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BLOCKCHAIN

BLOCKCHAIN

WAVE BL is a solution for organizations to transfer electronic Bills of Lading (eBLs) between parties. One of the building blocks of WAVE BL’s technology is the blockchain.

Table Of Contents

What Is Blockchain Technology?

A blockchain is a decentralized, digital ledger of transactions that is duplicated and distributed across an entire network of computer systems. These attributes, and the way in which ledger entries are connected to each other, mean that transaction records are impossible to delete or alter.

WAVE BL uses a blockchain ledger to transfer possession and record title, including the times at which these actions were performed. Having such a record enables parties to a transaction to verify the timeline of transfers, as well as the authenticity of the documents exchanged. This article will explain the advantages of using blockchain as a recording technology, the technical challenges it raises, and our answer to those challenges.

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Data Storage Approaches

There are two technological approaches to storing data:
1. Centralized ⁠— data is stored in one place and controlled by the entity that hosts (i.e., stores) the data.

2. Decentralized ⁠— data is stored in multiple places and controlled by many entities. Each entity hosts the same data; the result is that many identical copies exist.

Blockchain technology uses the decentralized approach. It requires that all the users in the network store the same data⁠—in this case, the ledger itself.

Blockchain In The Trade Industry

The international trade industry relies on deeply traditional workflows that, until recently, had hardly changed over hundreds of years. But today’s world requires more speed and reliability than traditional paper documentation can provide. That means that today, secure and reliable document digitization is a necessity for doing trade. As we will see below, blockchain technology is the perfect fit for the trade industry’s needs.

Security

A blockchain network can contain anywhere from two to thousands or millions of users, or members. In the case of WAVE BL’s blockchain network, these members are parties to trade transactions who use the network to issue, sign, transfer and receive documents.

When a new block, or record, needs to be added to a blockchain, all the other parties in that blockchain confirm the new addition via an automatic process called consensus. (See Verification section for more information) During this process, the parties “agree” on the shared history of the blockchain. After it is confirmed by all parties⁠ — or, more specifically, by the blockchain software they are running ⁠— the new block is added to the blockchain. In the context of WAVE BL’s network, this means that the blockchain contains a confirmed record of every single document transaction.

Each block has its own unique fingerprint identifier ⁠— a number cryptographically calculated based on (1) the actual content of the block, and (2) the fingerprint identifier of the previous block in the chain. This is critical for preventing forgery of both the block’s contents and the overall chain of records. If a hacker (for example) were to try to change a block in the blockchain ⁠— that is, to change a record after the fact ⁠— then its fingerprint, which was calculated based on the old content, would no longer match the new content. If the hacker also tried to update the fingerprint itself, then they would also need to update all the fingerprint information in each previous block in order to keep the calculations consistent ⁠— and they would need to do this for every individual copy of these blocks, which are stored separately on the computers of every party on the network. The result is that blockchains are extremely resistant to forgery.
A technical point: In addition to the difficulty of updating every copy of every block in the chain, a would-be forger would also need to actually compute a new fingerprint for each of these blocks. This computation is done via a cryptographic process that requires time and enormous ⁠— and expensive ⁠— amounts of computational power. It cannot be done on typical computing equipment in any practical amount of time.

Benefit to WAVE BL users: Because blockchain content is practically impossible to forge, every document contained in a block is guaranteed to be an unchanged original document. In addition, the blockchain accurately preserves the timeline of document transactions, and makes it possible for parties to automatically verify all transaction timestamps and content.

Verification

Each transaction is tracked and logged in each copy of the blockchain on each user’s computer. The data is logged only after a full consensus process performed by every user’s blockchain software. During the consensus process the data and its calculated fingerprint are verified as mathematically valid.

Benefit to WAVE BL users: When a WAVE BL user receives a new document, they can be sure it’s an unchanged original document thanks to the consensus process, which has verified that the new data is valid. As a result, users no longer have to manually verify and validate documents ⁠— our blockchain network automatically takes care of verification for our users.

A Trusted System

The fact that blockchains are decentralized means that parties to a transaction don’t need a third party (such as a centralized service provider) to perform and validate document transfers for them. In other words, there is no central entity that manages the blockchain; each document exchange is performed directly between the parties involved, and verification is automatically performed by the network. This also means that documents are not exposed to any third parties outside the transaction: they aren’t stored in a third party’s centralized data centers or subject to external approval.
Benefit to WAVE BL users: WAVE BL users have full control over the transactions they perform. Although WAVE BL provides the network, it is not a party to any transaction; unlike with centralized eBL service providers, our users do not need to subject their transactions to WAVE BL’s approval. Decentralization also means data privacy: we do not store our users’ data and in fact have no access to it at all.

Availability

An Ocean Bill of Lading is any type of BL that applies to the transportation of goods overseas across international waters. Like any BL, it specifies the nature of the shipment including what and how much is being transported and where the goods will be shipped to and from.

Because it is decentralized, a blockchain network is always online. And because users store a copy of the blockchain locally, they can still access all their data when they go offline. When they come back online, the network will automatically update with whatever new data has been added in the meantime.

Benefit to WAVE BL users: Data is always available, allowing WAVE BL users to access their document transactions from any place at any time ⁠— even if they’re offline.

Privacy

The blockchain network is fully transparent: when a user publishes a new transaction to the blockchain, everyone can see it. That can be a liability when it comes to private business information that parties might not wish to expose. In order to protect our users’ private information, WAVE BL has developed a privacy layer that encrypts document transactions. With this privacy layer, which is unique to WAVE BL, parties know that their document exchanges cannot be tracked by parties outside the transaction.
(Note: the following section is somewhat technical, but we include it for readers interested in the details of our implementation.)

Given that blockchain technology is all about transparency, how does our privacy layer work?

In a generic blockchain, users have two identities, or “keys”: a public key and a private key. When two users perform a transaction, the blockchain records their public keys. Since users generally use the same public key, or the same small set of public keys, for all their transactions, external observers can start to track the transactions that are performed with those keys, and see which parties are transferring assets (money, eBLs, etc.) with each other.

WAVE BL solves this problem by generating unique one-time public keys for users to use in each transaction. That means that on our network, you’ll never use the same public key twice, making it impossible for external observers to track your transaction history.

What are private keys for?

In both WAVE BL’s blockchain network and generic blockchain systems, users have a “wallet” or “folder” to keep their assets in. (These assets might be cryptocurrency, in the case of a network like Bitcoin; in our case, the assets are documents and signatures). Users use their private key to unlock their wallets and access their assets. On WAVE BL’s network, the private key also allows users to digitally sign their documents.
Benefit to WAVE BL users: WAVE BL’s privacy layer preserves the secrecy of sensitive business information concerning when and between whom transactions are performed. No one who is not a party to the transaction can track the parties involved.

Summary

Blockchain technology has been gaining momentum in the last decade; its popularity was sparked by the cryptocurrency industry, but many industries have begun to recognize the significant advantages it offers in terms of secure, decentralized record keeping. These are exactly the advantages that make it a perfect fit for the trade and trade finance industries.

Adopting blockchain technology makes it possible for trade to adapt to today’s world, benefitting from the speed and simplicity of digital transactions without compromising the security and privacy that are essential to doing business.

As WAVE BL’s Blockchain Lead, I can guarantee that our blockchain implementation, with its unique solution to the problem of preserving our users’ privacy, enables businesses large and small harness the power of secure, streamlined digitization to meet the challenges of 21st-century trade.

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