Volvo experimented with its own blockchain token for payments to suppliers and logistics coordination. This initiative intends to ease the process of transactions with various supply chain pa
Blockchain technology continues to grow outside the realms of the financial markets. As leading companies look into ways to resolve their problems within the complex global supply chain system. Specifically, Volvo Group announced trials using its own cryptocurrency aimed at easing the process of payments and coordinating activities.
Information management, artificial intelligence, and analytics director at Volvo’s logistics operation in Belgium, Ivan Branco, announced the move recently. While not attempting to go the way of the public cryptocurrencies, Volvo looked into ways to create a closed blockchain system. They facilitated transactions between the suppliers and the transportation providers.
The company chose to develop a private blockchain token as a means of improving coordination. Volvo designed the proprietary token to coordinate supplier transactions instead of creating a publicly tradable token. Volvo will use a single blockchain token to settle transactions between material suppliers, transport providers. And the company while recording transport orders on a shared ledger.
According to Ivan Branco, Volvo’s approach in evaluating blockchain technology is based on how blockchain addresses business issues instead of cryptocurrencies. He stated that most companies still see blockchain as a means of crypto speculation, which makes it hard for companies to adopt the technology despite its usefulness.
The Volvo blockchain project uses a private network with only authorized suppliers and partners and is not based on public blockchain systems. It relies on its own token, which helps achieve coordination and transaction settlement without utilizing any public crypto-assets.
This strategy reflects the way firms use blockchain technology, considering operational convenience and business needs, rather than the decentralized aspect of it. Those who support such an approach argue that an interoperable infrastructure can be developed, allowing different corporate networks to share information with each other.
Others doubt that permissioned blockchains will become something more than a separate closed ecosystem or will remain a database. In any case, Volvo’s experience cannot provide the answer, but it shows the approach of major manufacturers to the utilization of blockchain as a means for getting real business benefits.
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