Blockchain and Bitcoin: Impact on Global Logistics and Supply Chain Management

Running Head: GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Global Logistics & Supply Chain Management
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1GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
1.0 Introduction
A blockchain is defined as a record or list used to keep track of transactions between two
particular parties. It is such a record that cannot be changed after the record is complete
(Heilman, Baldimtsi and Goldberg 2016). Generally after completion of recording a data, a
blockchain is encrypted in order to maintain its security.
On the other hand, bitcoin is an online crypto currency that is used to make secure and
worldwide payment through the digital medium without keeping any track or traces. Bitcoins are
very secure modes of payment that keeps no trace of its origin or the destination and one user can
store it in the form an online wallet (Fauzi, Nasutio and Paryasto 2017). The basic difference
between the two is that bitcoin is the currency and blockchain is the ledger record for the
transaction of bitcoins.
2.0 Identification and Addressing of Key Issues
2.1 History of Blockchain and Bitcoin
The history of blockchain dates back to 1991 when two researchers W. Scott Stornetta
and Stuart Haber started developing cryptographic chain of blocks. Some other researchers also
improved on the design but it was not until 2008 that it was actually made useful by Satoshi
Nakamoto for using as a ledger for bitcoin transactions.
The term bitcoin was first registered in 2008 when Satoshi Nakamoto registered the
domain name bitcoin.org (Cachin, Sorniotti and Weigold 2016). The first bitcoin network was

2GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
started when the founder Nakamoto mined the first block on the “genesis block”. Also it has
been revealed that in the initial period, Nakamoto mined at least 1 million bitcoins.
2.2 Real Life Application of Blockchain and Bitcoin
Blockchain currently finds widespread use around the world due to its vast number of
benefits over common currency exchange systems. One of the most popular real life applications
of blockchain is international payment system. In the existing system, the international payment
requires at least 2 business days due to long verification process through Automated Clearing
House (ACH) (Dunphy and Petitcolas 2018). In addition, such transfers involve huge amount of
additional fees (generally in the region of $50). As a result, some of the users may not be able to
afford to make such payments. On the other hand, using blockchain technology, such payments
can be done within a period of a mere 10 minutes and also at a very low transfer cost (25-50 US
cents). Hence, it is much easier as well as cheap and hence, it can be used by anyone.
Although bitcoin is a secure crypto currency, it is yet to find real world applications
extensively. This is mainly because of the dark web associated with bitcoins. Bitcoins are known
to be a popular payment method in the dark web where criminals, drug dealers and other
unethical users make or take payments through bitcoins in order to prevent any trace of origin or
destination of the payment (Eyal et al. 2016). Hence most of the people as well as business
organizations associate bitcoin with criminal transactions. As a result, the real life use of bitcoin
is restricted. However, with increasing value of bitcoins as well as interest of people in investing
in bitcoins, many banks and other business organizations now accept payments in the form of
bitcoins.