. There is a lack of comprehensive supply chain standards to ensure consistency.

2. There is a question mark over data accuracy. Will blockchain be able to mirror all the steps in the supply chain?

3. Blockchain needs to offer more than just one-step verification.

4. When managing value, can the blockchain absorb the volume of transactions in the supply chain?

5. Who will pay for it? Realising the value of blockchain is a complex business, and remains unclear.

6. It’s not a green technology. How does it fit with sustainability strategies? Blockchain and its currency, bitcoin, use a lot of energy – the electricity required for one bitcoin trade could power a house for a month.

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