NO: DELENG / 2017 / 70663
official media partner of national maritime foundation
Capt. Vinod Naveen
By Sea and Coast | 04/04/2020

Digitalization and Blockchain (A physical to a digital transformation)

The Digital Era has arrived …I guess there is No doubt about it…and so it is catching up everywhere with everyone and for everything. People of all ages , wherever they are and for every other thing be it basic essentials like food, grocery, water, transportation or entertainment like movie tickets,tour packages or be it services like utility bills for electricity, piped gas etc.,it’s all gone digital . It doesn’t stop just there. Today we even have education online, Banking ofcourse was one to start early and many other such traditional things, which were so physical in nature and one never thought whether digitalization would ever have been possible in such sectors are the ones which have broken the tradition and are leading the line. This is certainly not going to Stop here and is only going to scale up.

Well, the comforts and conveniences of going digital are immense but, when one is breaking the traditional approach and going digital, along with the benefits there are also concerns.

Security of the system and data is one of the primary concerns. For example if you think of the traditional way of depositing money into banks, you would have to walk to the cashier, deposit your money with a slip and you would get a stamped slip back which becomes your authentic data that you have deposited that sum of money into your account and the holder of the slip is the owner of the transaction.Certainly nobody would deposit money into your account and nobody will be able to draw money from your account without having your physical signature/ authentication but in digitized transactions though there are various checks and balances the system is open to the entire world making it vulnerable to online theft, hacking etc.

Digitalization has other problems too with regard to storage of data. With huge volumes of data that need to be stored in centralized systems, the amount of storage required is enormous, though there are backups at the end of the day, a mishap can create a loss of huge amount of real time data. Data are being monitored and validated today through digitalization and this requires a system which can give good governance.

The purpose of digitalization is also to automate the process as the new buzz that’s going around in digitalization is “if a human is doing a repetitive job then a machine can do it better” Blockchain technology helps address the gaps in digitalization. In Blockchain technology the data is encrypted using cryptography and data once encrypted cannot be edited and changed making it a secure means of data transaction.In Blockchain data is immutable. A Blockchain is actually a database because it is a digital ledger that stores information in data structures called blocks. ... In digitalization as there are transactions between multiple and many parties and with large amounts of data that is being transitioned, the volumes of data being stored at the centralized location becomes enormous. In Block chain the data is stored at local level and only‘Validation’ takes place between issuer and valuator. Thus the requirement of large amount of data storage is reduced and in some cases by as much as 90%.Block chain uses decentralization

Blockchains are stored in computers within the system, also named as nodes. Each node will have a copy of the transaction made.The Blockchain system is similar to a spreadsheet which is constantly updated among users after a new entry. With every new transaction, this spreadsheet is updated and stored in nodes.

The current system works on centralized way of functioning wherein you have one centralized unit and all other system transactions happen with that unit,whereas Blockchain uses the decentralized method of functioning.Here each unit is considered as an independent unit and operates independently but within the defined scope of rules and regulations, stores data locally and for transaction seeks validation from the controlling/monitoring unit. The controlling unit acts as an Eco sphere and the independent units as Eco systems within the Eco sphere.The Blockchain transactions are secure.

Block chain sets the auto process and all exchange of data happens through an automated process but only after validation at each stage can the next stage be carried out. Suppose to complete a task there are 10 levels to be completed, and after each level a validation has to be done, then level 3 is possible only after the validation step in level 2 is completed and subsequently the transaction will only take place at higher levels only if validation at lower level has been completed and accepted. This way In Block chain no transaction takes place bypassing the set rules. transactions are transparent and not dependent on third parties So what does a online data transaction require…A process to be completed, validation of each data transaction, automation in data transfer as well as validation, safe storage of data, security of data and so on or rather a system which can cater to all above and give a good governance online.

The shipping industry is no exception, with more and more operations switching from the traditional physical process to digitalization, be it seafarer data transactions like training related course attendance, exit examinations, computer based testing, certification including issuance of COCs, seaman identity documents etc., the fraudulent practices connected with such certifications is a real concern to various authorities including STCW, Or Be it the logistics industry where there are exchange of documents at almost every stage of cargo movement, where time and security of documents exchanged are of prime importance and given the prevailing fraudulent practices and malpractices in documentation and the time delay in documentation is a cause of real concern to the logistic industry. So as the world is changing its tradition from the Physical to digital transformation.The Blockchain technology seems to be an ideal solution to all those industries including shipping using digitalization w th the main advantages being immutability,decentralization, security, transparency and less dependency on third parties so as to be able to maintain the same characteristics of the traditional physical touch but in a digital way……

# Sea And Coast Magazine