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Boston 12/19/2023
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This Life is a Chain
By Frank Pagano
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What blockchain does really well is create efficiency and transparency in our supply chains and production chains, or as they say in English, in the supply chain.
The following example is taken from a true story, as they say in the movies. The ship with the cargo of precious stones and metals, for next year's jewelry collection, arrives in Rotterdam, directly from the exclusive supplier's plant in Africa. The cargo is checked within hours by port officials, thanks to a series of sensors and cameras. Finally, the same people check the travel documentation. Green light. The smart contract linked to the transaction goes into execution and the transaction between supplier and chain is settled, costing a few cents (the famous 'gas fees'). Both, brand and supplier, receive instant confirmation of payment in crypto, from one wallet to the other. The treasury of both converts the crypto into local currency, again for pennies and instantly, to minimize volatility in their foreign or 'other' currency position. The shipment is ready to leave for Switzerland, sometimes the same day.
Since this famous jewelry chain, whose name we won't mention here, tested and then launched an automated system for checking shipments and adjusting payments via blockchain, the supply chain team has been able to make up two months' worth of time on a supply chain, which from ordering materials to the finished product, i.e., the one that goes in the window, travels on ten to twelve months. There was a whole period of testing and alignment of the supplier network, of course, with a lot of adjustment work, and a lot of communication between all the players involved. The final 15-20% efficiency gain is something never seen before, and it is an achievement that revolutionizes a business as old as the world. 'This life is a chain,' as a famous song by Lucio Dalla used to say.
In the past, just waiting for the bank payment, often involving multiple banks and multiple intermediaries between two continents, until final confirmation could take weeks, with considerable fixed and variable costs. No one has the incentive to deviate from the new protocol and take shortcuts, because it would be tracked on blockchain forever. There would also be no need for discussion. The load would be automatically rejected and the supplier cut off, forever. If anything were to be argued before a judge, the discussion would start from certain data shared between all parties, also making this 'B2B' customer service phase and the whole process of disputing invoices and services efficient.
Blockchain, Nfts, and the metaverse have garnered and are garnering enormous media exposure, usually, for what they can do at the front end, or rather in consumer engagement. However, the programmable, deterministic, trustless and permissionless nature of blockchain and its smart contracts fit perfectly, indeed better, with a fundamental mission: to cut out middlemen, costs and waste. Exchanging 'value' globally fits perfectly with a trade that has never really gone global, and has always been characterized by huge fees from financial intermediaries.
Blockchain was born to do just that. To understand its revolutionary scope, indeed, one would have to start from the back end, the back end, which unfortunately is the most boring part, and see in action a powerful tool that reduces waste and consumes less. Efficiency in the way we produce should be the first concern of every company, to optimize the resources at hand and produce, using less of the world around us. This life should be an efficient and transparent chain.
The following example is taken from a true story, as they say in the movies. The ship with the cargo of precious stones and metals, for next year's jewelry collection, arrives in Rotterdam, directly from the exclusive supplier's plant in Africa. The cargo is checked within hours by port officials, thanks to a series of sensors and cameras. Finally, the same people check the travel documentation. Green light. The smart contract linked to the transaction goes into execution and the transaction between supplier and chain is settled, costing a few cents (the famous 'gas fees'). Both, brand and supplier, receive instant confirmation of payment in crypto, from one wallet to the other. The treasury of both converts the crypto into local currency, again for pennies and instantly, to minimize volatility in their foreign or 'other' currency position. The shipment is ready to leave for Switzerland, sometimes the same day.
Since this famous jewelry chain, whose name we won't mention here, tested and then launched an automated system for checking shipments and adjusting payments via blockchain, the supply chain team has been able to make up two months' worth of time on a supply chain, which from ordering materials to the finished product, i.e., the one that goes in the window, travels on ten to twelve months. There was a whole period of testing and alignment of the supplier network, of course, with a lot of adjustment work, and a lot of communication between all the players involved. The final 15-20% efficiency gain is something never seen before, and it is an achievement that revolutionizes a business as old as the world. 'This life is a chain,' as a famous song by Lucio Dalla used to say.
In the past, just waiting for the bank payment, often involving multiple banks and multiple intermediaries between two continents, until final confirmation could take weeks, with considerable fixed and variable costs. No one has the incentive to deviate from the new protocol and take shortcuts, because it would be tracked on blockchain forever. There would also be no need for discussion. The load would be automatically rejected and the supplier cut off, forever. If anything were to be argued before a judge, the discussion would start from certain data shared between all parties, also making this 'B2B' customer service phase and the whole process of disputing invoices and services efficient.
Blockchain, Nfts, and the metaverse have garnered and are garnering enormous media exposure, usually, for what they can do at the front end, or rather in consumer engagement. However, the programmable, deterministic, trustless and permissionless nature of blockchain and its smart contracts fit perfectly, indeed better, with a fundamental mission: to cut out middlemen, costs and waste. Exchanging 'value' globally fits perfectly with a trade that has never really gone global, and has always been characterized by huge fees from financial intermediaries.
Blockchain was born to do just that. To understand its revolutionary scope, indeed, one would have to start from the back end, the back end, which unfortunately is the most boring part, and see in action a powerful tool that reduces waste and consumes less. Efficiency in the way we produce should be the first concern of every company, to optimize the resources at hand and produce, using less of the world around us. This life should be an efficient and transparent chain.
Frank Pagano is an experienced Business Leader, with 20 years of Sales & Marketing in CPG, Fashion and Tech. He is based in Zurich, Switzerland. He founded Italytime, a non-profit (more precisely 'loss') company based in NYC and has been collaborating with Il Sole 24 Ore on the CEO Confidential project for the past two years.
https://italytime.org/
https://stream24.ilsole24ore.com/serie/ceo-confidential-la-nuova-serie/AE1QkJCB
https://stream24.ilsole24ore.com/serie/ceo-confidential/ADtHl52
https://italytime.org/
https://stream24.ilsole24ore.com/serie/ceo-confidential-la-nuova-serie/AE1QkJCB
https://stream24.ilsole24ore.com/serie/ceo-confidential/ADtHl52
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author's alone and do not necessarily reflect or represent the views and opinions of Circular Protocol.
#blockchain #web3 #DeFi #crypto #NFT #GameFi #coin #decentralization
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