Blockchain technology. You've heard the word, you know it's big business, and, if you're anything like us, you probably have a weak grasp of what it actually means.

Volkswagen is the latest company to get in on the blockchain bandwagon, announcing this week that it will use the technology to create a new way to trace its components from their point of origin to the factory.

In simple terms, blockchain tech uses cryptography or another similar method to safeguard a single common version of one thing. A large grouping of people can then create or uncover versions of the common item, which enables, say, a cryptocurrency company, to track who has created the singular item in question. It's basically a secure, reliable way to keep track of things.


VW has partnered with a company called Minespider to develop a "proprietary protocol built on a public blockchain." The system will be used to track its automotive parts from the time the raw materials they were manufactured with were mined to the time they arrive in a VW factory. Having the system secured by a blockchain allows for suppliers, sub-suppliers, contractors and VW itself to securely access and work on the same system, giving the automaker immediate access to information that would otherwise be hard to find - such as where the material that makes up a given part was mined from.

The automaker describes it as "a common digital infrastructure that allows the transparent exchange of information."

“Digitalization provides important technological instruments that enable us to track the path of minerals and raw materials in cross-border supply chains in ever greater detail," said VW strategy group representative Marco Philippi. “Together with Minespider we will use the blockchain technology to make our processes more transparent and secure.”

So how does this affect you? It doesn't really (unless you happen to work in VW supply chain) but it will allow for the company to source parts that were manufactured with raw material that was mined ethically. This will be particularly important going forward, with organizations like Amnesty International already voicing concern over the origin of rare earth materials in electric vehicle batteries.

"In a company with international production sites and sales activities in over 150 countries, due diligence is an enormous challenge and a major responsibility," the automaker said. "The stated goal is to use industrial raw materials that are extracted sustainably in a socially and environmentally sound manner."