Blockchain in the mining industry is a developing topic — here’s a look at applications and what the future could be for this exciting space.
While blockchain in the mining industry might not seem like an obvious marriage, many are calling it the future of mining. Lots of industries often overlap, and the story is no different when it comes to the intersection of cybersecurity, blockchain and mining.
According to Softpedia, between 2010 and 2016, 22 mining companies reported major cyber attacks. Arguably cybersecurity and mining are on a collision course, and it’s getting harder to ignore that blockchain technology offers a way out.
Accenture Consulting reported that attacks range from hacking private information to hijacking intellectual property to knocking M&A off course. Similarly, Symantec’s “Internet Security Threat Report” shows that mining comes third on the list of industries receiving spam email (though it should be noted that there is not much difference in the numbers regarding other industries being spammed).
Even so, when many of those emails contain a virus, it’s not a list anyone wants to top — and that’s one reason why the mining community is turning to blockchain. With that in mind, here’s a look at the uses for blockchain in the mining industry and what the future of these exciting applications could be.
Blockchain in the mining industry: Applications
A PwC report called “We Need to Talk About the Future of Mining” touches base on what blockchain technology can provide the mining industry.
It highlights that blockchain technology is already used in some mining sectors such as the diamond space. For example, diamonds can be imprinted with a QR code linking to a digital token, “verifying their quality, ethical extraction and authenticity.” This process cuts down on fraud, plus theft and insurance costs, and creates a more transparent viewpoint of “the custody of goods.”
Accenture also indicates that the level of security blockchain can help improve areas in mining such as:
- The internet of things (IoT): More connected devices means more data generated. Blockchain can be used to process this data more effectively — for example, a digital ledger could link a vehicle with a warehouse, allowing the two components to “talk” and order new stock, with payment processed on delivery.
- Cost reduction: As mines operate all over the world, the expense of cross-border payments is a problem for the industry. But remittances are undergoing huge changes thanks to blockchain. Not only could blockchain solve a security issue, but it could also speed up the process of paying. Blockchain could also eliminate costly exchange rates as it provides the option of payment in digital currencies.
- Streamline contracts: “Smart contracts” are a chain of commerce and a way of remotely policing workers. That means if a gold mine is in Cambodia or another developing country, and the firm is headquartered elsewhere, business standards can still be upheld everywhere. The world’s biggest mining company, BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT), is using blockchain for its supply chain.
The report also states that blockchain applications make it easy to sign contracts electronically and without having to rely on a third party to verify whether it’s valid or not. Why? Because blockchain is a digital ledger that makes it possible to keep track of every transaction and “safely encrypts” information.
Blockchain in the mining industry: The future
As the above information shows, there are many ways blockchain could impact the mining industry in the future, and of course it is already being used by some companies.
However, it’s worth noting that despite all the above benefits there are practical application setbacks to be aware of for blockchain in the mining industry. Perhaps most notably, blockchain is new while mining is an old, established industry, and a great deal of the skillsets are worlds apart. Bridging those mindsets will be essential to bringing the industries together, and education and training will be essential for mining companies that implement the new systems blockchain could create.
Mining companies might also have to either hire a blockchain consulting firm for implementation and data migration, or create an in-house department to handle that. Either way, it’s an added expense.
That said, these are minor setbacks for what will likely be a huge improvement in both efficiency and cost effectiveness long term, which is why major companies like BHP are already hopping on board.
To conclude, far from hindering production, blockchain is a security solution that improves results and safety. Spreadsheets could be a thing of the past if uptake of blockchain continues. Mining is a dangerous job, so anything that can be done to ensure better practises is a step in the right direction.
What do you think of blockchain in the mining industry? Is it a positive step forward? Let us know your opinion in the comments section below.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.