- Category: Blockchain Development
As the era of artificial intelligence and automation is around the corner, security has become one of the major concerns for the major businesses. And when we talk about security, the one technology which is gaining huge acceptance is Blockchain Technology.
Blockchain technology applications provide three major features: security, immutability, and accountability. Since it is based on the concept of distributed database, wherein every computer in the network has a copy of the database, there is no single point of failure. Each and every transaction is verified by all the computers (nodes) participating in the network, and whenever a transaction happens, it is known immediately by the whole network. So, it is almost next to impossible for a hacker to do any changes in the network or steal any data, also because records of the transaction are stored in the form of a ‘block’. Each block has a reference to the other block and hence, to hack a Blockchain, all the blocks in the chronological order needs to be hacked.
To a layperson, applying Blockchain to mining industry may seem to be a weird thought. But for those who are closely associated with it, application of Blockchain solution is the next logical step. Let’s discuss the key challenges of the mining industry and how Blockchain promises to solve them.
Distributed Ledger Technology to Provide Security from Cyber Attacks
Though it is somewhat different to the general belief, according to a report by Symantec Security firm in 2016, mining is the No.1 industry when it comes to receiving spam email, and one of 3 such emails contains a virus.
Blockchain application deploys the concept of the digital ledger that keeps a record of every transaction and safely encrypts that information in the form of data blocks. And by eliminating the need for a middleman, it reduces the exposure of data to hackers because the validation is handled automatically and electronically. Thus, Blockchain could add a new level of security for miners.
Blockchain could be used to simplify cross-border payments and regulatory compliance by reducing the industry’s reliance on centralized payment systems operated by Banks. Removing intermediaries from the process could speed up transactions and increase transparency across the supply chain. The technology could also help in tracking of high-value materials such as diamonds.
Smart Contracts for Preventing Alteration of Records
Mining has one of the most complex supply chains among all the industries. Let’s discuss the various steps involved in its supply chain.
- Prospect– Involves identification of land containing promising mineralization for a more detailed examination.
- Explore – Most promising prospects become targets for a detailed exploration program to determine whether there is commercial viability for it to be mined.
- Establish feasibility –Economic viability is determined based on which the firm seeks to raise funds or set out tenders to start the mine development work and other subsequent processes.
- Mine & Move –Removal of mineral resources from the earth and transportation of Ores from source to processing plants.
- Extract & Process – Extraction of products of commercial value from industrial mineral/metal ore & further processing.
- Market & Sell – Process of taking the product to the customers for enabling revenue and profit generation.
A firm in the mining industry can span across all the stages mentioned above, or it can be a part of some of the stages. The risks that the firms operate in the early stages such as prospecting & exploration are high and gradually fall as we move towards later stages. While the technology to assess the size and grade of the ore body in the early stages have become highly sophisticated, still a fair amount of uncertainty and estimation error exist which can be known when the actual mining starts. This process itself can take up to 2 to 10 years or sometimes more. If such data is recorded in digital form, then considering the number of hacks happening in the mining industry, it can be altered.
A mining company could identify its ore body and get this information verified by a trusted on-ground third party, which would be recorded on a blockchain in the form of a Smart Contract. The blockchain record would enable anyone to verify information as well as the specific geographic location of the ore beneath the earth’s surface. It could also link to a physical tag that detects if the ore body is physically moved or otherwise disturbed and communicates that information to the Smart Contract. Smart Contracts are designed to automatically execute specific commands, like notifying the owner or even law enforcement, when they exposed to the external data input (in this case, communication from the physical tag).
Trace Ownership, Secure Provenance of Raw Material and Eliminate Counterfeit Products with ‘Colored Coins’
In a Bitcoin Blockchain network, whenever a transaction is completed, a Bitcoin is spent. But there is a concept in Blockchain called Colored Coins. In a Blockchain network in which Colored Coins are used, at the end of a successful transaction, the spent coin is replaced by a similar coin. This concept can be utilized in the industry to track the ownership of the ore/raw material as well as identify and eliminate counterfeited products.
For this to happen, all the stakeholders of the mining supply chain are supposed to be on the Blockchain Network. When the ore/raw material is transferred from one entity to another, a transaction would be recorded on the Blockchain, and a cryptographic token would be reproduced at the end of the transaction i.e. Colored Coin. After multiple transfers of ore/raw material, starting from the processing plant to the manufacturer of processed metal/goods, whoever possess this coin, would consider being the owner of the ore. It could also be used to cross-verify the origin of the ore/raw material and thus eliminate chances of replacement of the original ore/raw material with a counterfeit ore/raw material.
IoT with Blockchain to Automate Processes, Increase Efficiency and Reduce Cost
Mining companies can use Blockchain Technology to more efficiently process the rapidly growing amounts of data being generated from connected devices. Some technology providers are developing Autonomous Decentralized Peer-to-Peer Telemetry (ADEPT) systems that essentially enable a kind of self-managing IoT. Adept systems could enable automatic reordering of consumable stock when supplies run low, with payment being made automatically upon delivery.
How Blockchain Technology Application is Being Utilized in Various Industries?
The Blockchain is already being used with mining products such as diamonds, which are imprinted with a tiny QR code that links to a digital token verifying their quality, ethical extraction, and authenticity. This is helping minimize fraud, theft, and related insurance costs, as well as creating a much more robust, transparent end-to-end view of the custody of goods.
In September 2016, BHP Billiton, the world’s largest mining firm by market value, announced that it is planning to use Blockchain technology to record movements of fluid samples and wellbore rock. And also to secure the data that is transmitted during delivery. They plan to use this technology to collect live data by the end of 2016. According to their analysis, through Blockchain, they would be replacing the current system in which samples worth up to $100 million are inefficiently tracked through email and spreadsheets.
The firms operating in mining industry coordinate with numerous vendors at nearly each step in the mining process. And this is exactly where Blockchain promises to streamline processes, i.e., a transaction where numerous vendors are involved, and chances of fraud & counterfeiting of products are high. That’s why Blockchain is finding application in so many industries, and mining industry is no exception. We, at Sofocle, are continuously researching for the new use cases of Blockchain and are committed to develop customized Blockchain applications for various industries. To know how we can help you, feel free to contact us email@example.com or visit https://www.sofocle.com/contact-us/.
Read more about our Blockchain Development For Mining and Other Industries