Nathan Williams of Minespider on Blockchain

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | RSS | More

Nathan Williams is back! The CEO and Founder of MineSpider joins us to talk about the deeper ramifications that blockchain may have on manufacturing.

Danny:

Hey, welcome to IndustrialSage, today I’ve got a special treat for you, I’m going to be talking with Nathan Williams, who is the CEO and founder of MineSpider. And we’re going to be talking about blockchain in the supply chain. So let’s jump into it, Nathan thank you so much for joining me today.

Nathan:

Thank you so much Danny for having me on the show.

Danny:

Our pleasure, you know, but first for those who aren’t familiar with MineSpider, tell us what you guys do.

Nathan:

So MineSpider is doing blockchain, supply chain traceability. So what we do is we create digital passports for raw materials that travel along the supply chain with the raw material so they get stamped along the way, data gets uploaded so that you have a better picture of what you’re buying, where it came from and under what conditions it was produced. And so blockchain is a rather integral part of what we do because it solves a key problem of trust, that when you received this data about what you’re buying, you know that the data was not altered, that no matter how many hands it went through that it is your data and that it is unchangeable and that it can prove the authenticity of what you were buying.

Danny:

Great, you know, and there’s a lot of misinformation around blockchain, so, you know, we’ll start right there, the basics, what is it?

Nathan:

So blockchain was, is this technology that was created to solve this problem of trust, picture it back in 2008, when we had this financial crisis and people had trouble trusting banks for good reason, there was a big financial crisis and it had to do with certain groups of people who have more control over making financial rules than others. And there was a group of crypto anarchists who said, “Well, what does the bank do? They’re just a group that keeps track of a ledger, a ledger of transactions of who owns what. Could we keep track of that ledger amongst ourselves without having a trusted third party.” The problem, of course, if everyone participating is keeping track of the ledger amongst themselves, is, what do you do in case the ledgers different? Under the traditional system that bank would have the real version and so we could compare our own records to the bank. But because there’s no authoritative bank you need, it’s really not an easy problem to solve. So what, there was a fellow or maybe a group of people under a pseudonym, we’re not sure, named Satoshi Nakamoto, who came up with a rather elegant solution to this problem. So the solution was instead of a continuous ledger, we break that ledger into blocks and then we link blocks together and secure them so that they can’t be changed and it gets a little technical. Each of these blocks contains 4,000 transactions and then you add a what’s called a mystery number and you basically run and hash all of that together to make a code. If anyone goes and changes a transaction then it would affect the next block in the ledger, so they would have to fix that block and then the next one, and then the next one.

And so all of the participants, all of the people that are keeping track of the real record of transactions, will always have more blocks in their chain than someone who goes and tries to fiddle with the record and chain cause it’ll be broken. So essentially all of all of the participants are what are called nodes, they’re their computers that are keeping track of this real sequence of transactions, and so as a result, you’ve got this bank account essentially that can’t be changed that doesn’t have an authority figure. Now if you have a bank transaction, you have a memo field and in that memo field you can put a piece of data. Well, because you can do that, you can put in data that you don’t want to be changed. And so what we do is we put in these transactions, encoded data about supply chain history so that that can’t change. And then we encrypted in a certain way so that only the data owner has access to it. And so it’s this nested technology that makes it so that you are in total control of your data, but there’s no bank, or no central authority, or no central company, or government that has backdoor access to it.

Danny:

That makes sense, so, you know, even though it originated in the finance space, what value do you see it bringing to the supply chain industry?

Nathan:

Blockchains’ real use is making unique digital items and usually if you think of a digital item, you think of a photograph or a movie or a sound file that can be copied a million times and sent to anyone you want, but with blockchain, you know which one is the original and you know if it’s a copy or not or if it’s fake or if it’s duplicated. And so, this can be useful for creating coins that hold financial value, or it can be useful for creating unique documents that you want to not change or licensing of intellectual property because you know which is the original and legal and licensing, which ones are not. So the way you can use this in a supply chain is you can create a digital certificate. So you imagine this digital certificate can operate like a passport, That’s the way I often describe it, it’s it’s unique, you can’t duplicate it, it can be good, say, for a ton of metal or for a shirt or for a car or for a battery and it can have a unique code that is embedded into the object or the material itself or on a sticker, so that you can see which ones it relates to and then it can keep track of who held it and data they want to upload. Maybe they want to upload their government licenses, or third party audits, or data about their relationship with the community and maybe even school records to prove that the children were all in school and not working in the mine, or, what other data is needed in order to prove it is responsible. And so that data is then attached to this digital item or this certificate and is unable to be changed and so that can give the buyer a much clearer picture of who’s in their supply chain of what is going on and who’s not supplying data and whether it might want to take action or request more.

Danny:

So, if I’m a manufacturer buying raw goods like, let’s say fruit, do I assign a digital certificate to that shipment or to each individual item? Like how does it work?

Nathan:

It all depends on the problem you want to solve, right? And so this is a very, we’re talking about global supply chains for global shipments of every good that we’re talking about, So each one is going to have different challenges. And so you would use a method that would solve the problem you want to solve, So if you were getting fruit, maybe what you’re concerned about is that it was kept at the correct temperature, the entire length of the chain

Danny:

Yeah.

Nathan:

And that the people at the beginning of the chain were paid properly. And so then, it’s not as concerning to you, maybe, that someone took some fruit from a different place and subbed it in, what’s concerning to you is the operations of the company along the way and or maybe it is concerning if you’re, or maybe if you move into pharmaceuticals, it is more concerning that you’re getting is what it says it is. And so, then, in the fruit case, maybe, it’s enough to have a little IOT device that collects temperature along the way,

Danny:

Okay, yeah.

Nathan:

Maybe, for metal, you don’t need that, you just need a QR code that says, “Okay, this is where it comes from,” and then the data attached to it, will tell you the composition, then you can use that as a fingerprint. So there are different ways depending on how important it is to know exactly what you’re receiving. The way we do it, we wanted to be flexible to accommodate anything. And so, our sort of default is very lightweight, you put a QR code because if you receive a shipment, your first thought is what data is attached to it and you want to be able to look up the data and the record. And if you’ve got the data in the record, you will probably have data within that, that’ll help you identify the shipment itself. Now, depending on the risks you’re going to include data, like an IOT device or an RFID that gets automatically scanned, So that was automatic instead of manually entered. So there’s different things you can do to add layers of security.

Danny:

Okay, that makes sense. So then, you know, what is this big fancy word that, you know, blockchain interoperability in relation to supply chain?

Nathan:

Ooh, it’s a big topic, I’ll tell you that, everyone is interested in blockchain interoperability. I’m probably the most skeptical about it, of people that you will speak to. Blockchain interoperability is basically how do you get two blockchains to talk to each other? And in some it’s complicated, that’s where it comes down to is it’s really a complicated thing to actually do because blockchain is already interoperability between different computers, It has a way of making sure two computers or five computers or a hundred computers have the record of the same data, it’s like the internet. And so blockchain interoperability is sort of like saying internet interoperability: “If we have 15 internets, can we get them to talk?” Well, we can, and it might defeat the purpose of having an internet in the first place. So essentially the reason it is a hot topic, especially in the supply chain space is because you want competition, this is normal, everyone wants competition, no one wants one company to own the supply chain space and to have total vision, over the entire global supply chains, that’s a lot of power to give a private company. And the solution that people talk about is getting multiple competing companies, running their blockchains to talk to each other. I don’t think that’s the best solution, but it is what is very talked about.

The reason I don’t think it is the best solution is because a blockchain makes sure that the transactions in the block are unchanged by copying among every computer that’s participating. So if I’ve got five computers or five million computers in my blockchain and you’ve got five million computers in your blockchain, and I want to take a transaction off of my blockchain and put her on yours, maybe, because someone sent a ton of material from company A to company B, company A uses my blockchain company, B used as yours, the problem is I have to register that that ton went to company B on my blockchain, you have to register that it came from company A on your blockchain, but anyone using your blockchain, can’t see my blockchain. So that’s, as far as you can see, you no longer see the rest of the supply chain. Now we could copy all of my information from my blockchain to your blockchain, but then technically you’re using my blockchain. We’re using the same blockchain at that point, because your computers now have a copy of all my data and my computers have a copy of yours. And so that’s why it can be really, really difficult because you don’t want these broken chains.

From my perspective, the solution to this is the same solution we came to with the internet, there’s not one company that owns and runs the internet, there are multiple. And some of them are government institution run, some of them are private company run, and there’s a whole host of service providers at the lower end that provide the services but they use the same protocols. There’s one intranet, you use HTML, you use TCP IP and all of these protocols, you don’t have interoperability between 15, 20 different internets. And I think that that ultimately will be the solution, I don’t think we’re there yet, but I think that what needs to happen is that the people make their money on apps, built on top of a supply chain ball chain and then multiple companies will run nodes of the same protocol. I think that’s in our future, but I think that we’re a few years out from that at best, cause we haven’t sort of, we haven’t come to one universal standard yet, it’s a complicated field.

Danny:

So it’s a standards issue. You know, mentioned this could diminish competition, are you suggesting that I could use this to access like competitor data?

Nathan:

No, not at all, the way we designed MineSpider, we were thinking of this when we designed and so I’m not claiming that we’ve solved every problem, but this is definitely one we’ve thought about. The question of, how can you get competitors in the same supply chain to share data, but not see each others’ data?

Danny:

But not see, okay, gotcha, yeah.

Nathan:

So the way that we’ve approached this problem is, first of all, we use a what’s called a layering system, So each passport has layers, it has a private layer that’s encrypted invisible to you and your customers, you have a transparency that’s visible to everyone in the same supply chain but not visible to everyone, you need a key to access it and then, or you need to hold this passport to access it. And then you have a public layer. And this public layer is visible to everyone who uses the system. And so the public layer would have encrypted data, So you could see the passport exists encrypted but you can’t read it. And you would have maybe the material type and how much material is in the passport. So if she’s a passport is good for one ton of tin, then you would be able to see everyone is able to see that and that’s how you know it’s unchanged, but you wouldn’t see who it was sent to and from, I wouldn’t be able to divine or even date, we’d actually designed it so that you can’t data mine it and identify your competitors suppliers. So even though it’s public access and it’s an open protocol. So a lot of design work went into this to avoid having a central authority but to be able that competitors could use this without running into these antitrust issues.

Danny:

So it’s not as if I can see frequency of shipments or other details.

Nathan:

Sort of it, because it is still anonymized, right? So you could see that certain addresses have a certain frequency of shipments, but you also don’t know if the sending of the data is lined up in time with the sending of the shipments itself, you don’t know necessarily who owns which address and you also don’t know where they’re going to. So we’ve taken a lot of care to make sure that there’s a lot of anonymity where it needs to be. And that when people are able to see the data, it’s because it’s being granted by the data owner.

Danny:

That makes sense, so, you know, now for one big question, why do we need to go in this direction? Why is it so important?

Nathan:

I think that everyone has a right to know what they’re buying, and I think that everyone sort of feels that, but they felt a little bit powerless to make informed choices, they look at two cell phones or two batteries or whatever and they know if one’s better than the other and if one is, they don’t know which one is which and companies have that same problem. And especially now with supply chains being disrupted by the COVID pandemic, companies are looking and saying, “Well, it’s not just I want to know my materials in my raw inputs are responsible, I also want to know that I will have them tomorrow, I want to know that they are, that I’m not accidentally modeled sourcing, you know. I might be buying from five different companies who are all buying from one supplier and if that supplier runs into a problem, I run into a problem and I won’t even know it.” And so I think that this has moved from something people have said, “It’s important, I’ll deal with it at some point,” to something that has become urgent. And so now people are in crisis mode and that won’t last forever, but what will be the focus of the mid to the long-term is companies are going to want to know, who are my tier two suppliers? Who are my tier threes? And maybe I can go even beyond that and get a better sense of what I’m dealing with and what the risks to my business are.

Danny:

You know, that makes a lot of sense especially nowadays. So, you know, looking ahead to see if, you know, when this virus is over, what are some challenges or lessons or changes in supply chain that you see happening?

Nathan:

I think post-Coronavirus, we’re going to see companies taking more action to be a bit more robust and resilient against these sort of force majeure events so that they’re not caught off guard. Part of it might be keeping more stock and being willing to trade off, that’s there just in time operations for having more stock, and they’re probably going to want to know how much stock their suppliers are keeping. So this is probably going to be one area that gets built up is especially for large companies that have very complex products, they’re probably going to require their suppliers to have a certain level of stock so that they aren’t caught off guard.

Danny:

Yeah.

Nathan:

And I imagine that being pushed down, not just to their tier one suppliers but to their tier two suppliers that they’re going to require their tier one suppliers to do the same. I also imagine that post-Corona, we’re going to see, more need for automation, contactless, shipping receiving and we’re especially things like inspection, things that reduce the paperwork to reduce the amount of contact time, because I don’t think even after lockdowns are eased that we’re going to necessarily be out of the Corona problem. We hear reports that it could be quite a long time before a vaccine is ready and so just because the economy is returning, doesn’t necessarily mean that people are going to want to handshake to spend a lot of time together and so I can imagine contact with systems, less paperwork, less signing, less handing of pens, digital signing, things that streamline the handoff process to be very important.

And this is where blockchain shines, of course, because you can have an authentic, an authenticity guarantee of a digital signature, for example, or of a legal paper, so I’m imagining a lot of development in this area. In addition, I also see a big need for a critical component provenance. So if you’ve got critical materials and components that they’re not all coming from the same region, especially for better or for worse, I’m imagining a further nationalization of critical components. So we’re already seeing this with protective equipment PPE for medical workers, ventilators, that sort of thing that countries want to make sure that there’s a stock of them. And I think that this type of nationalization of critical industries, whether it’s a good thing or a bad thing, it’s a thing that’s going to happen. And so by seeing, okay, who are we buying from? Who are our suppliers? And are they all from one region or do we have a diversity? So that we’re safer. That’s going to be a question that’s on not just industrial minds, but government minds as well.

Danny:

You know, yeah, a lot, even in the 90s, you know, globalization was a huge shift with huge ramifications, and now energy. Like what effects good and bad do you see coming out of this pendulum shift?

Nathan:

I think one other thing that we’re seeing as well is, there’s always been sort of an assumption among everyone in the entire economy that someone knows what’s going on. And I think that with the coronavirus, what we’ve seen is that is not necessarily the case. People are very reactive.

Danny:

Yeah.

Nathan:

There has been some planning in advance. But by and large, people are reacting to the situation that they’re given, and there’s not necessarily one person that knows more than anyone else what the next step is or what is going on. And so the appropriate response to that would be to get more information, to get better data, to get a better sense of what is critical to my business, to make sure that you don’t get caught off guard, because we can’t just trust everyone else to handle it for us.

Danny:

Right, exactly. Well, Nathan, I really appreciate your time and help today in breaking down blockchain, so that, you know, a lot of people can learn from it. You know, what it is, and importantly, what it isn’t.

Nathan:

Well, thank you very much for having me on the show. It is a complicated topic, and I think that we’re in a position as an industry, where the potential of blockchain to underpin a lot of use cases and functions that regular business uses every day is huge, it’s going to be like the internet, in that, the average person doesn’t understand how it works, but because it how’s it works, we’re going to see this push over the next decade, where blockchain is just going to be silently in the background running a lot of our trusted infrastructure. And it’s important that we start understanding it now while it’s still sort of the early days, so that we’re not sort of caught off guard and drifting along with the changes.

Danny:

That makes a lot of sense. So, for those who’d like to learn more about your company, where can they find more information?

Nathan:

www.mindspider.com.

Danny:

Awesome. Well, thank you so much.

Nathan:

Thanks so much, Danny, for having me on the show.

 

 

Thanks for reading. Don’t forget to subscribe to our weekly newsletter to get every new episode, blog article, and content offer sent directly to your inbox. You can also subscribe wherever you download podcasts so you can listen on the go!

Sponsored by Optimum Productions