Why Blockchain Matters
Here is how the ledger system works and what it means for the airlines industry
Blockchain became famous because of the cryptocurrency Bitcoin.
The use of investing in blockchain technology is expected to grow.
Spending is expected to reach more than $4 billion in 2020, which is still a nearly 58% increase over 2019, despite the coronavirus pandemic reducing estimates, according to the International Data Corporation, a market intelligence company.
And in the next three years the spending is projected to grow to about $14 billion.
Here’s how blockchain works and why it matters.
What is blockchain?
“Essentially, blockchain is a decentralized database that people crowdsource”, said Lisa Butters, General Manager of Honeywell’s GoDirect Trade. That business is an ecommerce marketplace for used airplane parts that relies on blockchain. Lisa described blockchain like a scoreboard at a sports game. “Everyone knows the score because everyone can see the score on the scoreboard,” Lisa said. “It’s the same exact thing with blockchain. Everyone knows the score at all times because everyone has a copy of the database.” Ultimately, that provides transparency.
It helps manufacture trust between two parties. “You can’t ever go back and change a record.” You can never delete a record, so it’s a technology that is highly secure and open source.
Real-world application: Used Airplane Parts
The used airplane parts industry is a $4 billion industry and less than 2% of that business is conducted online, Butters said. That presented an opportunity for ecommerce of the used parts.
“When you look at an industry that you feel is antiquated, what we really are trying to solve is to bring them into modern times,” Butters said.
GoDirect Trade is an online marketplace that allows sellers to list their parts online for a yearly subscription fee.
But how do you guarantee pedigree of those parts that can average prices in the five-digits? Enter: Blockchain.
Buyers can review the ledger and see the history of the part. That also helps address safety concerns for pieces critical to flying an airplane.
For new parts manufactured by Honeywell, the ledger will start fresh like a digital birth certificate.
Decades from now, every Honeywell part will have a record of the planes it has been in or repairs made to it.
The Future of Blockchain
The used airplane parts business is just one-way blockchain technology can be used.
Industries leveraging blockchain have barely scratched the surface, Butters said.
She pointed to key industries like the food and beverage industry. For example, the moment a piece of produce is picked to when it lands on a dinner table.
And the guaranteed security of transactions will revolutionize
“It’s a complete paradigm shift from the way we think about data,” Lisa said.