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Monday, August 15, 2022

Is Cryptocurrency the next supply chain finance tool?

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Cryptocurrency is crossing the chasm to the mainstream. For evidence, look no further than the Crypto.com Arena, the new name of the Staple Center, with naming rights clocking in at a mere $700 million (dry humor intended). From the entry of Bitcoin as a dark web currency for conducting illicit activities, we have witnessed the explosive growth of Cryptocurrency through its ability to service legal, financial and business operations. What will its impact be on supply chain and why does it matter? Is the early hype living up to expectations? It’s our intent to provide a few use cases that supply chain leaders can use to capitalize on Cryptocurrency for supply chain finance operations. We’ll start with a primer to understand how blockchain, another hyped technology, supports Cryptocurrency commerce.


Blockchain enables Cryptocurrencies for commerce

While our focus is to explore Cryptocurrency for supply chain finance, it’s critical to understand how the underlying blockchain plays a role in enabling Cryptocurrency commerce. A blockchain is a digital network deployed globally with a multitude of nodes, not unlike a supply network ecosystem. These nodes process transactions through a variety of mechanisms and after completion, the transaction will be listed on the blockchain.

Transactions cannot be altered (a property defined as immutability). Much of the benefit derived from blockchain is that it enables organizations to execute business transactions. Blockchain is used as the arbiter to determine if the conditions of the transaction have been successfully fulfilled upon completion of given conditions. This is a property known as disintermediation and will be explored further in the topic describing use cases.

Mainstream blockchain technologies

For the purposes of this discussion, let’s review two blockchain technologies: Bitcoin and Ethereum. People are likely familiar with Bitcoin and Ethereum but there are many others that can deliver the value organizations are seeking. The Bitcoin network was the first blockchain network and has the largest market cap at an estimate $1.09 trillion. Unfortunately, Bitcoin has limited capabilities to support the applications and use cases to support supply chain requirements; but upgrades are in the works that may support these in the future.



By ·

Cryptocurrency is crossing the chasm to the mainstream. For evidence, look no further than the Crypto.com Arena, the new name of the Staple Center, with naming rights clocking in at a mere $700 million (dry humor intended). From the entry of Bitcoin as a dark web currency for conducting illicit activities, we have witnessed the explosive growth of Cryptocurrency through its ability to service legal, financial and business operations. What will its impact be on supply chain and why does it matter? Is the early hype living up to expectations? It’s our intent to provide a few use cases that supply chain leaders can use to capitalize on Cryptocurrency for supply chain finance operations. We’ll start with a primer to understand how blockchain, another hyped technology, supports Cryptocurrency commerce.

Blockchain enables Cryptocurrencies for commerce

While our focus is to explore Cryptocurrency for supply chain finance, it’s critical to understand how the underlying blockchain plays a role in enabling Cryptocurrency commerce. A blockchain is a digital network deployed globally with a multitude of nodes, not unlike a supply network ecosystem. These nodes process transactions through a variety of mechanisms and after completion, the transaction will be listed on the blockchain.

Transactions cannot be altered (a property defined as immutability). Much of the benefit derived from blockchain is that it enables organizations to execute business transactions. Blockchain is used as the arbiter to determine if the conditions of the transaction have been successfully fulfilled upon completion of given conditions. This is a property known as disintermediation and will be explored further in the topic describing use cases.

Mainstream blockchain technologies

For the purposes of this discussion, let’s review two blockchain technologies: Bitcoin and Ethereum. People are likely familiar with Bitcoin and Ethereum but there are many others that can deliver the value organizations are seeking. The Bitcoin network was the first blockchain network and has the largest market cap at an estimate $1.09 trillion. Unfortunately, Bitcoin has limited capabilities to support the applications and use cases to support supply chain requirements; but upgrades are in the works that may support these in the future.

 








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Article Topics

Blockchain &middot

Cryptocurrency &middot

Finance &middot
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