The CEO and co-founder of digital invoicing firm Tradeshift has stated that blockchain has great potential for making supply chains cheaper and more efficient. However, Christian Lanng also believes that the technology is too immature and not cannot scale sufficiently for the role at present.
Blockchain Needs to Scale Before It Finds Global Use in Supply Chains
Lanng spoke to CNBC at the World Economic Forum earlier today. At the event, held in Tianjin, China, the CEO and co-founder of Tradeshift stated that blockchain is a great technology to prove the authenticity of goods, along with their point of origin, and other details.
The various stakeholders involved can check on goods at different stages of the supply chain using the innovation behind Bitcoin. However, along with it being overly expensive, for now, Lanng added:
“The problem is just it’s not a high-performance technology.”
Whilst speaking with the publication, Lanng went on to state that current supply chains were not currently engineered with change in mind. He then commented that it is important for companies to digitise their supply chains in order to respond to change more efficiently. One such technology that is capable of such a digitisation is blockchain. However, Lanng is also cautious about the amount of hype surrounding the innovative technology:
“Whenever people say blockchain, I think what they’re really saying is they would like to connect things digitally… I don’t think blockchain is a mature enough technology yet to carry that … I also want to be a little bit cautious for some of the hype.”
In addition to its financial applications in cryptocurrencies like Bitcoin, many believe that blockchain technology could be particularly useful in increasing efficiency and cutting out middlemen in supply chains. Several companies and organisations are already looking at ways to apply the technology to their existing services. These include the U.K.’s Food Standards Agency and global logistics firm UPS. However, according to surveys cited by CNBC, widespread adoption of the technology might be as many as 10 years away.
In reasoning his position, Lanng used the Ethereum blockchain as an example. He mentioned that seven transactions per second is simply not enough to enable the technology’s use in global supply chains just yet. He went on to highlight the inability of developers to scale a blockchain and technical issues faced in building them to begin with:
“When you run a global supply chain, you have (thousands) of transactions per second. So, I think for identity, I think for certifications and stuff like that, blockchain is useful… For the main transactional scenarios, it’s not ready yet. It’s too expensive and it’s very complicated to build and scale.”
Featured image from Shutterstock.
