Emperor’s New Blockchain: An overview of technology adoption within the maritime industry

Emperor’s New Blockchain: An overview of technology adoption within the maritime industry

Doina Bunduchi writes from Oslo, questioning the blind comments made by many that blockchain is a panacea for so many challenges facing shipping. Doina has recently completed an MSc in maritime management at Chalmers University of Technology.

Several players in the maritime industry are claiming that they use, or plan to use blockchain technology. Despite of the end users’ intention, blockchain application will always be limited to the technology design and architecture. Therefore, we need to question the validity of such statements and understand if the alleged use of blockchain is more than just an adoptation of a concept.

In the following, I would like to share what I have discovered after researching blockchain use cases within the maritime industry. Due to confidentiality of the matter, I cannot mention which companies I have investigated, nor the employees interviewed. However, that should have little importance for the understanding of the material presented here.

Blockchain is an innovation that resulted from a combination of old technologies and well-known theories applied in a new way to solve the double-spending problem without relying on a trusted third party to facilitate digital transactions.

Nevertheless, blockchain evangelists have proclaimed that the technology could be used “beyond cryptocurrency”, selling it as a panacea to the industry.

Blockchain implementation within the maritime industry is not what many might think of or expect. The technology is adopted for sending digital documents. The respondents interviewed claimed to use blockchain to transfer documents like certificates of origin, bill of lading, phytosanitary certificates, or any other important documents.

The benefits seen by the blockchain adopters are: “trust”, “optimisation”, “instant data access”, “secure transfer of documents, namely proof of ownership” “save time and courier money”, “automation of the paper-flow process, you can see when the documents were created, at what time”, “seamless coordination”, “blockchain offers transparency and a single source of truth” and the use of “smart contracts”.

First, I do not know what is behind these characterisations of the benefits, if it is more than words without knowledge of the substance of the matter. Secondly, it ought to be mentioned that they are deploying “private blockchain” or a half centralised, half decentralised solution (hereafter referred to as hybrid blockchain).

There are no differences between private blockchains and regular databases. A private blockchain is not a blockchain. Private blockchain, also called permissioned blockchain implies a third party or a consortium of organisations acting as a third party establishes the protocol’s rules, identifies and verifies the network participants and controls who can do what in the system based on signed contracts.

In that case, of course, everyone will have access to trusted and reliable data when the network is made up of dependable stakeholders and orchestrated by legal contracts. That is how trust is created in such situations, and not because of the blockchain deployment as it has been advocated.

Furthermore, the immutability facet comes down to what makes a network or database secure and what risks exist for that particular system being jeopardised. A private “blockchain” is not more secure than centralised or distributed databases. It does not imply that their data is reliable and cannot be tampered with.

Now, let us see what is a hybrid blockchain. Hybrid blockchain means that there is a trusted intermediary who receives the paper document in exchange of a hash called token (an alphanumeric identity) the blockchain’s user gets to transact (transfer) among a network of known, identified, verified and trusted stakeholders. Later, when the user needs the document’s information to interact and take actions in real-life business, they return the token to the trusted intermediary in the exchange of the original documents. In other words, on the blockchain is only the “stamp” of the document which has no relevance because data is kept off the blockchain system.

In simple terms, you can think of the hybrid blockchains as a game in which you pay a friend a fee and exchange your cake for digital coins to play a ninja game. As a matter of fact, that happens on hybrid blockchains, except that the “cake” is your data.

Finally smart contracts, nothing new and it is hardly smart (described for the first time by Nick Szabo in 1998). On a blockchain it is a script (predicative) that generalises the problem and trigger the transaction. However, this feature is not exclusively characteristic of the blockchain, likewise stored procedures can do in relational databases.

If you look at those blockchain use cases mentioned earlier, it doesn’t imply a double-spending problem. Furthermore, the benefits they are looking for by adopting blockchain could be easily attained with traditional databases. Why they want to adopt blockchain? It does not make sense to use blockchain if your primary scope is the automation of paper-flow process, transparency, smart contracts or any other applications which has been presented so far.

Although blockchain is subject to continuous improvements, the technology will always be the same tailor-made solution independent of whom is going to use it.

Much of the findings related to the use cases that I have been exploring are reminiscent of the weavers’ work in H. C. Andersen’s fairy tale, The Emperor’s New Clothes. The adopters of blockchain technology seem to have little knowledge of what they are using, or consciously adopting only the blockchain term and not much evidence of the technology itself.

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3 Comments

  1. Avatar
    Petitdidier
    December 5, 2019 at 2:39 am

    In my company (internal BCO freight forwarder) we need a lot of people
    -to verify all the documents concerning shipment and product (SRC , BL, …)
    -to organize and follow the full respect by the shipping lines or freight forwarder of the given instructions.
    -to obtain data about shipments (ATA, ATD …)
    It seems to me that the future for us could be withe the use of blockchain, to spare all these controls : being sure that what we asked to be done or what we are expecting for document is really transmietted and correct. And this mean saving time and a lot of money for controls.

  2. Avatar
    Karen Czachorowski
    December 5, 2019 at 5:27 pm

    There seems to be a confusion about what private and permissioned BC are. I completely agree with you that a private BC is really unnecessary and also, the high majority of BC “adoption” so far is not a real BC. However, there are new maturity levels in platforms and protocols that are permissioned to also remove the controlling entity that you mentioned – what makes this possible is a combination of implementation architecture and ledger. One example is Ethereum Quorum and the new Private Collections in HLF. I also agree that the hype has been nothing more then a rock in the path of exploring what can really be done with this technology, but the tech is maturing really fast and we haven’t seen all of it yet.

    1. Avatar
      Doina Bunduchi
      December 6, 2019 at 5:29 pm

      Regarding the “confusion”, please check the references below.

      You cannot agree with me because I did not say that “a private blockchain is really unnecessary”. I said that there are no differences between private “blockchain” and regular databases. Furthermore, I said that a private blockchain is not a blockchain.

      Something else I did not say, or mean to say is that the “hype has been nothing more than a rock in the path of exploring what can really be done with this technology”. We witnessed in 2009 what can be done with the technology.

      Finally, if it is hype, then why researchers, professors, and Ph.D. candidates like you don’t thoroughly research the technology and avoid to fuel the hype?

      References

      Czachorowski, K., Solesvik, M., & Kondratenko, Y. (2019). The Application of Blockchain Technology in the Maritime Industry. In V. Kharchenko, Y. Kondratenko, & J. Kacprzyk (Eds.), Green IT Engineering: Social, Business and Industrial Applications (pp. 561–577). https://doi.org/10.1007/978-3-030-00253-4_24

      Gausdal, A. H., Czachorowski, K. V., & Solesvik, M. Z. (2018). Applying Blockchain Technology: Evidence from Norwegian Companies. Sustainability, 10(6), 1985. https://doi.org/10.3390/su10061985
      https://www.mdpi.com/2071-1050/10/6/1985