When you drop into your local pharmacy for your medication — whether it is a box of vitamins or a drug prescribed by a physician — you probably do not question the product’s quality or worry whether it will be in stock. But the fact that your medicine is waiting for you on the shelf is an organisational miracle and each box has a long journey behind it.
In most cases, this “invisible story” culminates in a happy ending: a patient who receives the right treatment. However, the journey from the manufacturing facility is long and perilous. According to the Corporate Finance Institute, a supply chain is the system used to produce and deliver a product, from sourcing the raw materials right up to to the final delivery to the end customer.
The supply chain of medicine is especially complex, however. Drugs are not only very delicate products that require special care, but delivery involves multiple stages, stakeholders, and border-crossings in a series carefully orchestrated and regulated steps with precise timing. In such a complex endeavor, many things can go wrong and when they do, it is crucial to have a transparent record of events in order to learn from mistakes and continuously improve supply chain processes.
This is where blockchain’s unique characteristics of offering an immutable and transparent record of transactions can show its strength.
The journey begins
To illustrate some of the most daunting challenges, let’s return to the journey of our hypothetical medicine from factory to pharmacy. Logistics, which concerns the physical delivery of medicines, is only a part of the entire pharmaceutical supply chain. Nevertheless, a Novartis source asserts that it can amount to nearly 40% of total operating expenses. According to the same source, a medicine usually passes through at least “ten hands” before a doctor or patient receives it.
According to Biopharmaceutical Reporter, a news outlet specialised in the biopharmaceutical industry, up to 10% of vaccines are lost in transit due to breakage or problems with cold chain infrastructure.
Once they have entered the system, faulty or damaged items are difficult to track down. Such substandard products are not only potentially dangerous to the health of patients, but also cause tremendous waste: the pharmaceutical industry discards at least $15 billion of product each year due to temperature deviations and this sum reaches $35 billion if we take into account additional costs like product replacement.
Pain in the chain
Once our package arrives at the airport, it starts the next phase of its journey and it is time for it to pass through customs control. Unfortunately, as a Harvard Business Review analysis highlighted, documentation is often manual and paper-based. As a result, paperwork piles up at each handoff and border crossing. Fragmentation of data across documents and siloed IT systems causes delays, and can lead to further errors. Regulations for transportation also differ from country to country, further aggravating the administrative burden.
When our medicine finally arrives at the wholesaler or pharmacy, one hurdle remains before it can be placed on store shelves. How can a distributor reliably check if the box of medicines they received is authentic? The question of provenance might seem trivial, but it is a significant challenge. According to Tegan Keele, US blockchain program lead at KPMG, drugs can be traced if they are packed in a box with a barcode or QR code printed on it. However, visibility decreases as soon as someone opens and unloads that box, because individual units are not yet traceable. This is a major problem: according to a Deloitte report, the pharmaceutical industry loses a massive $200 billion a year due to counterfeiting. However, the gravest cost of counterfeit drugs is their toll in human lives: according to the same report, fake drugs are accountable for about one million deaths per year, a tragedy that particularly affects developing countries.
Blockchain: always on the verge?
The pharmaceutical supply chain is ridden with fragmentation of processes and information asymmetries that make compliance with regulations and the monitoring of sensitive cargo a complex and expensive task. In short, it is an industry with multiple stakeholders with potentially diverging interests, where trust is paramount.
This is a use case for blockchain. One of its core purposes is to create a trustworthy, secure and inalterable ledger of records accessible to multiple stakeholders.
Proponents contend that if this were combined with smart contracts and Internet of Things (IoT) sensors to measure things like temperature, geolocation humidity and shocks, the entire supply chain could be made more transparent. In turn, this would lead to greater accountability and ultimately, less waste. You might even envisage a scenario where paper-based agreements like insurance policies and vendor contracts, and even payments are fully automated.
Unfortunately adoption of blockchain for supply chain management has been rather slow and mainly limited to pilot projects. So why does blockchain seem to be always on the verge but never breaking through to adoption?
One of the core issues is scalability. Managing a global supply chain potentially involves thousands of interactions between individuals and machines. Existing blockchains that rely on proof-of-work (PoW) mining can generally only process about 7 transactions per second on average. Indeed, scalability and excessive energy consumption are frequently cited by researchers as significant barriers to blockchain adoption in supply chain networks, both of which stem directly from PoW mining.
An even greater concern, however, is the technical complexity of blockchain and the degree to which it is interoperable with existing systems. Enterprises tend to want to combine blockchain with their existing back-end systems rather than starting from scratch, but this can often be an onerous undertaking involving high research and development costs. These issues are likely to be particularly prevalent in the pharmaceutical sector, due to the comparative complexity of its supply networks.
Perhaps the most interesting finding across recent studies is that security and privacy are currently regarded as a drawback rather than a benefit of blockchain.
If blockchain is to be a viable option for supply chain businesses, it needs to be flexible, upgradable, environmentally sustainable and cost effective.
The pharmaceutical industry could clearly benefit from blockchain-based networks that would enable information and resources to flow through the supply chain with less friction and waste. While blockchain holds the potential to ameliorate these issues, the theory remains far removed from practical reality. At Geeq, we are developing a technology to close this gap. We have designed a new type of blockchain network that can truly enable stakeholders to reduce information asymmetries and coordination problems, while increasing transparency.
This new type of consensus mechanism called proof-of-honesty, does not require costly mining. Unlike other public blockchains, there are no “block proposers” that win the right to validate the next block of transactions. Unlike other enterprise blockchains, there is no delegation to validate transactions to special, trusted nodes. Instead, all nodes are treated equally, follow the same rules and compete in terms of the accuracy of their ledgers.
By making ledger accuracy, rather than mining power, the fulcrum of competition, blockchains can be created that support far higher transaction throughput, even with modest numbers of nodes. This degree of scalability will be an essential prerequisite for widespread deployment of blockchain in the supply chain sector.
Stephanie So is an economist, policy analyst and co-founder of Geeq. Throughout her career, she has applied technology within her specialist disciplines. In 2001, she was the first to use machine learning on social science data at the National Center for Supercomputing Applications. More recently, she researched the use of distributed networking processes in healthcare and patient safety in her role as a Senior Lecturer at Vanderbilt University. Stephanie is a graduate of Princeton University (A.B.) and the University of Rochester (M.A., M.S., Ph.D).
Cardano Reaches All-Time High as Founder Pitches to Mark Cuban
Cardano, the fourth-largest cryptocurrency by market capitalization, reached a new all-time high on Sunday, one day after Charles Hoskinson engaged in a conversation with Mark Cuban around the topic of Cardano’s potential.
ADA, Cardano’s token, has gained more than 60% in value over the past 2 weeks according to CoinGecko data, reaching an ATH of $2.45 on May 16th at a time when projects using Proof-of-Work (PoW) consensus protocols like Bitcoin experienced a steep drop in value.
Long seen as one of the biggest potential alternatives to the Ethereum network despite not having completed the development process, Cardano is now gaining traction as news of Tesla’s decision to stop accepting Bitcoin due to environmental concerns continue to affect projects relying on PoW.
While Ethereum will be transitioning to a Proof-of-Stake consensus protocol with the release of Ethereum 2.0, the network still uses a PoW approach that might have prevented it from being considered as a reliable alternative at this time.
This barrier should also be added to concerns about the ability of the network to escalate and operate efficiently at a time of high congestion.
Cardano’s latest releases provided developers and users with the option to create native tokens but the platform is still lacking smart contract features. The Alonzo update, which is expected to occur by the end of this month, will add smart contract support and open the doors for new uses of the network.
Hoskinson Pitches ADA to Mark Cuban Via Twitter
Mark Cuban, an American billionaire with a net worth estimated around $4.3 billion, has shown an increasing interest in cryptocurrencies such as DOGE and BTC over the past months.
The Dallas Maverick’s, an NBA team owned by Cuban, even started accepting the popular Shiba Inu-based cryptocurrency as a valid payment method for acquiring the team’s merchandise and tickets.
The entrepreneur started a Twitter discussion by asking his followers if they were” personally, able to use $ADA for anything?”, with thousands of followers quickly providing their opinions and retweeting his question.
You’re breaking my heart mark…. But levity aside. Come by the farm in Colorado sometime and let’s chat.
— Charles Hoskinson (@IOHK_Charles) May 15, 2021
One of such followers was Cardano’s Founder, Charles Hoskinson, who about an hour later replied with an invitation for Cuban to visit him in Colorado to chat about the project.
Hoskinson would later mention that the project has, “five million students in Ethiopia, thousands of assets issued on Cardano, a nice DApp ecosystem brewing for smart contract launch, a new VC model with catalyst, huge community.”
While Cuban seemed to find this information interesting and recognized Hoskinson’s status as an “ETH OG”, he also shared his belief that the platform was still not “there yet” in terms of applications while also mentioning the lack of smart contract functionality.
All Eyes are Set on the Alonzo Update
Like Mark Cuban, Cardano critics have been quick to point out that the network still lacks an essential aspect of blockchain technology: smart contract functionality.
This has made the Alonzo Hard Fork one of the most anticipated deployments for the network, as it will allow the network’s users to actually test the claims made by the project’s development team.
Hoskinson also Tweeted a 12-minute video in which he talked about the project’s history, goals, and status, directly addressing it to Cuban.
Mark Cuban Cardano https://t.co/x0zYCeSIRd
— Charles Hoskinson (@IOHK_Charles) May 15, 2021
In the conversation with Cuban, Hoskinson replied to the concerns around Smart Contracts by tweeting:
“We rebuilt the entire smart contract model. It took four years to do it, but it’s necessary if you actually want security and scale. No more DAO hacks, less off-chain code. Consistent operating cost. Furthermore I want all devs not just solidity devs”
This smart contract model will finally be seen with the release of the Plutus Core in the Alonzo update, which the project’s developers assure will provide greater security and flexibility.
With Ethereum 2.0 also advancing on its development, the success of the Alonzo hard fork will prove to have an important impact on how the race between Ethereum and its competitors advances in the future.
Especially at a time when enterprises are paying more attention than ever to environmental-friendly alternatives to Ethereum and Bitcoin.
Crypto Companies Raised $2.5 B in First Quarter of 2021, the Highest Ever!
2021 bull run has propelled Bitcoin, altcoins, and the whole ecosystem into the mainstream limelight as well as adoption. The growing demand for digital assets is evident from the number of mainstream financial firms adding support for cryptocurrencies as well as the number of crypto companies that have become a billion-dollar company after the latest funding round. The first quarter of 2021 saw crypto companies raise a combined capital of $2.5 billion the highest ever and nearly double of 2018 second-quarter total fundraise
Many of these crypto companies attracted funding from mainstream behemoths including Chainalysis whose valuation grew into billions after its latest funding round of $100 million that saw participation from TIME Magazine owner Marc Benioff. Apart from Chainalyis other crypto firms that raised capital to the tune of hundreds of millions in their latest funding round include BlockFi that raised a whopping $350 million in their Series D funding round and Blockchain.com which also raised $300 million to see its valuation grow to $5.2 billion.
Crypto Companies in High Demand
The multi-fold increase in valuation of several crypto companies along with the public listing of many others reflect the growing demand for not just digital assets but also for experienced service providers from the crypto space. Coinbase created history this April after it made its public debut on Nasdaq with an $80 billion-plus valuation and over 50 million registered users.
Apart from crypto companies growing demand in the mainstream market, many traditional financial firms and payment processing giants such as PayPal and Venmo with over 300 million and 70 million customer bases respectively. PayPal that was once a part of Facebook’s infamous Libra association also opened a crypto spending option for its customers across millions of its verified vendors. MasterCard and VISA have also added crypto payment support in one form or other, not to mention, only a few years back these payment processing giants were blocking crypto-related transactions via their platform.
Bitcoin is more energy-efficient than Gold: Galaxy Digital Report
A report from the diversified financial services firm Galaxy Digital has revealed that Bitcoin is more energy-efficient than Gold.
Digital assets investment firm Galaxy Digital has published a report detailing that Gold consumes more energy than Bitcoin. The report also notes that banking institutions average twice the energy consumption of the leading cryptocurrency.
Bitcoin has, in the past, been frequently weighed against different assets but none more than Gold. Some industry experts have even described it as the digital version of gold. However, there have been a lot of questions surrounding its energy consumption. Bitcoin’s carbon footprint in 2019 was so huge that it was compared to carbon emissions in the cities of Hamburg and Las Vegas by the Technical University of Munich.
On more than one occasion, the flagship cryptocurrency has been criticised by individuals and institutions that believe it is not energy efficient. The report from Galaxy Digital, however, seems to challenge these claims. It comes just a few days after Tesla announced it would no longer accept Bitcoin payments for its electric vehicles. The automaker cited concerns for its energy usage as rationale for the decision.
The report pointed out that while most people are eager to criticise Bitcoin, they hardly do the same to other financial industries and assets. Galaxy Digital explained that energy usage by the traditional financial industries was harder to assess because the institutions don’t submit data on electricity consumption.
The author of the report was keen to acknowledge that the Bitcoin network consumes a lot of energy, adding that the energy consumed was vital in making the network robust. According to the calculations presented by Galaxy Digital, Bitcoin consumes 113.89 TWh per year. To put this into context, the cumulative energy used by always-on devices annually in the US is estimated to be 1,375 TWh. Bitcoin’s annual electric consumption figure is about twelve times less.
In the case of Gold, the author managed to find a workaround for estimation by evaluating all the processes involved. The author arrived at a rough figure of 240.61 TWh/year, which is more than twice the figure recorded by Bitcoin.
The report considered various aspects for the banking industry, including Automated Teller Machines, card network data centers, banking data centers, and bank branches. Based on the analysis, the average power consumption was noted to be 238.92 TWh/year — slightly less than that of Gold.
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