The crypto space is largely driven by emotion and speculative hype, and the prevailing sentiment around it has shaped its broader impact and influence at a global scale.

This doesn’t just affect retail investors—but also executive decision makers within a wide range of industries, such as logistics and supply chain managers.

Beyond the sentiment underlying crypto, there exists a very viable piece of technology that these business leaders can use to their advantage. This, of course, is the blockchain.

Blockchain technology has several use cases that make them potent tool to fuel business growth and operational efficiency across various sectors. It’s an enterprise-grade solution that’s designed for regulated organisations.

Blockchain is the underlying framework of both retail and institutional crypto. So if you’re looking to understand what makes institutional crypto a good tool for supply chain firms, then you’re in the right place.

This article examines what institutional crypto means, why it matters for modern supply chains, and how leaders in the industry can use crypto technology and the blockchain to stay ahead of the competition.

Let’s jump right into it!

What Is Institutional Crypto? 

Institutional cryptocurrency distinguishes itself from traditional retail crypto in several ways. For one, it’s designed for regulated entities like banks, corporations, and large businesses (including, of course, supply chain ventures) as opposed to regular traders. 

This separation has many benefits for these institutions. It removes price slippage from the equation, enabling large volumes of crypto to be transacted without affecting the liquidity of the market. 

This is a common problem for individuals and entities trading large volumes of crypto in the retail market, as their bids and asks may cause big price swings that the market could react to in the short-term.

It also grants access for these institutions to dedicated OTC desks with their own agent, which is one such offering promised by regulated institutional crypto exchange Independent Reserve, among many other platforms.

On top of getting access to dedicated infrastructure, institutional-grade crypto activities also adhere to stricter standards and regulations than the retail-based crypto space. 

It’s not uncommon for crypto platforms to require a high minimum transaction threshold before they can add new clients to their existing OTC network. This exclusivity allows these platforms to better cater to their specific customer base and improve coordination among their network.

Supply chain leaders can benefit from this type of network because the systems in place tend to fit well with what they’re doing. 

Regardless of who owns a token within the blockchain system, these systems operate the same at the end of the day. This means that supply chain leaders get the entire range of benefits of having a stake in blockchain.

What are the Benefits of Being on the Blockchain?

If the term blockchain is a concept that flies over your head, then let’s narrow it down and start with its definition. 

The blockchain is a shared digital ledger that records transactions across a peer-to-peer network. These transactions are secure, transparent, and impossible to alter once recorded. They’re also accessible by multiple participants in their own isolated system.

In the context of business feasibility, the blockchain offers several advantages that improve operations through various means.

It improves traceability by assigning each transaction or asset a unique cryptographic hash recorded on the blockchain, creating a tamper-resistant history that allows items to be tracked and verified through each stage of the supply chain.

It also improves coordination between partners due to its self-executing nature. No middleman needs to be present to securely execute blockchain-based action, as they’re all automated through a smart contract. This translates to faster and more affordable verification for partners across the supply chain.

For supply chain leaders overseeing a complex supply chain network, being blockchain-proficient can lead to a whole lot of benefits across the entire system. 

When suppliers are on the same ledger and shipment records are added to the unalterable blockchain database, there won’t be any question about whether a piece of inventory has moved on to the next stage of the fulfilment process or not. In turn, this makes the company a whole lot more productive, precise, and efficient.

3 Real-World Applications of Blockchain in Supply Chains

Now that you’re aware of blockchain’s feasibility as an institutional asset, the question then becomes how can it be integrated into the day-to-day operations involving supply chain logistics and management. 

The good news is that there are multiple applications of blockchain in this specific sector. Let’s look at each of them in greater detail.

1. Improves Product Traceability

One of the most valuable applications of blockchain in supply chains is improving product traceability. 

Because blockchain records transactions in a permanent and tamper-resistant ledger, each step of a product’s journey can be verified through the blockchain. This allows supply chain managers to track origin and movement with a heightened degree of accuracy thanks to blockchain’s record-keeping system.

In a supply chain environment, this level of transparency and traceability is critical. It allows the delivery of goods to be tracked in real-time. 

A delay in the delivery of goods like food, medication, and electronics can have broad implications to the intended recipients—and with blockchain, managers can trace bottlenecks quickly and efficiently, giving them ample targeting to resolve the issue without disrupting the whole network.

The manager isn’t the only one who can benefit from this traceability. With every transaction securely recorded on the blockchain, people across the supply chain gain a clearer view of how goods move through the supply chain—prompting them to fulfill their word and ensuring a smooth flow of goods to maintain a good standing.

2. Supports Logistics Automation

Another blockchain application in the supply chain system is its ability to support logistics automation. This is largely made possible through smart contracts, which are self-executing programs built into the blockchain that automatically carry out actions once predefined conditions are met.

In logistics systems, it’s usually the case for documents to be manually reviewed and approved before proceeding to the next step in the chain. This can add delays to the administrative process, slowing down operations and costing the company extra overhead costs in the process.

With blockchain technology, particularly smart contracts, the steps that involve reviewing and approving documents no longer need to be overseen by a supervisor. The individual can simply submit the document through the blockchain network and have it processed once the conditions are met instantaneously.

In essence, when routine processes are handled automatically through blockchain-based systems, organisations can move goods faster and minimise delays caused by verification bottlenecks. This makes operations run more smoothly across the supply chain network, thus fulfilling the delivery of goods to the final consumer at a much faster rate.

3. Provides Verification Records

Another real-world application of blockchain technology in the supply chain space is its ability to verify records of transactions and the movement of goods.

When a piece of inventory is recorded in the blockchain, it has its corresponding hash code. When it gets transferred to a new receiver, the transaction can be tabulated, time-stamped, encrypted, and recorded in the blockchain.

This process enables businesses to maintain a clear record of goods movement across the supply chain. Beyond that, thanks to blockchain’s tamper-resistant structure, these records are difficult for anyone within the supply chain to manipulate. This makes verifying shipments more dependable as they go through the distribution process.

We hope that we’ve helped you understand the significance of blockchain and its impact on the supply chain network. All the best in integrating this potent new technology in your own business operations!