Cryptocurrency, Blockchains and Alpaca Socks

It is disappointing that business still predominately works on a model created during the Industrial Revolution. Even with all of our technological advances some very fundamental things haven’t changed much and money is one of those things.

I get lost in the detail of how financial institutions work and how money goes around but it feels like corruption is still a huge part of business and if we could find ways to eliminate it, genuinely make things more transparent, then more money would flow to the right people and right places.

When Bitcoin was used to make a purchase of alpaca socks, making it sound so normal and warm, I wondered whether this was a geek dream or something that would change the world and of course business with it.

People have been working on it since 2008 and it is used as a currency today in around 100,000 places but the gem that seems to be surfacing out of this audacious venture is the system it works on; the blockchain.

“Instead, it relies on the blockchain. This is a digital ledger that resides on computers that run Bitcoin's software. Every time one party exchanges some amount of bitcoin with another party, information about this transaction is checked against previous entries in the blockchain. If a party tries to spend counterfeit bitcoins, or bitcoins it doesn't own, these checks will reveal that. If the transaction's recipient isn't a legitimate Bitcoin account holder, that would also be revealed.

With its "distributed consensus" approach, in which multiple public copies of a shared single ledger are constantly evaluated to prevent fraud or error from entering, Bitcoin offers a high degree of security. In contrast, a bank's proprietary ledgers offer more centralised and private points of attack for hackers and criminals to target and potentially corrupt.” (Reid Hoffman: Why the block chain matters. Wired 15th May 2015)

It made me think about how Supply Chain Management really did change the way we did business, the technology, the change in mindset, vision and ambition of what happened underpinned the globalised workforce we see today. 

Blockchain feels like that magnitude of change again, in fact that technology is what global supply chains need today so that businesses that have outsourced parts of their business can operate on a distributed model allowing transparency and traceability right through the chain. Remember Paul Polman talking about Inclusive Captialism:

“But the single action that would yield the biggest difference would be if businesses were willing to take a greater share of the responsibility for what goes on within the total reach of their value chains.

As some have argued, you can outsource the means of production but you can’t outsource the burden of responsibility. Yet many today still choose to hide behind convoluted corporate structures, outmoded tax arrangements and intricate supply chains, hoping to avoid scrutiny and comforting themselves with a few token CSR activities.

It’s not enough merely to put your own house in order. Responsibilities flow upstream and downstream. Indeed it’s only by taking co-responsibility for what goes on within the total value chain that trust in capitalism can be restored and the benefits of business can be spread more evenly.

That means taking a share of the responsibility, for example, for the way raw materials are sourced and the livelihoods of those who supply them. It means taking responsibility for upholding – and indeed promoting – the dignity and human rights of workers at every stage of the production cycle. And it means taking responsibility for the way products are used and disposed of long after they’ve left the retailers’ shelf.”

Could the technology behind cryptocurrency do this? Could the addition of cryptocurrency lower the costs of operating electronically? Could it help us value money, trading and business differently?

It feels like it could, in fact it gives me a warm alpaca socks type feeling.