How Blockchain Technology will Improve the Precious Metals Supply Chain

From the gold on your finger to the tin in your iPhone, the precious metals supply chain has been rife with controversy and corruption. Movies like Blood Diamond certainly call attention to some of the more unseemly practices, but they don't solve the problem. There's still a lot of uncertainty about the ethics behind what we're buying, and much of this is due to the anonymity behind the supply chain.

Sure your iPhone may have been assembled by workers who were paid a fair wage, but what about the person who mined the tin? What about the company who shipped the metals? Few people know the truth because the complex supply chain goes largely ignored. A consumer doesn't have to be a die-hard humanitarian to be against child labor or conflict-driven profits, which is why they're demanding more from the companies they patronize.

And if companies aren't aware of the conditions they're unknowingly supporting, then how can things ever change? Karuschain is a technology company who wants to apply emerging innovations to the issue of social change. See how they're using the blockchain to unlock the cage and let this problem out into the open.

The Promise of the Blockchain

Before you understand how Karuschain improves the supply chain, it helps to understand why the blockchain is so important. This technology is essentially an electronic ledger that can keep track of any and all data. There are a few major perks of the blockchain that have managed to put it front and center in the technology space:

  • Air-tight Security: Due to its many, many layers of protection and distributed data storage, the blockchain is virtually unhackable. Once the information is stored, it can't be changed or stolen for someone else's gain.
  • Total Transparency: The blockchain is essentially made up of if/then statements (known as smart contracts) that can literally be applied to anything. From construction to family trees to supply chains, people can use the ledger to track it all.
  • It's Anonymous: The information of the blockchain is an open book, but the players behind it can protect their identity from even the most motivated hacker. Plus, there are private blockchains available for even more security.
  • More Efficiency: Payment transactions, data entry, and verification are simply faster on the blockchain than any of our traditional services.

Karuschain saw a way to apply the blockchain to supply chains so that all participants could see exactly where their materials were coming from.

How It Works

The Karuschain platform implements smart contracts that make it easier to comply with all responsible sourcing guidelines. Groups like the Organization for Economic Cooperation and Development (OECD) and the London Bullion Market Association (LBMA) set out specific regulations for those in the precious metals industry, and Karuschain helps its members verify the producers they use before they accept or reject the product. Members of the platform do this by tracking and recording every step of the production process and allowing cross-identification as it moves through the chain.

Major Incentives

The idea is that anyone further down the supply chain will want to work with Karuschain so they don't risk violating the compliance laws. Members can share information about who's upholding the laws and who's cutting corners. And because they financially support those who work upstream, buyers can then influence production processes. In other words, Karuschain members can refuse to buy from anyone who makes questionable or outright poor decisions during production.

As more and more participants benefit from these services, it will attract more users and grow the Karuchain platform. It will normalize this process of data-sharing and transparency, making it the rule and not the exception. Once everyone is comfortable with the new systems, the sharing of data will begin to spread. The more transparency, the more newcomers will be brought to the platform.

This complex chain reaction will eventually make production a much more ethical and efficient process. Suppliers can count on Karuschain to give them the information they need to improve their products — without compromising their social consciousness. Once the end goal of full, end-to-end transparency is achieved, production, transport, and purchasing will all become easier to coordinate.

Auditing Made Easy

When companies do business on an international level, they're required to keep careful records of their many transactions, and internal and external audits are necessary to ensure nothing slips through the cracks. But part of the problem with audits is that so much time and energy is devoted to tracking down information that has changed hands any number of times.

The blockchain makes audits easier to execute. In fact, Karuschain promotes real-time auditing because the information is so simple to find and the events so easy to prove. Whether they're financial, transactional, and informational transactions, the blockchain records it all. Furthermore, participants of Kuraschain have the option to decide which data can be shared and which data can stay on their private blockchain.

A Better Time

Karuschain began because the leaders recognized some major flaws in the supply chain of precious metals. Some profits from mining were going into warlords pockets, while children exposed themselves to the disgusting conditions in the mines. The environment of small villages was being destroyed due to largely unregulated waste disposal procedures.

Karuschain wants to shed some light on this problem with the help of the blockchain. No longer will immoral companies be allowed to operate without consequences. No longer will companies claim ignorance of the problems surrounding their personal supply chains. With a better supply chain, companies can sell their products to the public without guilt or fear and consumers can make smarter choices about what they buy.