Members of the business community in Memphis, from occupants of the corner office to founders of smaller bootstrapped ventures, find themselves having to increasingly master a strange, futuristic-sounding lexicon these days.
Strange, in that concepts like blockchain, bitcoin, and cryptocurrencies certainly don’t tend to come up casually in typical watercooler chat or boardroom presentations. Nor is their meaning all that apparent from the words themselves. But those concepts have been steadily commanding attention and resources from captains of industry, both in Memphis and certainly beyond — which shouldn’t come as a surprise, when you think about it.
Show us a successful business, an enterprise that’s been buffeted by the winds of change and the onslaught of competition and gone on to stand the test of time, and we’ll show you an organization that didn’t get there by accident. They were constantly learning, peeking around corners, anticipating The Next Big Thing. Things like — well, why not blockchain? Who’s to say it might not make the difference at some point in the future between making it and missing the mark? The only way to find out is to be that proverbial man in the arena.
Several businesses and people in the city are striving to come to grips with buzzy new concepts like blockchain — and the strange new language around it that they’re all in the process of learning.
Mark Pryor, chairman and CEO of local commodities trading and agribusiness software company The Seam, certainly sees blockchain as potentially transformative for his organization — maybe as game-changing as the internet itself. Speaking of the internet, Pryor says if he had to compare where things are with blockchain to the maturity of the internet, he estimates blockchain right now is about where the net was circa 1998. We all knew something was going to happen, but only the keenest visionaries saw that smartphones, social media, and other technology would take over our lives.
So what is blockchain, exactly? And why should you care about this concept that sounds like some sort of complicated sports play or maybe a wrestling maneuver? Pryor, for his part, describes it in almost philosophical terms: “What it is, in essence — it provides something we haven’t had before. It’s a shared source of truth — a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. Think of it like a spreadsheet, replicated across the globe by tens of thousands of other computers. And they can share in this information. It’s constantly being synchronized, too.”
That’s important, he continues, because what it means is we now have the technology to conduct open, neutral and borderless transactions that don’t require a central intermediary, like a bank. “With software systems in the past, you had to put your trust into, say, Equifax,” he says. “You’d have to trust in some central organization for your data and data processing. What this technology allows is a decentralized approach, where you have several competitors that don’t have to trust or agree with one central intermediary. They just communicate and transact business-to-business. Or person-to-person.”
That kind of interaction allows for connections of things like the very complex supply chain in the food industry. And for disparate pieces of the agriculture industry, which The Seam is focused on. The Seam has actually spent almost two decades developing software for industries that include cotton and peanuts — and it’s now focused a great deal on blockchain and how it can take advantage of it, including by working to help create a blockchain-based ecosystem for global trading and field-to-fabric supply chain innovations.
And The Seam is far from being the only interested player in Memphis.
In fact, if you look at those other two concepts — cryptocurrency and bitcoin, which have more niche communities around them — blockchain is the one that’s probably the farthest along locally in terms of familiarity and adoption.
Dr. Mark Gillenson, a professor in the Department of Business Information and Technology in the Fogelman College of Business and Economics at the University of Memphis, points to other industries potentially benefiting from blockchain technology. There’s speculation, he says, that it could be useful in healthcare to do things like helping to secure and authenticate patient records. Near term, he thinks the greatest business value will mostly be found in the logistics industry thanks to all the companies in that field passing goods back and forth to each other and needing to be able to track where those goods come from.
“This is a very revolutionary kind of technology that’s very unique, very innovative, and complex,” he says. “I’m not aware of any competing technology to blockchain.”
One of the benefits it brings, he explains, has to do with security. Not to get too technical, but digital signatures — which are related to something called public key encryption, more on that in just a second — are involved in blockchain security processes.
“When someone signs on to Amazon to buy something, one of the technologies involved in conversing with Amazon or anything over the internet that requires security is public key encryption,” Gillenson says. “Digital signatures are a kind of a reversal use of public key encryption. It’s a further use of it that’s being used in blockchain to verify that a person who claims to be someone for access to the blockchain is in fact who they say they are.”
Memphis has a robust blockchain “Meetup” community that’s at more than 450 members now (meetup.com/blockchain901). Meetings are held in the Exchange Building downtown and are focused on applications of the technology in the business and legal communities.
Memphis-based Good Shepherd Pharmacy has also just launched a collaboration to use blockchain technology to make prescriptions more widely available. Good Shepherd announced it’s teaming up with Lipscomb University and the FedEx Institute of Technology at the University of Memphis to create a blockchain network that pharmacies around the country can access. The partnership, among other things, includes setting up a way for individual patients to donate their unused oral chemotherapy so that patients who otherwise wouldn’t be able to afford that medicine could now be able to have it. There will also be a way set up to get those prescriptions delivered into the hands of underinsured patients.
Good Shepherd will be overseeing the process of receiving and redistributing the medication, while Lipscomb University and the Fedex Institute will provide the resources and expertise necessary to build out the blockchain infrastructure.
“I knew that reclaiming medicine would be a good use for blockchain technology but needed a partner who truly understood how blockchain works,” says Dr. Phil Baker, CEO of Good Shepherd Pharmacy. “In my research, I found that Dr. Kevin Clauson and his team at Lipscomb were doing amazing work at the intersection of blockchain and pharmacy.”
FedEx, meanwhile, earlier this year joined something called the Blockchain in Transport Alliance. The Memphis-based package shipper joined the alliance’s standards board and launched a pilot project that called for using blockchain for data storage related to resolving disputes. It’s so important, blockchain, that no less than FedEx founder Fred Smith himself said during a conference in New York this summer that “for cross-border shipments, ‘trust’ is a legal requirement for every transaction. What blockchain has is a potential for the first time ever to make the information available for everybody.”
Speaking of FedEx, which of course is a mega-player in the logistics industry that’s so key to Memphis, the city’s industry assets like logistics are one reason Memphis has also begun to attract blockchain startups to do business here. Startups like dexFreight, a Miami-based enterprise that this summer signed a memorandum of understanding to partner with the FedEx Institute of Technology.
Rajat Rajbhandari, dexFreight’s co-founder and CEO, said that many of the smaller logistics providers in the area who are here as a result of FedEx “are our potential customers.” That’s why it wanted to team up with the FedEx Institute — “not only to gain access to potential customers but also to collaborate in elevating the use of blockchain and complementary technologies in the space.”
He describes dexFreight as a blockchain-based logistics platform that allows shippers, carriers, and other supply chain stakeholders to do business more efficiently, and with more transparency and security. A super-simplified description of what the company does? It uses a blockchain-based verified identity system that lets shippers and carriers find each other, connect and negotiate deals directly, with no middlemen.
Expect developments like these and others to continue, spurred on in part by outside forces. Earlier this year, for example, the Tennessee state legislature passed a pair of bills Gov. Bill Haslam signed that support blockchain technology in the state, in part by protecting ownership rights of certain information secured by blockchain.
In terms of the way the cotton business is done, Pryor walks through how a blockchain-based transaction would unfold in a way that compares it to something like a digital proof of title.
“In the traditional trading of cotton today, the clearing instrument or the title document is an electronic warehouse receipt,” Pryor says. “In a blockchain world, the actual bale — when it’s created, as soon as it leaves the gin — may go into 10 or 20 different warehouses, but it’ll be represented by a token. An electronic digital token that represents this physical asset. So in the future what we’re seeing for trading with bales is, instead of using an electronic warehouse receipt as has traditionally been done, you’ll actually have a tokenized asset on blockchain that represents that bale uniquely and allows you to trade it regardless of what warehouse it might be in.
“The other thing in cotton is just the efficiencies of the global trade process,” he continues. “Currently, there’s lots of paper that’s involved in a transaction of shipping goods to the destination, and blockchain provides a shared source of truth for that, so you don’t have to have a lot of different systems capturing the same information in their own proprietary way.”
You get the sense from taking all this in and from talking to some of the players that we’re on the cutting edge right now of the promise of blockchain. It’s certainly a word that, in the months and years to come, you will definitely hear more of and see the effects of in Memphis, even if you don’t fully understand why right now.
“Blockchain can produce radical efficiencies in very complex, paper-laden global trade,” Pryor says. “This is something that’s going to happen and it’s going to be really amazing.”