Blockchain applications: How does it work in simple words? We’ll explain it to you with a practical example.
- 1 What is Blockchain?
- 2 Blockchain applications and sectors
- 3 Blockchain applications to understand how it works easily
- 3.1 Participants
- 3.2 Assets
- 3.3 Transactions
- 3.4 Smart contract | How it works
- 4 Blockchain applications | a practical example
- 5 Blockchain applications for companies
- 6 Blockchain experts
What is Blockchain?
If you have already heard of blockchain, quite likely it was related to cryptocurrency issues but this technology is not only used for that since any type of company can apply it to their transactions.
Blockchain is a type of DLT and offers us data decentralization, complete traceability, and immutability of the information contained in each block.
The main goal of this technology is to generate trust between unknown parties and, consequently, transparency and security in transactions.
Blockchain applications and sectors
Now, let’s have a look at some blockchain applications apart from financial transactions of all kinds.
For example, we can apply blockchain to any logistics solution in which there is data that we don’t want to share with all parts of the process. Besides, quite recently we notice blockchain applications in an electoral context since it allows votes to be safe, immutable, and anonymous. And, in these sad times of a pandemic, it is also important to highlight the relationship between blockchain and COVID-19.
So, since sometimes blockchain applications can be difficult to understand, today we’ll share with you a practical example of blockchain applications in food & beverage companies.
Blockchain applications to understand how it works easily
Let’s talk about ‘tomatoes’ for a moment.
Today, getting tomatoes with the best flavor, the best quality, and freshness is not that easy, right?. It is very common to find varieties of products designed to have high production and to be durable. It is also true that we can choose ‘better’ tomatoes but at a considerably higher price. In this regard: what real guarantee does the end consumer have on the highest quality of this product? What does the freshness of tomatoes have to do with blockchain technology?
The real case of blockchain applications that we propose begins in the tomato crops of Almería (a Spanish region) that is, in their place of production, and will end in a supermarket in Madrid, distributor and final place of purchase.
We will start by defining the participants of this transaction and then define the assets to be exchanged in it, and finally, the transaction that will get recorded in our blockchain example.
The blockchain participants in this transaction would be all the parties interested in having the tomato with the best flavor: from the producer to the final client, passing through different auditing entities, to the temperature control devices during transport.
Not all participants will need every information that we keep in our blockchain, thus, there will be participants who only know a part of it, while, for example, both the producer and the final distributor will be informed about the entire chain process.
These would be the participants:
Producer of tomatoes
Temperature and humidity sensor
We will define transaction assets as all the data saved in our blockchain: from the Protected Designation of Origin to a dossier on maturity period, temperature, and humidity standards during transportation.
These would be the assets:
Certificate of designation of origin
Optimum ripening certificate
Temperature and humidity monitoring
Now it’s time to decree rules that all participants must comply with and that will determine what operation each of them can perform and what part of the information they will know in detail.
In this case, the transactions would be:
Producer certificate of quality
Cargo arrival notice
Temperature and humidity certificate
Certificate of Origin
Smart contract | How it works
Once we know all the participants, the assets, and the transactions, we’ll break down all the operations that the smart contract will need to perform. A smart contract is an immutable agreement stored and executed in the blockchain, and, through a graph, we will explain it in more in detail.
1 – Deploying the smart contract and the producer’s request for payment: in this step, the producer of our tomatoes from Almería displays the blockchain smart contract. This is just the payment step.
2 – Quality Assurance set by the producer: timing, maturity, seeds used, etc. Everything related to the product would be stored in this block.
3 – Quality Audits: the auditing entity verifies that the product complies with the standards and stores all the information certificates in the next block. It is fundamental that everything stored in the previous block agrees with the collected data.
4 – Shipping company: verifies that the packaging is correct for transport and certifies it in the next block within the chain.
5 – Temperature and humidity sensor: a special device monitor will be applied from now on throughout all the following blocks and will send the data. If the shipping is going to be very long, this node would be replicated as many times as necessary to store the constant control of the quality factors.
6 – Cargo arrival notice: the shipping company marks the shipment as delivered in Madrid.
7 – Certificate of Origin: once the cargo has arrived, the certificate authority makes sure that all the set requirements were respected.
8 – Commercial distributor: our supermarket in Madrid makes the payment requested by the producer and marks it on the blockchain. In this block, the communication with the smart contract ends, and the payment is made.
Blockchain applications | a practical example
The image below shows how our blockchain example works. On the left side we see the participants and, on the right, the portion of the chain that each participant will have access to. We put in green all the accessible blocks and in gray, those that won’t be shared with the specific participant. The numbers would indicate which transaction is being carried out at any given moment.
Blockchain applications for companies
As we marked in the image, not all entities have access to every transaction, but only to the parties that matter to them. On the other hand, both the final distributor and the producer will have the entire chain available to check for anomalies within the process. For example, the financial institution would only have access to the nodes related to the payment, that is, the first and the last block but the transport company will only be able to see the intermediate nodes related to its function.
In short, the participants do not need to trust each other since the information would be decentralized, traceable, and secure. With this practical example for blockchain applications, it is much easier to imagine all the enormous advantages this technology can bring to companies in any sector.
At Tribalyte Technologies we have a team of Blockchain experts and R&D engineers dedicated to the development of decentralized applications (DApps) on Blockchain. We implement all kinds of blockchain solutions and, in addition, we are proud partners of the Alastria association.
After everything we’ve seen so far, are you looking for Blockchain experts to develop your project? You just found them.