But that leaves many still wondering what blockchain is or how it works.
But before we get there, a little history. The first blockchain database was created for bitcoin. A peer-to-peer electronic cash system developed by Sakoshi Nakamoto (a moniker for an as yet anonymous individual or individuals), bitcoin, like other cryptocurrencies, is vulnerable to double-spending, in which users could spend bitcoins, delete records of the transaction, and then spend the same bitcoins over again. To solve this problem, Nakamoto proposed a public, distributed ledger that would be difficult to alter once transactions had been verified — the blockchain.
How does this work? Well, stick with me, because it can get a bit technical.
As envisioned by Nakamoto, a blockchain ledger is decentralized with transactions recorded across many computers using a peer-to-peer network. This helps on a couple of fronts.
First, using a peer-to-peer network means distributing computing power and data storage over a wide network, thus letting many computers share the load. In theory, anyone with a computer and an Internet connection can participate. Second, the record stored in the blockchain cannot be changed without altering the entire blockchain and doing so requires at least 51 percent of the network to agree to the change. The peer-to-peer network autonomously manages the blockchain database and timestamps transactions.
As the name indicates, a blockchain comprises a series of data blocks, each linked to the previous data block by a series of numbers and letters that represent all the text that comes before it, known as cryptographic hash. Any alteration of the information of the data block will not match the cryptographic hash. That makes unauthorized alteration of a single block of data difficult. The benefit is that because all computers that registered the transaction have a record of the nearly unique hash sequence the database of transactions is resistant to fraud or manipulation.
For railroads, and freight carriers in general, blockchain technology offers some enticing advantages. First and foremost, fast and accurate record keeping where everyone involved in the transaction has the same information generated from a single source. According to its website, BiTA officials say the technology can free up capital, reduce transaction costs, expedite processing, and increase security with fewer chances for error.
Hard as it is may be to believe, certain international intermodal shipments are still governed by paper documents that need to be mailed between shipping companies and presented by truckers to intermodal ramp managers before making final deliveries. To make matters worse, mistakes in those types of documents often have to be corrected at origin and re-sent says Trains Technology Editor Steve Sweeney.
The current system is also open to corruption and abuse, for instance, anywhere bribes can be made to distribute cargo without complete paperwork or fulfilled contract terms, such as a letter of credit from a local bank.
Blockchain shipping documents would permit shippers, railroads, truckers, airlines, banks, and customs officials to read and understand the extent and context of a transaction quickly and make preparations or corrections before the cargo ever arrives at its destination.
Shipping documents are only a beginning for blockchain’s potential in railroading. With radio frequency tracking devices — or future variations — every move a shipment takes on a railroad, from loading to local switching, yard switching, long-distance hauling, and delivery could be recorded as separate transactions or steps in a transaction, Sweeney says. He says this permanent record could inform the railroad and shippers about crew handling, weather disturbances, equipment performance, and locomotive reliability. The same goes for maintenance-of-way record keeping and locomotive and freight car inspections — with every ballast tamping and turn-of-a-wrench digitized and recorded for posterity.
Blockchain remains an emerging technology and implementing the technology even at just the railroad level would require industry-wide reformation replete with standardization reaching deep into company operations.
“People in the blockchain space don’t know a … thing about supply chain, and people in the supply chain don’t know a … thing about blockchain,” said Redwood Logistics CIO Eric Rempel at Distributed 2018 this past July. “There is so much intellectual property on both sides that has yet to mesh. We’re still embryonic here.”
BNSF Railway and the blockchain alliance did not respond to requests for comment. A CN representative declined to comment.
