by Kevin Madden

You would be hard-pressed to find a person interested in business and technology who has not at least heard the term ‘blockchain’.  It was first introduced in 2008 by a figure named Satoshi Nakamoto as the technology behind the now world-famous cryptocurrency, Bitcoin. While its most significant application has been in the financial industry, the hype surrounding cryptocurrencies and Bitcoin has led experts to wonder what impact blockchain could potentially have in other sectors of the economy.

Blockchain has also garnered the interest of investors and technology enthusiasts in Canada. There was a blockchain supercluster application as a part of the Federal Government’s Supercluster Initiative, and although it ultimately did not make the cut, the proposal raised $50 million in pledged support from 60 partners. The plan was to locate the supercluster in the Toronto-Waterloo area, in order to capitalize on the wealth of blockchain expertise in Southwestern Ontario. Despite the lack of funding, those behind the blockchain proposal plan on moving forward with the project.

Ontario’s historically powerful manufacturing sector and the rise of blockchain talent puts the province in a unique position to explore the potential intersections between the two domains. Furthermore, as Industry 4.0 continues to spur the use of big data and the digital representation of physical assets, advanced manufacturing is poised to benefit from blockchain technology. To see why this is the case, it is necessary to have a basic understanding of what exactly blockchain is.

What is Blockchain?

In its simplest form, a blockchain is a distributed, append-only ledger which can store any type of digital information. This means that ledger can only be added to and once something is added it cannot be removed.  The data on a blockchain is immutable, public and secure because it is supported by advanced mathematics and cryptography. While the technical components of the blockchain are complicated, for our purposes it is sufficient to think of it as an online, community database.[1] Everything in the database, whether it is a transaction, contract, asset, certificate or anything else, can be viewed by every member of the community. However, it can only be added to, meaning it is impossible to alter anything that has been entered into the blockchain in the past. Furthermore, every new entry must be validated by each member of the community using advanced computing (the computers run a series of tests to ensure the entry is legitimate), which results in the blockchain acting as the keeper of trust between all participants.

How can Blckchain supplement advanced manufacturing and Industry 4.0?

Industry 4.0 can be characterized as the use of advanced automation and big data in the manufacturing process, with a focus on the digitization of physical assets and the value chain. Physical objects like machinery are increasingly becoming interconnected via the “Internet of Things” (IoT), and at the same time they are storing, processing and analyzing real-time data using sensors. With this massive digital shift, manufacturing companies will need to determine the best way to organize and extract value from their digital information.

Blockchain technology could help address this need for firms. Two specific benefits it might provide are to establish transparency in the supply chain and to facilitate the use of smart contracts.

The blockchain has the potential to connect all components of the supply chain by creating an authentic, historical, digital trail for all physical assets. To see how this is could work, suppose a hypothetical Ontario machine-parts manufacturer collaborated with suppliers, customers and stakeholders to put product information onto a blockchain. What this information amounts to is a digital passport for a product, tracing it from the raw material supplier to manufacturer, and ultimately to the end customer. At each stage of the process, IoT data is stored on the blockchain for all partners to view and utilize for their business decisions. As IoT data continues to become more advanced, it is conceivable to imagine a scenario where the manufacturer can photograph, measure and record all components of the product, and have this data instantaneously available on the blockchain. This not only helps to contribute to a level of collaboration among business partners, but also precisely documents value added at each stage of the process. Furthermore, because data on the blockchain cannot altered, all partners can trust that the information they access is secure and reliable.

Another application of the blockchain in advanced manufacturing is in the use of smart contracts. A smart contract is a programmed set of instructions that are executed once a specific condition has been meant. With regards to the hypothetical machine-parts scenario, the manufacturer could register its production equipment on the blockchain and have raw material purchased as soon as its sensors indicate it is the right time to do so. This both further contributes to transparency and decreases transaction costs, while being supported by the trust of the blockchain.

Although blockchain has the potential to serve as the future platform on which the manufacturing sector conducts business, it is not without challenges. Skeptics can point to privacy concerns, cost (it takes significant computer power to support a blockchain) and technological feasibility as hurdles the technology must clear before it can be implemented on a large scale. Whether it becomes the technology of the future or not, members of Ontario’s manufacturing industry would be wise to become aware of blockchain and the ways it could potentially shape their business. For more information about the intersection of blockchain and advanced manufacturing, visit the links below.

[1] Learn more about blockchain by visiting the Blockchain Institute’s website: