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View From the Board: Blockchain - turning hype to reality

Friday, February 2, 2018   (0 Comments)
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View From the Board

 

by Wong Chee Meng

 

 

Blockchain – turning hype to reality

Last Wednesday I read an interesting article by Vikram Khanna on Straits Times.The headline was “The hype and reality of blockchain”

In that article, Vikram said that “blockchain can eradicate world poverty. It can save the rainforest. Such are the magical properties admirers bestow on blockchain, the technology underlying bitcoin, which is its first application”.

He explained that “Currently, if you want to send money or anything else valuable over the Internet, you have to go through an intermediary to manage and verify the transaction, such as a bank or a money transfer service like Western Union, or a broker, all of whom deduct fat fees as commissions. These intermediaries act as institutions of trust, verifying that your money has been sent to another person, deducting it from your account and crediting it to the receiver's.With blockchain, peer-to-peer transactions are possible with no intermediary. For example, you can send bitcoin - a virtual currency that uses blockchain - to anybody without a bank being involved and (at least in theory) pay tiny commissions. Blockchain solves the risk of double-spending by logging every transaction on a time-stamped universal ledger automatically, without the need for an intermediary. By removing the need for an intermediary to verify transactions, blockchain opens up many services and exchanges to people at very low to zero cost. The implications are said to be potentially game-changing across a staggering range of industries and activities. For example, Stock transactions can be settled within seconds, securely and verifiably, without the need for brokers or cumbersome clearing and settlement systems. Valuables such as diamonds can be tracked - individual diamonds can be given unique identities which are put on the blockchain. They can then be monitored as they are sold and resold, which prevents fraud or theft. A company called Everledger is already doing this, and extending its service to other valuable items such as jewelery, fine art, watches and other luxury goods. There are countless other examples of how blockchain can, at least in theory, cut transaction costs, improve efficiencies and reduce fraud.”

However, Vikram went on to say that “There are also signs that blockchain technology is being adopted for its own sake, even though it does not solve the problem it purports to solve. In other words, it is being misused”.

Take the case of Kodak, which on Jan 31, will launch a scheme that will supposedly make life easier for the world's photographers. In partnership with a company called Wenn Digital, it will create a "photo-centric cryptocurrency" on the blockchain which it claims will "empower photographers and agencies to take greater control in image rights management".Kodak's new system, will create an immutable digital ledger for rights ownership for photographers. They upload their photos to the system, and are given the rights to license them. So every photo can be tracked and if somebody uses a photo, the photographer gets paid instantly. KodakOne will also trawl the Internet 24/7 to identify any unlicensed use of the images and then, according to its press release, "manage the post-licensing process" in order to reward photographers - although it does not specify how”.

The photographers will also be paid in KodakCoin (although Kodak will, of course, take a commission). They will be able to spend it on other (as yet unknown) items that can be bought by KodakCoin. How they will convert it into real money is not clear. Here is a classic example of the misuse of the blockchain. It is not the solution to the problem of matching buyers to sellers of photographs”.

So I thought about how blockchain can be useful to our air cargo industry? Can we find practical and useful applications of blockchain to harness its true benefits?

TIACA is the only organization that brings together shippers, forwarders, airlines, cargo terminal operators, etc.Imagine like-minded parties (shippers, forwarders, airlines, cargo terminal operators) can come together to operate the blockchain.“Smart contracts" can be executed between the parties.Cargo that passes from the shippers to the forwarders, export CTOs, Airlines, Import CTOs and the consignees on arrival could be tracked at every stage.

Shippers and forwarders received full track and track transparency on their shipments. Once receipt is confirmed, payments can be made from the forwarders to the airlines, the airlines to the CTOs, etc. without the need to generate invoices and verifications by a team of finance staff, etc.

The whole process would be more efficient, less costly and is a win-win for all involved.

If TIACA can lead this initiative successfully, it would be a game changer for the industry.I sincerely hope I can witness this happening one day.

Wong Chee Meng

SVP Cargo Services

SATS Limited



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