Blockchain, edi, immutability

Data Masons is pleased to present our blog series on Blockchain and EDI. Blockchain is quickly becoming less of a buzzword and more of an inevitability in the B2B world as more companies utilize it in their business practices, including in EDI processes. In this post, we'll discuss immutability in Blockchain, and what impact that feature will have on EDI.

With Blockchain, immutability is basically the concept that once data is entered as a block onto the chain, it cannot be changed or altered. In simplest terms, that means no more data fixing. But that doesn’t mean that errors won’t occur. 

Crash Course: What Exactly Makes the Data Unchangeable?

When we say the data is “unchangeable,” it doesn’t mean that the data is set in stone and sealed, but rather, there is no way to change the data without it being shutterstock_715107325_blockchainlocksnoticed and having a significant impact on the entire chain.

The unchangeable nature of the Block is due to a function called hashes. Hashes are mathematical functions which turn the data into an output of characters which represents the data on the Block. The hash acts as the fingerprint for the data, and blocks are ordered according to the previous block’s hash. If a hash has been altered, it will break the chain and be easily discovered. If there is an error in the data entered, in order to preserve the integrity of the chain, the user will need to create a new block with the corrected data, rather than changing the already-entered information.

 

EDI, Business Transactions, and the Error-Prone Nature of the “Throw it Over the Wall” Approach

One big reason this will have a significant impact on the EDI world in general, is that by their nature, business transactions between companies and trading partners are prone to frustrations and errors.

Historically, business transactions which are now covered by EDI, such as purchase orders, invoices, and payments, were exchanged by mail, fax, phone, and computer. In these exchanges, documents were registered in ledgers and replicated in many different forms of storage- from file cabinets to digital media. Each party had their own copies of the transactions.

Think of this model as “throwing it over the wall,” because there’s no immediate feedback when transactions with errors are tendered. This is still the typical manner by which business is conducted today, and there are inherent challenges. If you’ve ever encountered disagreements between transactions, you know it’s a time-consuming headache to fix. For example, if you show an invoice as paid, but your trading partner claims it’s still open, you’ll need to do research, revision, and reconciliation, to name just a few steps.

But why do these errors occur in the first place? Why are transactions between trading partners more prone to them? If you’re working with EDI or your company’s business transactions, you probably already know the answer. Every trading partner has their own requirements, and the more humans are involved in these transactions, the more likely there are to be mistakes. EDI helps, but advances in technology, if they’re leveraged by EDI solutions, will eliminate some of the remaining pains.

If an EDI system utilizes Blockchain, “throwing it over the wall” will not only no longer be an option; it will be obsolete. With Smart Contracts, transactions will be automatically validated before they’re entered. There will be a clear ledger of the transaction that has been approved by multiple nodes, and which shows the history of every step in the transaction and business relationship.

 

Get Prepared for Blockchain

Blockchain technology is poised to make a large impact on how companies integrate their business interactions today via EDI and API’s. To learn more about how you can make sure your EDI system is ready for the challenges of Blockchain, download our brief or read the other posts in our series on Blockchain and EDI.

Download the Blockchain for EDI Brief

Also in This Series:

Blockchain for EDI: How Secure is It?

Blockchain, edi, security

Data Masons is pleased to present our blog series on Blockchain and EDI. Blockchain is quickly becoming less of a buzzword and more of an inevitability in the B2B world as more companies utilize it in their business practices, including in EDI processes. We're starting our series by addressing the most important question that accompanies any new technology. How secure is it? Sometimes it seems like technological advances face a constant battle between ease of use and security.

While no technology can be completely risk-free, Blockchain does have some advantages due to the way information is added and stored, and security protocols which are unique to Blockchain. Read on to learn more about how security works, and what it means for you as an EDI user.

 

What, Exactly, is on that Chain?

Whenever a transaction is processed using Blockchain (also known as “the Block), it is added to a limitless chain of linked transactions, or blocks. This distributes a copy of the chain and transaction throughout the Blockchain network, which results in a decentralized, distributed ledger.handshakeblockchain

 

The Security of Immutability

The blocks in the chain are immutable, which means that they can’t be modified once they’re added. If changes need to be made, this requires a separate correcting transaction, rather than a change to the transaction itself.

Even though shifting from correcting ledgers to creating new ledgers for corrections could be a pain, it has a couple of advantages. First, it will force companies to adjust their business practices to minimize the chance of mistakes and the need for corrective transactions. Second, it makes it extremely difficult for the data to be attacked because of security protocols such as Proof of Work.

 

Smart Contracts to the Rescue

But the need for corrections will be minimized, thanks to Smart Contracts. We'll cover them more in depth in a future blog post, but simply put, Smart Contracts will do the work to make sure that each transaction is correct BEFORE it takes place, without the need for human intervention. Today’s method often relies on validation from disparate and disconnected systems, but a Smart Contract provides another type of security for Blockchain users: assurance that transactions are correct before and after they take place.

We'll also go over immutability in the future, including, why exactly a block is unchangeable, but here’s what it means in terms of security: if a hacker or other malicious party wants to alter any data on the Block, it would mean altering the entire chain, and they would not be able to achieve a consensus. The definition of consensus in terms of a Blockchain principle is outlined in further detail in Blockgeek’s awesome post, but suffice it to say, it’s a necessity of any Blockchain transaction, and makes Blockchain a much more secure way of doing business than today’s standards.

 

Is Your EDI System Ready?

The bottom line, though, is that the Block is only as secure as the software interacting with it. It’s an exciting buzzword and you want to make sure that your EDI system is not only eager to use it, but prepared to keep it secure and give you the peace of mind that you need. Download our brief or read the upcoming posts in our Blockchain and EDI series to learn more about how to evaluate your EDI system for this emerging innovation.

Download the Blockchain for EDI Brief