Bitcoin has emerged as one of the hottest technology topics in the 21st century. While bitcoin is great for grabbing headlines, many technology experts believe blockchain, the software methodology that powers bitcoin, will be utilized across multiple industries in the future.
So what is the blockchain? The name blockchain derives from its natural structure: reports (blocks) that are linked together using cryptography. With bitcoin, the public ledger records every individual electronic transaction conducted. Blockchain allows for distributed processing, meaning computers across a decentralized network can process and validate requests instead of one large server doing the work centrally.
Visa and other payment processors must run massive server farms to verify and conduct all the transactions. Central banks, like the U.S. Federal Reserve, also have vast computer systems and bureaucracies to support their currency.
The ledger is perhaps the most crucial aspect of bitcoin and blockchain. Processing, accounting and verifying data consumes tremendous resources. With blockchain, you can quickly and easily allocate the resources needed to build and confirm the public ledger. Decentralized data means that the information is spread across a massive network in bits and pieces, making it impossible to corrupt. Since the general ledger is innately open, it's easy to audit and verify transactions as well.
Besides bitcoin, Ethereum and Quorum also run on blockchain methodology. Goldman Sachs, JP Morgan and other major banks are examining blockchain technology for ways to apply it to other more traditional financial sectors.
Blockchain technology has the potential to enable "on-demand" manufacturing and equipment leasing. This is achieved by utilizing blockchain and its associated methodologies to monitor machine usage. This will allow OEMs to lease machinery to end users and be financially compensated based upon the usage and performance of that machine. Ultimately, end-user enterprises can lower upfront capital outlays.
Industrial manufacturing equipment often requires a large upfront investment. For many prospective clients, these high upfront costs prevent them from purchasing the necessary equipment or cause them to purchase less technologically advanced equipment thus lowering overall productivity and quality. Utilizing performance-based financing or a usage-based financing module, a small end-user can now afford the newest, most advanced machinery and compete with the larger companies in their industry.
So how would the blockchain operate? First, data is collected from the manufacturing machines. this data is then analyzed. Blockchain methodology creates a transparent and incorruptible receipt of machine information that is then sent to the OEM, end-users, and, in some cases, financiers. The data shown to each type of user will be pertinent information that drives business decisions for that user. For example, a financial admin would be able to find a specific machine their company has financed and show machine data over its life-cycle. This machine data could consist of things like the total number of products produced, machine efficiency over its life-cycle and machine maintenance. This is valuable information for this finical admin and will be beneficial for the next potential buyer of the asset. The blockchain stores an immutable record of all of this machine activity.
Blockchain technology will ensure that the data is accurate and incorruptible; adding a sense of security to every party in the transaction. The blockchain will also distribute the burdens of processing and manage the data, and therefore minimize costs while ensuring high-performance.
There is a multitude of benefits to using blockchain methodology in the manufacturing industry. Blockchain technology has the potential to enable small companies to compete with the giants in their industries by allowing the smaller companies to afford the most advanced equipment.
With the opportunity for OEM's to sell their most advanced and most expensive equipment to new, smaller companies their client base will grow.
The blockchain also eliminates the need for trust to be the primary driver between OEMs and end-users. Instead, data can be the primary driver. The transparent records will allow every party to view critical machine data that drives their business and make decisions based on that transparent data.
Cryptocurrencies are a hot topic. However, the potential for blockchain technology goes well beyond such alternative currencies. SteamChain is already using blockchain to help revolutionize the manufacturing industry by enabling new equipment financing options for OEMs, end-users, and financiers.