Blockchain provides mining accountability
Decentralized digital ledger offers map from mine to consumer Metal Tech News Weekly Edition – January 22, 2020
Last updated 6/27/2020 at 5:09am
Whether it is a necklace from Tiffany & Co., an Apple iPhone or a pre-ordered Tesla Cybertruck, many buyers want to know that the metals going into the products they are purchasing are sourced ethically and sustainably.
Metals pass through many hands on their way from mine to consumer, which can make it hard to ensure the source of the minerals. This adds time and cost and origins tend to become convoluted and even questionable.
As we evolve into the digital age, recording these transactions has become even more complex. That is, before the arrival of blockchain technology.
While blockchain has become a buzzword around the technology and finance circles over the past decade, very few outside of these sectors understand what this technology is, how it works and its potential for mining and other sectors.
The growth of global commerce and trade has created a network of disparate ledger systems, vulnerable to errors, fraud and misinterpretation.
Blockchain has the potential to eliminate these vulnerabilities with transparent transactions.
It was this technology's ability to keep an ongoing and virtually "unhackable" record of transactions that made Bitcoin a serious contender as a global digital currency. It did not take long for others to realize the power of this secure ledger, especially when it comes to tracing metals and other commodities from their source to the consumer.
Blockchain found its start with Bitcoin, a digital currency in which a record of transactions is maintained, and new units of currency are generated by the computational solution of mathematical problems.
Basically, Bitcoin mining is the programming of computers to do arbitrarily complicated calculations in a puzzle competition that gets harder as time goes on. Essentially, converting electricity into digital money.
This idea was introduced by Satoshi Nakamoto, a name presumed to be a pseudonym for the person or persons who developed Bitcoin, in the 2008 whitepaper, Bitcoin: A Peer to Peer Electronic Cash System.
Blockchain provided the answer to digital trust by recording important information in a public space and not allowing anyone to remove it. It was transparent, time-stamped and decentralized.
Over the past decade this digital ledger has developed into one of the biggest ground-breaking technologies, with potential to impact every industry from financial to manufacturing to educational institutions.
Entrepreneurs began to explore and invest in how blockchain could alter many different kinds of operations.
As an open, decentralized ledger that records transactions between two parties in a permanent way without needing third-party authentication, blockchain has created an extremely efficient process that could dramatically reduce the cost of transactions.
Entrepreneurs that understood the power of blockchain have invested heavily to see how it could impact supply lines, healthcare, insurance, transportation, voting, contract management and more.
Nearly 15 percent of financial institutions are currently using blockchain technology.
The potential for a secure system of agreement could become the immutable source of trust in all markets in the future. A promise would stay a promise.
Blockchain trade viability
Blockchain offers all parties involved in a business network a secure and synchronized record of transactions. The blockchain ledger records every sequence of a transaction from beginning to end. Whether it is hundreds of steps in a supply chain or a single online payment.
As each transaction occurs it is put into a block. Each block is connected to the one before and after it. Groups of transactions are linked, and a fingerprint of each block is added to the next, creating an irreversible chain. That is why blockchain is ideal for recording the mining, refining and distribution of some of the most valuable goods in the world.
It can trace a minerals path from the mine to the hands of the consumer with exceptional security and transparency.
While blockchain works with all types of transactions, there are three key features that make it uniquely capable of handling the requirements of regulated industries.
It is distributed, it is permissioned and it is secure.
Because the ledger is distributed, it works as a shared form of record keeping. Ensuring no one person or organization holds ownership of the system.
As a product cycles through its supply chain, everyone involved during the process is permissioned to have a copy of every record and piece of data. No transaction can be added to the chain without consensus across the participants.
This means not a single person can add to or alter the blockchain without it being permanently recorded, making it tamper resistant and highly secure, and eliminating the risk of fraud and error.
It cannot be deleted, not even by a system administrator.
In the case of an ore blockchain ledger, a record of high-resolution photos or material metrics can be followed along every touch point along its journey.
It can hold real time records of every payment transaction as well as shipment manifests, lode volume, quantities, ore grade, signatures, anything you can think of for verification and authenticity.
At the end of the buying cycle there is a complete auditable and indisputable record of information. Blockchain technology gives us the ability to transform industries of all kinds to become more streamlined and transparent, building a better relationship between company and customer.
Furthermore, monetary transactions or even things like contracts, deeds, records and other public and private agreements can implement blockchain to add security. It frees up capital flows, speeds processes, lowers transaction costs and most importantly provides trust.
Without blockchain we have the instability of today's supply chains and the uncertainty that comes with it, especially the consequences that follow irresponsible supply lines.
Minerals fuel our world, even more so than crude oil. They are our phones and laptops, our fridges and stoves, our cars and airplanes.
With so much revenue potential in metals, it almost need not be said the lengths with which some individuals and companies will go to make an extra buck.
A perfect example of the risks of supply lines and no-accountability with suppliers is the cobalt mines of the Congo.
Due largely to its use in the lithium-ion batteries that power electric vehicles, the global demand for cobalt has nearly tripled in the last five years and is estimated to at least double again this year.
Currently, Democratic Republic of Congo (DRC) supplies much of the world's cobalt.
DRC, however, is also infamous for its lack of human rights and the use of child labor in the cobalt mines there.
In December, the non-profit organization International Rights Advocates filed litigation claiming tech giants Apple, Google, Microsoft, Dell and Tesla are "knowingly benefiting from and aiding and abetting the cruel and brutal use of young children in Democratic Republic of Congo to mine cobalt."
Each of the companies had been asked whether child-mined cobalt was being used in their products. All the organizations acknowledged problems with the supply chain.
Blockchain, however, could help clear up these supply chain difficulties making it easier for these tech giants to ensure that the materials they need are sourced ethically and sustainably.
This ledger technology could also put countries such as DRC on notice that corporations and the public do not want child-mined cobalt in their EVs, computers, cordless tools and other lithium-ion powered devices.
Blockchain provides accountability.
This is just one of the many potential avenues this digital ledger technology offers. Several companies in America have had similar litigations regarding child labor in other fields – blockchain eliminates any uncertainties and disputes.
Blockchain may not be a simple technology but it provides a platform that can easily ensure the stability that is becoming ever more necessary in this growing technological world.