If you know anything about cryptocurrency, you probably also know a bit about blockchain technology. Because it was originally designed to be a public transaction ledger for cryptocurrencies, namely Bitcoin, it has a lot of built in security features to reduce theft and fraud. For those who may not know all that much about it, here's a quick Blockchain 101 intro!
A blockchain is a database that is used to store records, or in the case of cryptos, a ledger for holding transaction details. However, instead of the data being in nice neat rows and columns like a traditional database, or spreadsheet, a blockchain stores data chronologically in time stamped blocks. As each new block is generated, it's added to the end of the chain and linked to the previous block in chronological order via a cryptographic hash signature, thus forming a 'chain of blocks'.
The records in a blockchain are also unique and unchangeable, representing a one-off transaction that happened at a precise point in time. It's a bit like the way a photograph is a record of an instant in time. With a blockchain however one doesn't have the ability to 'photoshop' and change anything. If records within a block are changed in any version of the blockchain, that block gets a new signature that no longer corresponds to the encrypted signature within the block following it and is therefore usually rejected by other nodes within the network.
Further, unlike a traditional database or spreadsheet, which is typically stored on a single server, or computer (hopefully with secure backups), a complete copy of the blockchain database is stored on multiple computers, called peers or nodes, across a network. Every time a new block is added, it's verified by all peers on the network and, if accepted, every copy of the database across the network is updated. This site contains a very good description of how new blocks are generated and the steps involved in adding them to the blockchain. It also explains how the linking cryptographic hash functionality works to ensure that all blocks retain their integrity.
How could blockchain technology benefit mining?
In traditional data storage systems, historic data can easily be lost ie deleted, lost through system failures etc. If it's safely stored in a blockchain, those risks are vastly reduced. Management would then have access to a complete and traceable work history of things like asset and reserve calculations, financial transactions, health and safety records, mine planning records, environmental records, personnel records, and various other work processes. BHP for example is using the technology to keep a record of their wellbore fluid and rock sample movements.
Blockchains remove the risk of important data being altered or tampered with; ultimately it represents a securer way of storing data whilst at the same time allowing wider access across a network of operators. Shared data via traditional means is vulnerable to corruption if those with write access decide to change anything. Blockchains are specifically designed to prevent this from happening, which means more users can safely be allowed to access the data. That improves transparency and allows people to do their jobs more efficiently as they have direct access to data that previously may have had to be 'obtained' for them. Further, because data in blockchains is encrypted it makes life a little bit harder for hackers.
Tracking Product From Ground To End Consumer
The process of a mineral from ground to end consumer is a long, complicated procedure invariably accompanied by a complex paper trail. In the past this process was largely manual and still is in many respects. As is the case with most manual processes, the more 'people input' and people generated pieces of paper that are involved the more risk there is of error, fraud, unauthorised disclosure of sensitive / confidential information, and costly delays.
Digitising this process via blockchain has the potential to reduce months and weeks to hours and days. Required approvals can be granted immediately the data becomes available on the blockchain. There would no longer need to be a paper trail documenting the progress of the mineral from ground to end user because all the information will be securely stored on the blockchain. That improves trackability, which has important implications for a number of reasons. For instance, in an endeavour to promote sustainability and ethical production, companies like Apple are increasingly monitoring where the minerals they use in their products come from to ensure they're ethically mined and processed. This is now feasible thanks to blockchain.
Blockchain will also do away with the need for paper documents to arrange things like transport for processed minerals, raising invoices, or recording payments. These can be done via smart contracts running on the blockchain.
Blockchains And Smart Contracts
As you'd expect of a platform that evolved to serve a trading market, blockchain is particularly adept at facilitating the secure transfer of digital assets. It's done via programs called Smart Contracts, which are stored in the blockchain. Their job is to automatically move assets between accounts when a set of pre-determined conditions are met. The usefulness of smart contracts though is not limited to crypto trading! They can be applied to a whole range of trading activities to ensure the secure exchange of goods, services, and trade documents.
Mining companies are huge consumers and blockchain's ability to generate and maintain these smart contracts could automate much of the buying and selling process. Further, combining these programs with data produced by the IoT to automate procurement and payment processes would considerably simplify and speed these up. For instance, a fuelling station hooked up to a digital ledger could autonomously notify a fuel supplier that it's running low and order more. The depot dispatches the fuel and is paid automatically by smart contract upon delivery whilst the blockchain keeps a permanent record of it all. When you consider the many hundreds of these types of transactions mining companies do on a regular basis, that's a lot of potential automation, streamlining and cost savings.
Blockchain And The IoT
Overall, blockchain in fact has the potential to considerably expand uses for IoT data. Vehicles with smart maintenance software onboard for example could order their own spare parts as required, and 'authorise' payment upon delivery of the parts. Of course, it still needs a human to actually install the parts but a complete history of parts ordered, and how much it's costing the company to keep the vehicle running, is automatically stored on the blockchain. This in turn will allow mechanics to analyse the performance of the vehicle, identify where it may be running into performance issues the most, and make a decision about its 'future' with the company. Likewise, data fed back from other equipment and systems hooked up to the IoT could be used to automate their maintenance purchases, monitor performance, and even confirm compliance with environmental, sustainability, and ethical standards if necessary.
Blockchain And Compliance
Implementing blockchain technology could also benefit compliance. There is a requirement for mining companies to manage a great deal of official documentation relating to licences and permits, reporting responsibilities, mine planning and compliance, health and safety, personnel records, stock management and inventory, environmental compliance, and so on. Blockchain represents a convenient, transparent, and highly secure way of storing this data. If implemented correctly the technology, with its chronological cryptographic linking and unalterable data storage, would provide considerably more traceability and allow for the permanent secure storage of important historical data. Pertinent information could also be readily made available to stakeholders and various authorities as a means of providing transparency around the company's operations and for verifying and documenting compliance.
Monitoring Production With Blockchain
Reconciling mining output with what is sent to processing units can be problematic. Using blockchain technology combined with effective measuring technologies and procedures could greatly reduce this. The data can be fed directly into blockchain from the measuring equipment for automated reconciliation and recording. Smart algorithms could subsequently analyse this data and potentially identify any problem areas.
Reducing Costs Associated With International Monetary Deals
Utilising blockchain technology could help reduce international trading costs. Mining is a global industry and many mining companies these days have reason to deal in multiple currencies. This incurs a heap of charges – international bank transfer fees, exchange rates etc. Digital currencies transcend political boundaries and could be used as payment options, thus reducing the costs involved in dealing with international fiat currencies and speeding up the process as well.
Blockchain would also be invaluable for keeping track of inventory across an entire network of operations.