Insight report on distributed ledger technologies

Suggested citation

Pogson, G (2017) Insight report on distributed ledger technologies: safety of engineered systems [online] Lloyd’s Register Foundation.  Available at: https://www.lrfoundation.org.uk/en/publications

Executive summary

Distributed ledgers are a special type of database whose contents are distributed across a network in multiple sites, countries or institutions and use cryptographic techniques to provide a transparent and permanent record of activities between parties within that network. They present an opportunity for extraordinary innovation in meeting the challenges of providing assurance and safety of engineered systems.

Digitalisation is having a profound effect on society as we seek to improve performance, efficiency, safety, and reliability in our everyday activities. In engineering, digital technologies are supporting more widespread adoption of advanced manufacturing processes, providing additional product functionality, shortening product lifecycles and allowing more flexible use of the most appropriate resources, often leading to more complex and widely distributed supply chains.

But while such technologies are transforming how we live, their rapid adoption has left a number of challenges that must be addressed. The shortening of product lifecycles has resulted in dramatic increases in waste and difficulties in managing it. This waste is often transported for disposal or recycling to less well developed areas of the world where lack of controls can lead to health hazards for the population. Complex supply chains are difficult to manage with an increased potential for counterfeit goods to enter the supply chain, as reported by bodies such as Europol, with detrimental effects on product safety or environmental impact.

As highlighted in Lloyd’s Register Foundation’s Foresight review on big data, an increasing reliance on data within engineering also presents challenges. Many engineered systems rely on data for their safe and reliable operation, from aircraft and motor vehicles, to rail networks and other critical infrastructure; the development of smart factories and autonomous systems will only serve to increase this reliance. Digitalisation in engineering lifecycle processes means that risks must be managed in both the physical and digital domains. Issues such as data theft and corruption or falsification of sensor data or its resulting information present serious threats to the dependability and safety of engineered systems. Furthermore, in the continued drive to improve efficiencies and drive out costs of through-life ownership, practices such as predictive health monitoring of an asset, that rely heavily on data, will become more widespread and an understanding of the asset’s origin and analysis is key in obtaining an accurate understanding of its ‘state’.

Growing interest in the use of distributed ledgers and blockchain to store, process and assure such data is resulting in an increasing level of investment. The first real application of blockchain technology was in the cryptocurrency Bitcoin that some believe will cause significant changes in the financial services sector. This family of technologies has the potential to bring about such changes in a much broader range of industries, especially where there is still significant scope for digitalisation and automation of processes. The family’s potential ability to provide a technological solution to lowering uncertainty between people and/or organisations means that the technologies may have a role in addressing unsolved challenges such as the threats of counterfeiting or falsification of logs.

This report aims to provide a greater understanding of distributed ledgers and blockchaintechnologies and their underlying concepts in order to provide more clarity on the applications in which they might be used, with a specific focus on engineered systems. Several distributed ledger systems with differing design philosophies are described in order to demonstrate the range of capabilities of such technologies.
Applications of distributed ledger and blockchain technologies within engineered systems are explored on the basis of literature research, interviews with experts and a workshop which brought together representatives from across a range of industry sectors, academia and government. The report also looks at the challenges that need to be considered in any potential implementation, or that might hinder more widespread adoption. The report concludes that distributed ledger and blockchain technologies have a potentially wide range of applications related to engineered systems, particularly where a permanent and auditable record of activities is required. Examples already at various stages of development include the tracking of food products through a supply chain to provide transparency of their provenance and the verification of shipping container mass to avoid misloading of ships. Such examples demonstrate the scalability of the technology to applications, for instance, in assuring the provenance of engineering system components.

Key challenges associated with the technology itself are also described such as its scalability and interoperability with existing systems. Examples of work being undertaken to address these challenges are given and recommendations are made for further work to be conducted, such as the development of training and technology maturity levels, and road mapping.