Blockchain is typically associated with controversial currency Bitcoin. It was created as a way to track and store transactions in a ledger that was secured using cryptography. Unlike other ledger methods, such as book records, blockchain provides a decentralized data chain, increasing its reliability, and this has caused its use to extend from providing Bitcoin security to all manners of applications. The data entered is verified by the computers in the network, improving its veracity and eliminating intermediaries. At the same time, cutting out the middleman reduces time and cost of data interactions, changing the ways in which we access, verify and make transactions.
But besides cryptocurrency mining, what does blockchain have to do with minerals and why must miners incorporate it in their processes?
UNDERPINNING DATA INTERACTIONS
Blockchain was first associated with Bitcoin and cryptocurrency transactions through a Distributed Ledger Technology (DTL) recording all transactions in chronological order and allowing participants to track and verify data in a decentralized way. The peer-to-peer network’s creation is attributed to Satoshi Nakamoto (whose real identity is still unknown) in 2008. Blockchains are appearing in a variety of commercial applications today, Investopedia explains. “Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain,” it says.
One of DTL’s flagship advantages is streamlining companies’ internal operations, thus reducing costs, errors and time delays of reconciling traditional ledger methods. “Electronic ledgers are much cheaper to maintain than traditional accounting systems; the employee headcount in back offices can be greatly reduced,” Investopedia explains. Also, fewer errors eliminate steps in data confirmation, minimizing delays and capital risks over pending transactions.
The distributed database system can significantly simplify business operations, and there are discussions around this technology being applied in voting processes, vehicle registrations, medical records and of course, mineral mining.
FIVE WAYS IN WHICH BLOCKCHAIN IS DISRUPTING MINING
Named the tech breakthrough megatrend by PwC 2017’s report, blockchain is a catalyst for major change across global industries. “The potential impact of blockchain is driving businesses to rethink existing business models, re-examine opportunities previously thought non-viable, and explore a new frontier of opportunity that can impact the bottom line and benefit society,” explains Mining.com. As for mining, the industry can significantly benefit from incorporating this technology. Keep reading for five ways in which blockchain can disrupt the industry!
Chain of custody:
Mining’s importance for global development is undeniable but geopolitical, financial and social factors can put the industry at risk. “Social concerns are driving a new wave of rules and legislation making it mandatory for manufacturers to not only disclose the source but importantly reinforce the concept of ethical sourcing,” explains Mining.com. Transparency across the value chain takes importance when it comes to minerals. Blockchain’s contribution is like a sort of ultra-high-tech tracking system. “Simply put, it is the knowledge of every set of hands the minerals have passed through, between the moment it is extracted, to when it lands in the hands of the final owner,” says Mining.com.
Automating ore acquisition and mineral rights:
Registering mineral rights can be a bureaucratic nightmare. But, what if blockchain could automatically register mining discoveries in a secure system to claim mineral concessions worldwide? It can be done! DTL can be used to record ore acquisitions and transfers between companies buying minerals from third parties, making the process more transparent and efficient, while creating a record of ore blending.
(Socially-conscious) Diamonds are a girl’s best friend:
Given the increasing concern over blood diamond mining, how can prestigious retailers, such as Tiffany’s, guarantee to their buyers that their diamonds are clean of human exploitation? Blockchain allows transparent tracking and verification of the production process. The English company Everledger has been the pioneer, placing more than 1.6 million diamonds on a blockchain. “Entries on the digital record include dozens of attributes for each diamond, including the color, carat, and certificate number, which can be inscribed by laser on the crown or girdle of the stone,” says Mining.com. Just like diamonds, the technology can also be used to record production chains of other minerals.
IoT and mining automation allows a record to be kept of multiple data variables, including machinery efficiency, temperature and energy consumption. With behemoth amounts of data to hand, the question turns to how to allow operators to process it. Once again, blockchain could be the answer. Its Peer-to-Peer Telemetry enables device autonomy in IoT transactions and marketplaces, making industry process more smart and efficient, points out Mining.com.
Getting rid of the middleman:
Bankers and traders are the usual intermediaries between miners and end-users. But in trading, blockchain is not only limited to hosting Bitcoin exchanges but can also evolve to enable commodity trading. “Blockchain can enable trading marketplaces for ore or energy, where regulators, miners and their customers can trade directly without the necessary involvement of intermediaries,” says Mining.com. “This can provide miners real-time information on demand, allowing them to respond accordingly and reduce the costs of intermediation.” BHP, Australia’s biggest mining company, already took the blockchain step to improve its supply chain.
These are just the steps developments that are taking place right now, but it seems like blockchain is losing no momentum in the future. Philip Hopwood, Global Mining Leader at consultancy Deloitte told Mexico Mining Review that its uses in mining could extend far past those previously mentioned. “Blockchain could allow tokens for underground gold to be created to serve as currency, bypassing the need to mine it at all. And virtual mining and simplified supply chains could derive from this,” he said. “The pace of technological innovation just continues to pick up.”