Sunday, 18 October 2015

Electronic bill of lading on blockchain

The first and most famous application of the blockchain technology is bitcoin. But the real innovation lies in its underlying technology and a number of proposals and trials have been made on its application in the past few years. I personally think that one of the most promising areas of application is trade in goods. 
Bills of lading, which form the backbone of trade in goods, have been the subject of a number of attempts for digitization since 1986. But they seem to have yielded only a limited success, with paper bills of lading still occupying a mainstream status. The only means to electronically emulate the function of bills of lading as a document of title is to effect an online registration. It, however, limits the possibility of the use of electronic bills of lading to trading among members of a registry. This limitation encumbers the spread of electronic bill of lading since trading often has to involve a number of parties such as consignors, banks, carriers, and consignees. 
With the advent of the blockchain technology, I think a breakthrough is finally on the horizon. A delivery order issued by the carrier may be registered on a blockchain and may be transferred to the seller and then to the subsequent buyers on the blockchain. The algorism of the blockchain ensures singularity, a function essential as documents of title. It does not rest on any memberships but allows everyone to take part in transactions. While putting sensitive trade-related information on blockchain may give rise to concern, it could be overcome by putting the hash values of such information instead. 

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