You’ve probably been hearing a lot about blockchain in recent months. The technology offers new opportunities for better security for retailers, but so far it does not have a clearly defined roadmap or protocols.
As of September 19, Cisco has co-founded the Trusted IoT Alliance, a consortium of 17 companies to help establish a protocol for a blockchain-based Internet of Things (IoT). The mission of this new alliance is to set the standard for an open source blockchain protocol in major industries worldwide.
In retail, IoT simply describes the network of systems, sensors, wireless, software, and other technologies that enable digitization of the store. In practical terms, it’s the network that you already have, but better connected to help you take the next step in growing your business. The alliance will also work to create a roadmap powered by the IoT ecosystem.
What is blockchain and why should you care?
So, what is blockchain? Blockchain is an encrypted digital ledger in which transactions are recorded chronologically and publicly. Each blockchain is typically managed by a peer-to-peer network (i.e., your employees and partners’ employees). Once recorded, the data in any given block cannot be altered without also changing all subsequent blocks, which requires agreement from most of these people. Blockchain also lends itself readily to cloud-based solutions and software as a service (SaaS)–in other words, blockchain as a service. Information from all your digital devices (the IoT) helps to supply the information that feeds into the blockchain ledger.
The reason for so much focus on blockchain these days is because it has the potential to provide much more secure transactions. (It’s hard to hack a process that requires so much scrutiny from so many people.) For cardholder data, medical records, and other critical transactions, blockchain holds high potential for better security.
How is blockchain used in retail?
We all know that security is a critical issue for stores. Currently, three major use cases stand out for blockchain in retail:
- Blockchain supports today’s highly flexible mobile payment systems, similar to Amazon’s “walk out the door and you’ve paid for it” model. This concept not only makes payment easier for the customer, but assures far better loss prevention for your store.
- Traceability is a major benefit provided by blockchain. Across the supply chain, parts and products are vulnerable throughout the processing of multiple transactions–from design to development to manufacturing to shipping. By unifying every transaction down to the store, retailers can provide far better security for every step of the production process.
- Transactions recorded by blockchain help to authenticate high-end luxury goods (jewels, art, etc.) and identify possible counterfeits (“blood diamonds,” stolen art, etc). Where individuals or businesses are buying globally, authentication can also include sensitive items such as pharmaceuticals, assuring that any product is produced sustainably and compliantly.
Other retail use cases:
- Blockchain contracts used to support loyalty programs to track accrual and management of points.
- Stores must provide a great deal of content for all sorts of sales purposes, much of which is produced by the retailer or manufacturer. Blockchain helps to secure intellectual property, including creative digital media.
- Many other horizontal applications apply across industries into B2C transactions, such as smart contracts for car leases.
Blockchain is a revolutionary protocol that may well parallel TCP/IP in the early days of the internet. Just as multiple systems of networks make up the internet, we will increasingly see a multitude of blockchain networks to help keep our information secure. Interoperability and interworking is critical to this new technology and are key enablers to broad-scale adoption.
With the announcement of the Trusted IoT Alliance, major industry players have begun efforts to monitor and selectively steer this industry in a direction that will yield highly competitive results. To learn more, please read the Trusted IoT Alliance press release.
To learn more about how digital technology is driving customer interaction, take a look at Consumer 2020, a new Cisco and PSFK report.