 Hi, I'm Jim Rice, Deputy Director here at the MIT Center for Transportation and Logistics, and I want to welcome you to our blockchain supply chain webinar. Thank you very much for taking your time to join us. I have with me my colleagues, Dr. Inma Borrela and my colleague, Ken Cottrell. They are part of the blockchain research team here at MIT. There's also a handful of other folks, in fact, my colleague over there, Connor, is part of that. We also have some guests who have joined us, Haiying, as with us as well. But today, it's just the three of us, and I might drag Connor on screen a little bit, to talk about blockchain and how it might be applied in the supply chain, and our particular interest here is to help you understand this so far very difficult subject to get a good sense of, and how it actually works and how it could possibly be useful in the supply chain. So, before we get started though, Christine, can I ask you to cut over to the first slide? Well, actually, we're going to use a device here that's called Slido. So I'm going to invite you to go to slido.com, and in that, you'll just enter the word blockchain in the box, and then click join. And this is going to allow us to conduct some polling, and also it's the vehicle by which you could submit questions to us, so that we could answer them. And that's really what we want to do today. We want to share some of our own understanding about blockchain, but we also want to find out what is it that you want to know. So that's going to be the vehicle that we're going to have you use. And so while you're doing that, there's a question. Is that question? Yes. Okay. So my colleague, Inma, has just put that question up. How much do you know about blockchain? So I'll talk a little bit about what our agenda is. And Christine, if you could go back to the slides. Thank you. So here's our plan is we're going to, I'll first talk about understanding what blockchain is, why there's this great excitement. I'm going to turn it over to Inma to talk about the applications in the supply chain. She and Ken will address the several really interesting applications. She'll talk about some of the challenges, and then I'll wrap up with the way forward. Now, we are not going to focus on technology. So we're not going to be spending time talking about all the things that confuse people about blockchain. At the end of our talk, time permitting, we'll spend some time explain that. But we think that that's really a diversion for what the real important aspect of this is, which is try to understand what blockchain is at its foundation and how it can be applied in the supply chain. Certainly technology plays a role, but it's something that I think takes people away from real core message. By the way, during the session, please use Slido to submit questions. We'll take those questions real time. We'll actually wait till somebody gets finished with what they're covering on each particular slide. But once we do that, then we'll, if we have questions and when I'm speaking in mobile, pop a question up and say, Jim, I think you need to answer this or we need to address that. And when she's speaking, I'll do the same for her. All right. So let's see here. All right. You've already done that. You've already joined. And let's go to the poll. Can you show the poll, Christine? And what we'll see when the poll data pops up as it's just done. Now, you'll see that the over half of you are telling us that you have some familiarity, a quarter of you know nothing at all. And I appreciate that candor. A few of you, very few, less than 10%. So you're very familiar with the concept, then you're an adopter. All right. As we see some of those numbers change, I'd invite everybody to try to participate and share that with us. But that gives us a general sense. It also tells us something that I think this is not inconsistent with what we see when we- Also shows us that no one wants to give this talk, Jim. Nobody wants. Yeah. That's right. For a good reason, perhaps. All right. So Christine, if you go over to the slides, I'll start talking a little bit about understanding blockchain. So let's start with the very basics and fundamentals. We've broken this out in three different segments, because it's important to look at this individually. It is a blockchain is a right once data structure. By that, we mean you write once. So you add data once, you cannot edit that data. Secondly, the blockchain stores the data chronologically. So in sequence of data of receipt. So it's not, it's very structured. And again, by time of receipt. And the data is collected into blocks. So one piece of data is added to a number of others, and it's created into what's called a block. And these are cryptographically chained together. Now, at the end of the talk, you can explain what that cryptographically means. But there's an added measure of security. And again, we can talk about it again. But it ends up being a growing series of blocks. And that's why it's called a blockchain. Now, importantly, this data structure that stores the data in blocks is used as a distributed digital ledger. And what we mean by that, the ledger is really a register of information. So it's really just a list of information that you've placed into that. It's digital in the sense that the data is actually available for you to access. That's different than someone taking an image or digitizing a photograph and making that so that you could look at it. This is such that the database you can actually pull the data out of. Now, it's distributed in the sense that it's shared. So many different parties will have access to that. It's replicated. So it's the same data that's been on each of the different ledgers. And then it's synchronized. Again, so everything is at the same time has the same data available. Now, the application of this blockchain as a distributed digital ledger gives its potential benefits. Now, it's important to understand that this all started as a component of crypto currencies, most of most familiarly with us is Bitcoin. But it served as one of the foundational components there. But keep in mind that in its application for cryptocurrency like Bitcoin, it was tracking one asset, one type of an asset. And the speed of the transactions was not critical. And so I think that's important as we look at this starting from 2008. The concept was put forth by an entity or an individual named Satoshi Nakamoto. We don't know who that really is. Could be a group of people. But he described the process that later became known as blockchain. And what we see now is a growing, well, as of 2016, a growing number of blockchain pilots in the supply chain that I think are really only getting started now. I mean, people have been thinking and talking about a lot of it. But just like yourself, over half of you are somewhat familiar. Companies really haven't grabbed onto being adopters. I'm looking at the poll and only 6% are telling us that you're familiar with the concept and are adopters. So question we need to answer, I think, is why all the excitement about this? We've seen excitement about past innovations that have scared people in and how these new innovations were going to solve every problem that might exist out there. But I would argue that there's some excitement for four different reasons. Because of the capability that we believe is inherent in a blockchain because the potential leverage that exists in using that. And because of the appealing philosophy that's underlying this. And of course, because of the hype. So the processing capability is important. We can, as we have come to understand blockchain, we can see this as providing potentially real-time access to data. That is nearly tamper-proof. We say nearly because so far, at least in the application of Bitcoin, it hasn't been tampered. But there is a possibility of some tampering, depending on how it's applied. I think we'll talk a little bit about that. We think that probably the big benefit is going to come from when blockchain is combined in use with other innovations and capabilities, such as being a data source for artificial intelligence. Being a data source to enact and enable the automation that might come from smart contracts. Or using it to pull data in from industrial Internet of Things sensors. But more importantly, we get all excited about this because the distributed consensus and open source and transparency in the community of this makes us think of companies like eBay and Amazon and Google. Because those companies use those same philosophies to create their business model. So one would then say, well, golly, we really need to use this because we're going to be able to have that kind of impact on our business. But I think that researchers have revealed something that's a little more clear. And it was Marco and Sienti and Karim Lakhani from HBS, who introduced this. Could you go to the, oh yeah, got this slide, good. Who basically say, look, blockchain is not a disruptive technology. It's a foundational technology. And so it's important for us to think of it that way. Think of it as a foundational technology. And so therefore it's important to think of blockchain really as being just one component that would be combined with many other different components that will create a system that might enable some disruption. Depending on how you apply that. So again, just to put some foundation around that. Now with that, I'm going to turn this over to Inma and she'll talk about, she will start talking and then transit it over to Ken, talk about the application of blockchain and supply chains. Thank you, Jim. So now thanks to Jim, we have a clear idea of what, more clear idea of what. More clear, yeah. More clear idea of what blockchain is that boils down to its bare basics. It's a digital ledger that is shared by a network and it serves to record it. So we believe this technology can have very interesting applications to supply chain management. Before starting to discuss those, I would like you to go to Slido again and answer to a new poll because we would like to know what is the level of adoption of blockchain in your company. So please start responding to the new poll and we will comment your responses in a little bit. If I could just interrupt and I want to say thank you for your kind comments, Josh. I know you're out there. All right, so before I start starting to discuss the applications of blockchain to supply chains, we'd like to talk a little bit about the application of blockchain to businesses. Could we switch to the slides please? Yeah, thank you. So there are three elements in any application of blockchain, right? We have a network of participants. We have some assets that have been exchanged and we have a ledger with transactions and other data are recorded. So in public blockchains, some of the ones that Jean was referring to earlier, like the Bitcoin blockchain, the network is open to anyone who wants to join. The assets are money or digital assets and the ledger is usually public so the information is available to anyone who wants to consult it. But of course, business have a different environment. So usually the networks in a business environment are exposed, is a limited, is formed by businesses and organizations that share transactions and information. The assets are not only money or digital assets but also physical assets. And if we want to introduce these in a blockchain, they need to be digitized, it's a challenge. And the ledger records relevant data in a business environment but confidentiality is really, really important. So that's why the concept of private or permissioned blockchains was created. Of these private or permissioned blockchains, function for a smaller private network where participants need to be authorized and they are more efficient than the public blockchains because of their smaller and the consensus mechanisms are different. For companies that are starting to implement blockchain, they have usually two options. They, some of them are developing their own blockchain using open source blockchain platforms such as Corda or Hyperledger who are actually offering some tools to facilitate the development of this technology by companies or they might be using blockchain as a service using the services of companies like Microsoft, SAP, IBM, Vechain just to mention some of them because there are many companies now offering blockchain as a service just like cloud services. So why we think blockchain can have interesting applications in supply chain management? Basically because this blockchain that is a ledger of information or ledger of records presents a single version of the truth. So a single version of the truth can have a lot of interest for a supply chain because several capabilities derived from that a blockchain can consolidate data, verify data and visualize data all across the supply chain. What do we mean by consolidate? Well, data consolidation, for example if all the partners involved in international trade transaction had access to the deal of leading and all the other documents that are needed to carry out this transaction that can speed up processing time in that specific application. Regarding verification, well verification of product characteristics can take less time and be more effective. If we have this single version of the truth this ledger of the information is available and this can be really important and have a great effect in the fight against counterfeit products. And regarding visualization if all the relevant information is recorded in a ledger that is available for the network, for the business network visualizing a supply chain real-time data real-time situation can lead to process improvement and also to quick identification of issues so actions can be taken before these issues become greater problems. So we would like you to give these three blockchain capabilities in mind before we start discussing the applications we would like to share with you today. Now we consider very promising. The first one is the application of blockchain to improve trustability systems and the second one is the application of blockchain to improve a streamlined international trade. Before going to the applications let's see your answer to the poll. So what is the level of adoption of blockchain in your company? Could we show you some? Thank you Christy. So one third of you just have known adoption of blockchain in your company at all so you haven't seen it yet or maybe you are considering it. Actually another third are thinking about a supply chain application but you haven't tried it yet and 18% engage in a proof of concept so that that's fantastic. We would love to hear about that because you want to share some comments in the in the questions through the questions section in a slide or we'll be happy to to learn more about what you're doing. Yeah if I can interrupt I would invite you and encourage you to really take a moment now to share with us what are the applications? As Emma pointed out that around just a little bit under 10% say you're piloting or using an application actually it's 15% looks like you're using or piloting so we'd like to know what that specific application is just send us a brief note in the questions and that'll be helpful. For those who are actually applying then also let us know what are some of the issues you're having we'll come back and ask you that later on but while we're at it just give us some questions you're in the mix of it we want to know what the questions are that you're experiencing the challenges that you're experiencing it's encouraging that 15% are the using or piloting yeah yeah I think that's good that's probably a little more than I would have expected right that's good. Fantastic so let's continue and now we'll start discussing the first application of blockchain to supply chains that is trustability so many people are saying this is one of the killer applications of blockchain and supply chains that still remains to be seen but we certainly think it's promising so why is it relevant? Well trustability is really important nowadays in our increasingly in our global supply chains increasingly complex because we first of all we're finding in the global market a big problem counterfeit and fraud for example in the food industry there's been studies that say that 10% of products in supermarket shelves have been adulterated that's huge amount of products and the food fraud industry or it's not even an industry a food fraud represents a market of 10 to 50 billion dollars per year that's that's the estimation so it's really a big big problem but counterfeit and fraud is not only happening in food industry it's also happening for example in the automotive industry where fake car parts are being marketed all around the world for example airbags or brake pads radiators and these fake parts can lead to safety hazards for the users that buy them and put them in their cars there's also health hazards associated to food for example we all remember the E. coli outbreak that happened one month ago here in the US and led to hundreds of cases of sick people and also a fatal case in California so it's a really serious a serious concern and we also have to take into account the tangible attributes that are very important for some in some of our industries for example the chance to trace conflict minerals that come from conflict areas as well like maybe they are used to finance violence this is really important it's something that can't be identified in the product itself but we need traceability and provenance to be able to get rid of these type of products in our supply chains so this is why traceability is important we need to improve it and we think blockchain might be an interesting tool to improve the traceability capabilities of companies but can I just make a suggestion here so on this particular application and this is I think something that would be worthwhile for everybody to do if you're looking at an application is to is to bring it right back to the specific capabilities that we mentioned I'm going to just jump in and go back to this so to get that traceability you really need to have the capability of consolidating that data right and that's one of the things that this that blockchain can do it also gives you the opportunity to visualize and see that in one particular place most importantly it offers the possibility of verification so when you are trying to trace a product you want to understand exactly where it's been well these three capabilities are pretty important to this particular application of traceability so when you think about traceability I would say or whatever your application is boil it down to what are the particular capabilities of blockchain that you're going to use or maybe it's a capability of some other technology or system that enables you to get that but I would don't focus on the traceability go back to what are the core components that are helping you get there thank you that's a really good point or you're just saying that so let's show let's share we would like to share some examples of companies and industries that are trying to apply blockchain to their supply chains but specifically to improve traceability so let's start talking about diamonds Diamonds are a 75 billion dollars industry and oh they're pretty cool we all like diamonds right so diamonds just start with being mined in a mine in one of the country producing diamond producing countries such as Australia Russia Congo Botswana South Africa those are some of the biggest producers the rough diamonds they're not the beautiful shaped ones just these rough stones are extracted from them they are traded then they are cut and polished they get to this the diamond we know and then it is ingrained in some type of tool and sold to a retailer so it's very interesting industry because it has a lot of value but it only has one processing step the cutting and polishing that's it that's the only transformation that the the original stone extracted from the mine suffers so it's should be relatively easy to trace and it's a good pilot project to try blockchain and to improve traceability so why is productivity important for this industry? well this industry faces two problems one upstream that's the black diamonds I'm sure you've heard about them these are diamonds that are come from public zones they're used to finance violence and well they market like governments and also industry would like to get rid of those and downstream there's there is another problem which are synthetic stones these are lab grown diamonds they look almost exactly like a diamond and they're really difficult to distinguish from a real one but their value they can be manufactured by some sense of authority so these two threats to the industry can be reduced by having good traceability systems so what are they doing right now? well they have the Kimberly process that is the process that seeks to take black diamonds out of the of the market but it's a really like paper based and cumbersome process nowadays and they also have like just paper based lab certifications for the authenticity of diamonds blockchain can create a historical ledger of every diamond from mine to finger so that's really powerful tool if it can be applied to this to the supply team because it can underpin the Kimberly process digitalizing all the data and making it easier and faster to verify all the documents that are needed one of the requisites and also they can reduce the synthetic stone fraud the application how do they do that? well they're lucky because each diamond can be uniquely identified they can add digital thumbprint can be created that is uniquely linked to a specific diamond they do this with technology that is already available in the industry such as a chain rate color 3D extractor digital points serial numbers so they do this they create this digital version of the physical diamond and then they can trace it forever from they can add all the information of provenance and then they can keep tracking the ownership of that diamond for years to come so it's a very interesting process and it's helping to provide complete visibility of the diamond from the origin until the latest owner and this is not only interesting for the industry but also for the insurance companies that are ensuring a diamond see a very interesting application blockchain here and we I just would like to finish by commenting that there are like two big industry initiatives one is called trust chain and the other one is tier ACR and they are competing to become the standard for the industry but they both know that the initiative of the blockchain for the diamond improving their own trustability has to be an industry wide initiative because to achieve trustability end to end all the partners or the Actors in the supply chain has to be involved so um now I will handle it too well before actually can we just talk about so on this slide I should realize until I just looked at this you have that little certificate there it reminds me that MIT has put all their the diplomas with them on the blockchain so we get a lot of people apply to our school and sometimes they they create their own diplomas from MIT so we can actually verify that the applicants who say they're from MIT we can actually verify their actual diploma by going on the blockchain in a small little application yeah worth noting worth noting yes all right so do you want to skip the fish you know where we can come back to the fish yeah I think I'm I'm gonna skip the fish okay so uh because I ran out of time it's me mentioning that this is another traceability application and it's to trace sustainably sourced fish it's really interesting and we can send you the the reference later or we may we'll have some time at the end we'll do it sometime we can just go back we can go back yeah okay all right you're up Ken something that we all love chocolates so here's a very um simple and I stress simple a representation of the cocoa supply chain it starts with the small holder farmer who grows the beans and then sells the beans to a buyer that could be a farmer co-op they could actually be just an independent buyer the beans are then fermented and dried and the finished beans are then eventually they could go via a marketplace for example but eventually they're bought by a manufacturer who turns them into a product such as chocolate so I stress it's a very very simple representation the actual supply chain's a lot more complicated well let's go back to the the small holder at the beginning of the supply chain so what is the problem that warrants a blockchain type solution well it really is that when the small holder farmer sells the green beans let's say to a co-op or an independent buyer the record of that transaction is very unclear it's often paper the paper can get changed the paper can get lost and there's a lot of corruption in this supply chain anyway so what normally happens is that the small holder farmer is undersold so the you know 100 beans that they sell to the buyer could end up being 80 beans when the small holder eventually gets paid and there's because the small holder lacks a verifiable reliable record of the transaction the buyer the seller has no recourse and that's a major major problem in the supply chain also because the small holder hands off the beans to the buyer and has no further involvement in the supply chain then it means that the small holder has actually no visibility at all into the supply chain so that's another issue a company called Ag Unity which is an Australian software company has come up with a very very simple solution which has achieved some pretty interesting results so they've actually applied it in New Guinea and they're applying it in Kenya and several other countries at the moment so essentially what happens is that the the small holder farmer is issued with a smartphone and the smartphone already has the app embedded on it and when the small holder wants to sell the green beans and the small holder alerts the buyer let's say it's a former co-op that the green beans are ready for sale the former co-op sends a representative and then the farmer and the representative agree on terms for the transaction and then the farmer scans a co a qa code on the on the co-ops smartphone and representative smartphone does the same for the farmer and so they both have a record of the transaction embedded on their respective smartphones and that data is now stored on a blockchain it's encrypted it's very difficult to change and so now the farmer has what has been missing for so many years which is a verifiable reliable record of the transaction and so in addition to that of course they have a system where they can keep the farmer updated as to the progress of the cougar beans because when the co-op takes delivery of the beans and for example then transfers the beans to the fermentation process they alert the farmer via the smartphone that that's happened and the farmer can actually track the progress of those beans right through the fermentation process right to the stage where they're ready for sale he's alerted when the sale has been completed and the farmer's money is available so the farmer now has a much better record of the transaction knows when he or she is going to get paid and there's also now has some visibility into the supply chain it's a very very simple change but one that's had huge implications for the for the small holder and also the supply chain according to our unity the pilot joined the pilot in certainly in New Guinea the small holder's revenue was increased by threefold and they're now able to invest that money in materials and tools to improve their yields which will of course make the operation more profitable and then that will build from there so as you can see it's a very specific supply chain blockchain application it doesn't use a full blockchain solution it only uses components of the blockchain which I think as Jim has mentioned is going to be a theme that we will go back to time and time again in this talk but I think it's a great example of where blockchain can actually make a big difference so Ken if I just add to that I agree with you and I think that it's worth pointing out in this particular application the what really occurred here was using the verification aspect of blockchain because they had a paper process and the numbers that they put on the paper got changed by the co-op but by simply using a phone and then using a blockchain to document how many beans the farmer actually gave to the co-op they were able to actually verify how much they should get paid for and that wasn't happening before now that's a very simple application but what it's enabled is a lot of exciting things as you point out the revenue went up because they're getting paid for what they actually produced and sold and then some of them deployed those resources to forward integrate and to actually get into the cleaning and the next stage of the process so a small little change enabled a bigger one and I think that's the story we're going to start hearing about but we need to focus on the very simple application of the blockchain in our world and I think that's a great example yeah I mean I think another interesting sort of byproduct of this is that the farmer owns the data so the the ag unity system made a decision early on the farmer should be the data owner so the farmer has a public key and a private key and the farmer can give permission for other parties to share that data which means that in the co-op the farmer can authorize other farmers in the co-op to share that data which gives the co-op more leverage but interestingly it also means that the co-op becomes a bigger player in the supply chain because the farmers can share resources because they have a record as to who's got what they know what kind of resources people are using they know who is producing the beans and they know that the record that they've got is immutable and so that is encouraging them to share resources which is actually consolidating the co-op's position in the supply chain so it we haven't got time to go into the full benefits but Jim's absolutely right and I think the other point to make Jim which is very important and this is another point that we've kind of stressed time and time again and that is that the actual blockchain itself is not the disruptor the blockchain is the enabler and so the disruptions that come later on are almost a byproduct of the blockchain application and that's an important point to stress I think yeah and I think that's what all organizations need to be thinking about it that way as opposed to how's it going to disrupt our industry it might change the process and then when you put that together with a number of other capabilities whether it's new data from IoT devices or whether it's using AI to actually exercise that data or analyze that data that's where the big change is going to come it's going to be a one helper maybe to add to that I think that's a really important point and also in the case of diamonds and I think in this case too it's not that blockchain invented the process the process is there it's just enabling more transparency and more security it's just a streamline in the process is improving them the process is where they're before now we have another applicator we have time for this yeah we have time yeah this is important because there's a thing that most of the folks will probably have a I think a little bit closer connection I think a lot of them have probably heard of this but you're probably ultimately familiar with the the problems with trade documentation that based on on a paper trail essentially which is unwieldy it's it's prone to fraud it's very very slow and because of that there are lots of potential to cut costs there have been a lot of proofs of concepts projects in the past one to two years in this area to try and use blockchain to automate this process with mixed results the one we're going to focus on today is very new I think it was announced about maybe a week and a half ago it involves the UK Bank HSBC the Dutch Bank ING and the agricultural giant Cargill and it there's a transaction that involved the shipment of soybeans from Argentina to Malaysia the the the participants claim it's the world's first commercially viable trade transaction using blockchain that may or may not be true but I think what is interesting is that they used a single blockchain platform to transact the the information and the the platform they used is a coder platform it's quite an interesting platform I would encourage you to go on their website and just fish around and see what what they're doing but it's it's an open source platform that's been developed by a consortium of banks it basically is a way to record the state of a contract or agreement between individuals or organizations it's not a pure blockchain solution as such in fact I think you'll find on the website they they they call themselves or they call the solution a blockchain inspired solution so it takes elements of blockchain for this particular problem and again that that's a big current theme that we'll come back to so by using the blockchain they were able to use digital information as opposed to paper-based information which meant that they could also make the processes which meant that they could cut down the time it takes to actually process the documentation in this case it was a letter of credit the letter of credit normally takes about five to ten days to reconcile all the various pieces of information they did that in 24 hours and as supply chain professionals I'm sure you're well aware of the kind of implications you know for example if you could cut down the cycle time so much it's possible that you might be able to cut down inventory so there's lots of other connotations that come out of that achievement I think HSBC now have announced that they're now developing other applications so I think of all the proofs of concept and pilots out there this one it seems to us seems to be one of the most interesting could over the next year go into a live situation so it's worth keeping an eye on so that's another I think good example that illustrates how blockchain can tackle a very specific problem but without using the pure kind of blockchain solutions that everybody's describing and as Jim quite rightly said it's important to think not to get too focused on what actually a blockchain is comprised of I think it's more important to focus on on what the solution or what the problem is that it can tackle and what elements of the blockchain can be brought to there to solve that problem I think we have another should we go to another poll we have another poll we would like to hear from you and now the question is which are your respective benefits when using blockchain because of course if you're listening to us for one hour because you're interested in blockchain technology and maybe applying it at some point in your company while the folks who are responding I just wanted to say to Eddie asked a question whether we make the slides available we will I think very simply we can distribute those directly to our partners in our weekly supply chain exchange note that comes out under my name but actually Christine does all the work so thank you Christine and but if you want to get it sooner than next week please send an email to any one of us at the last slide you'll see our email addresses of course you know how to get us through the website the other thing I just want to say thank you to Lawrence and Lawrence and Arvin for describing or giving us a little brief information about your application and then Kevin gave us a good interesting example of the honey adulteration oh yeah and I thought that was a great example very consistent with the the issue of fish fraud and then just verifying the providence for diamonds okay what do we got thanks to Josh for saying he likes the presentation that's encouraging so uh the check's in the mail to Josh so I don't know you want to go through the poll the answers in the poll or you want to discuss the challenges first let's go to challenges yeah so then we end with we'll have a little more time yeah a little more time for people to respond there so um you're gonna still respond to the poll but uh now before um discussing the benefits we would like to talk about the challenges so uh we think blockchain technology is promising for supply chain applications we showed some examples there are many more but of course there are many challenges too and that's why it's hard right and that's why most people are still in the pilot phase or just thinking about the application and not like not so many are using it in the in a daily basis in their uh processes so uh we try to summarize in six uh big dots or uh the the challenges associated to to blockchain technology and its application to to businesses and supply chains there are more of course and we are open to discuss them we just wanted to give you a clear more clear idea what we think are the main challenges nowadays for blockchain adoption so my colleagues sorry sorry I would like to make it this more conversational not just like me discussing every challenge but maybe each one of us can be commenting uh one of the we love hearing your voice in there maybe thank you Ken I can start with the first one but please just jump in actually I just think it may be Jim Jim gave us a very very interesting definition of the difference between digitization and digitization yes yeah maybe worth just mentioning that you sure so we right now there's people in our world are freely interchanging the use of digitization and digitalization I'm informed by my colleague Dr. Jeani Ross over at our Center for Information Systems Research who has explained that from their perspective digitalization is different than digitization digitization imagine this imagine you have a bill of lading and you want to make that available to somebody well you can send it by courier right put it printed out hand it to a courier courier delivers it alternatively you can take a photograph of it or you can scan it and you can electronically distribute that to them and you can even archive it someplace that information is visible that's different than digitalization digitalization would be if you take the data off of that bill of lading and then make that available electronically to a user the distinction is that if I sent the bill of lading to the next party in the chain he or she can look at it and say I have verification but he or she cannot take the data off of that they can't actually say well how many units are on that what's the weight of that particular conveyance and then potentially compare that with the data digitalized meaning the actual data components are available in the case of blockchain that's being made available that provides a possibility to do a lot of things you can actually take the data and do something with it as opposed to saying well I have an image of it now I have to process that visually and then take that and actually enter the data so that's one of the distinctions between digitization and digitalization at least the way I'm thinking about it again informed by my colleague Jean Ross and what that also means is that some of the challenges exist what we had a question from I was in Priscilla was Amish what's the difference between current tech and blockchain and well this is one of the things that's the same at the very base of the blockchain somebody has to enter that data now if it comes from a sensor you don't have human intervention there so there's no possibility of a human mistake but a lot of data is still entered by hand and when it gets into the blockchain you still have that issue of well is that the accurate data now that the what happens is a blockchain unlike other databases once it's in there it's not going to change right as I remember what I said it's right only no editing so that's one of the one of the issues that human beings can make mistakes or that can be somebody who purposely puts the wrong data in there in the very very first part I would like to add something I'm because these two are here together because we're facing in supply chains and the application of blockchain to supply chains we're facing the challenge of translating the physical world to a digital world and that's where digitization is important because we need to create a a digital version or a digital image or a fee of a physical good and that's in that part is important like the example of with the diamonds how they were able to create a digital thumbprint of the physical diamond and then introduce it in the blockchain so that's a big challenges and challenging to supply chains and that leads to these threats or yeah problems of possible human errors human like mischief people trying to introduce Ken you want to talk a little bit about governance think about what we learned from our event last October yeah I mean the governance really has become a bit of an issue because we've got now these sort of private blockchains because as soon as you create something that's private then it means that you're automatically thinking about controlling who has access to the information so the governance system has to address that issue how do you actually control who has access to what in fact you know blockchain purists would say that that means it's not a blockchain because essentially you're you're you're not making the the data public and so this is a huge issue and one I think that was still working through there are lots and lots of different governance models and we don't have time to go into them here but the basic point is that governance essentially means how you control information and so you have to figure out a mechanism that is compatible with the aims with the and the solution that you're trying to develop and is compatible with all of the users involved in the community and it's it's actually quite a major issue data ownership is an interesting one that came up actually in several of the proofs of concept on the international trade front where you had you know several parties with different systems and there's lots of data being interchanged and they couldn't really figure out who should own what data and that is also a major issue and as you can imagine when a blockchain gets pretty big and you get a big mix of users that can become a pretty major issue so complexity do you want to tackle complexity in that? Sure yeah that's an easy one the blockchain environment right now even the concept is complex because there's so many different understandings of it blockchain digital ledger technology there's just a mess out there there's not a lot of clarity there's a lot of standards in the way we define things but also in the way that these initiatives are being implemented so people in the same industry are implementing blockchain initiatives with the same goal but with very different technologies and they are not speaking to each other so we're in a moment of of trial and error of people like exploring trying to understand what blockchain means what are the capabilities associated to it how can they apply to their companies but we have to start to like clear this mess and have some some more straightforward definitions for each one of the concepts associated to blockchain technology and also it's interesting how some industries are trying to create some standards to implement blockchain in a wider well there's also there's a handful of different initiatives one of them is called BITA the Blockchain and Transportation Alliance there's a lot of companies that have joined in that and they're working together to develop some protocols some standards they expect this to be useful in a number of years time so not tomorrow not next week not next month but at some point in the future but I I applaud that initiative because they are recognizing that this may have some impact on the industry and they want to get ahead of it so the ecosystem challenges is a very real one and some in fact some people say it's it's one of the most difficult challenges to to address in that you know the blockchain is supposed to be a system that could be scaled when you have a lot of different types of users in the blockchain community you need to align the various objectives you need to align them in how they're going to use the the blockchain you need to align them and how they're going to agree to the governance structure so there's there's lots of issues there that need to be aligned on and creating that ecosystem is actually a major task so that is also a work in progress interoperability is that something yeah so since different companies are implementing different systems interoperability might be an issue there are different startups working in in solutions for blockchains to talk to each other and also for blockchains to talk to the current systems databases and that the technology is already implemented in the company so that's that's a really important area to be further explored but there's there's a lot of advances things are like coming up every day so it's a very lively area and also it's important to take a look to the transaction cost and the speed of the solutions that are being chosen to be to solve to be implemented in to solve different problems in the supply chain and the legal obstacles there again I think there is some progress we make of this area but essentially you know smart contract is essentially code that's all it is and it's it's just a way of executing a contract electronically but that has all sorts of legal implications and so if there are different legal systems that have different ways of acknowledging that system then that creates lots of tension between particularly in the supply chain which but you know you know by definition the supply chain industry is an international industry so it means we're having to try to reconcile different legal jurisdictions when we're using smart contracts there's a lot of work going on to do that and in fact there's work even domestically in the US I think Arizona for example is a state that's quite forward-looking in this area and is has passed legislation recently that is sort of blockchain friendly but again it's some it's an obstacle that's worth keeping in mind when when you're looking at these at the technology so what I'd like to do is do a quick process check we have about six minutes left and there are a few questions but I'd like to offer you the opportunity to tell us what technology questions do you have if any we haven't received any I we got a couple of I think we want to answer somebody asked about how you can get the supply chain exchange update which we do every other week and I just invite you to send an email to me J R I C E at M I T dot E D U and you'll be able to we'll put you on the distribution list if you're not on it already but there was a question that our I think Amish asked and that question was what do you do when you enter wrong data that data gets in there and I think that's one of the issues when that happens there's not a real clear way to unwind it Connor is there you can't unwind it once the data is in there right there's a couple ways you can overwrite it but you have to get all parties to agree to overwrite later if they like the outcome yeah so it basically means getting everybody who has this distributed ledger to agree to change and that's one of the reasons why it has this immutability capability which is there are so many people that have would presumably have access to the data and have this be very difficult to change yeah but it's a big problem like pharmaceuticals for example because you know the regulations can change so you know what do you do to correct that so yeah it's a really good question and I think there was a I think it was Connor it was Accenture if I remember rightly a proposed software that could actually overwrite or correct an error in blockchain but it doesn't seem to have gone very far but I'm not quite sure where they're going with that solution but there's not really anything out there is there in general if you can correct it or make changes to it it defeats the purpose exactly exactly so making it so people can tamper with this and defeats the tamper proof right purpose right yeah thank you Connor Mikowsky technology yeah let's see here oh so I want to just take just a moment and address the question that Amish asked was really what's the difference between the current and the current system in blockchain and I think that we could spend a lot of time on that I think we try to highlight some of those what I would say is that the current system in many cases it's paper words digitized meaning the data is not available although it might be shared electronically the systems are generally not integrated some of them might be but they're not always automated then the data is not consolidated when I think about it it's really all about the data it's about making data available consolidating that data making sure that data is the data that was originally entered into that particular of the register and making that data available so it's really all about the data so that's a rough characterization between the current and the future now the question comes back to what we suggested what can you do with that capability eras thank you for your your question but eras asked us to highlight the you know what the relationship between blockchain and smart contracts is well look smart contracts if you read newspapers today it would make you think that you have to have a blockchain to have a smart contract that's just not the case there are many smart contracts that are already in in use but what the blockchain can possibly do is consolidate the data and allow that automation from one database as opposed to multiple databases that otherwise are it's how smart contracts are being used today any other counter thoughts about that? I mean smart contract is it's again in many ways the tim is misleading but it's essentially code which which you provide an input some sort of a you know this has been delivered so then the code interprets that and says okay it's been delivered and then it refers to some predetermined rules okay it has to be delivered at a certain temperature at a certain time if it complies with those rules okay it's validated that's trigger a response and response could be a payment it's just a very simple mechanism for basically transacting a milestone essentially yeah so Josh asked the question how do you start and that allows us to just go to our great question our last slide and what we would suggest is that you become familiar with blockchain note that we're not saying hey two feet in you've got to create a blockchain team you have to invest lots of resources it's not what we're saying really try to understand the basics you know keep up with the content this this landscape that continues to change understand what your competitors are doing what your peers are doing and consider joining an industry initiative we're not saying you have to do that consider it and there's a resource that it you know it takes resource time to actually do that and then consider a use case but I would think that we would agree that we would say be clear about what your objective is don't do it do it just for the sake of having a blockchain and one of the things that we think could be helpful would be comparing your as is your current process with the the after process or the future process that will help you to identify what would be different with the blockchain or what you believe would be different and therefore then try to infer from that what if you know is it going to be faster is it going to be lower cost will it require will it change will it give you some new capability that you don't have before again come go back to the original capabilities all right which we talked about are being able to to visualize to verify and consolidate the data right and then decide is blockchain what you need or do you need a mix of things or do you need something that's like blockchain you know if you like the idea of a distributed ledger well distributed ledgers have been around for a long time blockchain is just a type of a distributed ledger so with that I think we are right on the money so um I oh let me see here is there anything anything else that popped up either we want it that we we don't have time to drag it would you do anything on the quit sir yes and show do you want to talk quickly about the the results of this poll do you want to go through the poll or through the questions let's go with the poll because it's 12 o'clock now so we have to so interesting response most people clearly support greater transparency totally agree yeah that's interesting that you know the avoiding intermediaries which I think one of the from the outset many would say oh well you know if you're boxing you will need other parties well I think we we've we've seen this happen a number of times disintermediation isn't all that it's cracked up to be and so it sounds like there's some skepticism or at least not right thinking that that's the the you know primary benefit the results of the poll I think is very much in line of what we said in the talk so so it means that you you guys could have given the talk after all well then we have a little beam for news all right I think with that we need to close up before we close I want to say thank you to the folks who actually made this happen and Arthur stepped away but Arthur Brown but also but Christine Adams who's been the the producer and director and so do you want to come on camera and say say hi to folks she's the magic behind the screen all right so she's making it happen so and then recognize my colleague Connor say hi and come on over here say hi all right hey guys I'm Connor and I'll say up there so hey guys if you guys want to stick around for five minutes afterwards not you guys but you guys on the presentation here I'll answer some of the questions on Slido I'll reply to them for you guys so maybe over the next five 10 minutes post your questions I'll answer them the best that I can great cool all right great this hi it's high yeah hope you enjoyed it all right thank you so I think we can declare victory and we're done all right thank you very much