How Blockchain Will Impact the Steel and Metal Industries
If you’ve been reading, watching, consuming the news lately, it’s likely you have heard of Bitcoin. If you have, then you might have heard the term “Blockchain” thrown around as well. However, if you have not heard of either Bitcoin OR Blockchain and you want to know how at least Blockchain might impact the steel and metal industry continue reading.
How Does Blockchain Function with Bitcoin
Blockchain allows cyptocurrencies like Bitcoin to function. Currently the majority of users on the internet function by pulling information from a website which in turn pulls it from a server. This is called a client server relationship. This means that if something detrimental happens to the server, the website can go down and all the data held within that server can’t be accessed. That singular central storage function will soon be outdated and insecure enough to drive businesses elsewhere.
For instance, Bitcoin has proven to be a supremely secure environment because of the structure of how the data is stored and verified. The data is stored across a network of computers whom all see the same strings of blocks or the blockchain as a whole as they are created. This is called a peer to peer network and the network of CPUs are individually called nodes. These nodes function independently so if a single node goes down the network can still function.
In order for blockchain to function it uses private and public keys which act as barriers to hacking and secure the data within the blocks in the blockchain. This allows the person sending the data to verify that A) they are in fact the owner and B) the recipient of the data is in fact the intended destination as they are given the private key to open it and receive it. That’s a very basic synopsis. There are many guides to how the networks function within Bitcoin and Blockchain. For a gentle intro into Blockchain by Antony Lewis click here.
Blockchain: How it will Impact the Metal and Steel Industry from Melt Source to End User
After you understand how Blockchain works you can begin to see how it might impact the metal and steel industries. Michlin Metals is an AS 9120 certified Woman Owned Small Business. That being said, one of our largest challenges is chain of custody. Chain of custody shows the pathway from metal that’s been melted at the source to the end user. Every step that’s taken is documented. Heat treating, grinding, cutting, all must be documented and proven to have occurred via a lengthy paperwork trail. The more links in a standard chain, the more likelihood that errors can take place.
How Blockchain Will Help Eliminate Human Error
Theoretically, the way that human error can be eliminated is through a vast array of nodes checking work that has been done on the block before, verifying that all previous steps have been completed and handled according to the codes and rules of the chain of events. Those events have been pre-established and coded into the framework to ensure that all steps are taken before moving the data onto the next block in the chain. There is always the chance of human error and it can’t be completely eliminated outright. However, if your core code is setup to eliminate erroneous data before it’s entered into the block the errors would be greatly diminished.
For instance, you can’t move onto block B without meeting all stipulations of block A. Assuming your programming is setup to verify certain facets of the documents or that certain specifications have been met, assuming they have, you can move onto step B. The beauty here is that the chain never breaks. Every step is recorded and if a person tries to break the chain and impart new/different/doctored data they have to have all the previous keys which is an impossibility. They could have their key for the single block they are working on but they could only undo their single transaction not the whole chain.
The infancy of this new type of data storage, manipulation and usage is so early on it’s truly hard to say exactly what and how the metal industry will be impacted but imagine if you could trace the material from end user to melt with 100% confidence that the metal is what it is leaving you zero doubt about it’s origin. The transference of paperwork regarding the necessary total amount would diminish substantially because it would travel through the chain and always be available at every step. As the additional value add processes are added onto the chain, they are verified by the nodes in the network, granted access to the block and then ultimately added to the chain proving they are legitimate. False test reports would be a thing of the past, wrong grinding certs would not be an issue as all data is confirmed before appending to the block and thus the integrity of the product is protected from melt source, to mill, to distributor to heat-treater then grinder and ultimately to the customer. Not to mention every time a truck hauls the material you can watch the movement via the updated chain which would be programmed to include all shipping documents so that verification along every step is maintained.
Traceability in the Metal Industry
Most end users need to know the origin of their material and they require MTRs (Material Test Reports). Blockchain has the ability to attach these documents in a secure and immutable fashion likes the which we know not currently. This traceability is paramount to customers who manufacture parts for government work. The labor hours required to maintain this traceability are immense and the amount of paperwork that ensues is not only detrimental to the organization it’s very environmentally unfriendly.
In the beginning it’s likely that the metals industry will lag far behind the rest of the world but for those of us that see the light, there’s a serious end game to consider. Who will be the first to provide services through blockchain? What services will be offered? How will the sources and their data remain secure? How will payments be made and will institutions be necessary like the are now? There are so many unanswered questions about how the impact will be felt across the industry. Look for more information to be shared in the coming posts.