A few years ago at the height of the blockchain boom, scarcely a day would pass without getting a whitepaper about the latest initial coin offering (ICO). The quality of these ICOs was hugely variable, and their frequency prompted the Securities and Exchange Commission (SEC) to issue a warning for investors that ICOs were being used by scammers to execute “pump and dump” schemes in which the value of the ICO was inflated before the coins were dumped for a tidy profit.
The “wild west” nature of the blockchain world at the time helped to create an overwhelming sense that it was open season for criminals to get rich quickly. A new study from the University of Bath suggests that it’s time blockchain throws off those shackles, and actually became a technology that prevents crime, rather than supports it.
"Blockchain technologies are likely to form part of supply chain solutions in the same way that bar and QR codes and RFID tags are now mainstream. But blockchain offers much more in terms of product visibility and traceability, helping consumer safety and allowing the public to make more informed choices about what, how and where they buy from," the researchers explain.
The researchers believe that by providing a more accurate record, the technology promises to reduce instances of crime in areas such as food production. They cite a wide range of environmental and health scandals in recent years that were predicated on difficulties in understanding the providence of particular foodstuffs, whether in terms of their origins, their contents, or their environmental footprint. There have also been human rights violations, with the use of child labor in the supply chain showing little sign of abating.
In the UK, there was famously a scandal surrounding the use of horsemeat in 2013, in which products that had been labelled as beef were actually horsemeat. Similarly, numerous instances have unfolded whereby chicken had been sold in supermarkets despite being infected, thus causing numerous E-coli cases.
The researchers believe that blockchain can provide a transparent ledger of products at every stage of the supply chain. This ledger could contain the nutritional value, any allergens, as well as where the products have been, and when. It can provide both retailers and consumers with reassurance as to the provenance of products.
The paper highlights a number of case studies of blockchain being used for such purposes. For instance, Chinese company Techrock utilizes blockchain to try and reassure parents that the baby formula they give to their child is safe to use. The technology was developed against a backdrop of infant formula scandals that resulted in a number of babies dying and around 300,000 becoming infected, thus destroying the confidence the parents had in formula as a means of feeding their child. The Techrock solution allows parents to scan their formula and see all the information about the product, including logistical data and even what the formula should look like.
The paper also cites Australian company Agridigital, which provides consumers with a range of information to help them verify any claims made in marketing campaigns. The platform is designed to capture a range of inputs from farmer to store, with RFID tags used to monitor the product as it passes through the supply chain.
The World Wildlife Fund has also been using blockchain to help promote sustainable fishing. Their blockchain solution collects a range of data on fishing grounds, including their location, catch logs, and the crews fishing in them. The data is stored in the blockchain, and each fish is given a code to help it be tracked through the supply chain.
"These positive uses and developments bode well for the future of blockchain although it is important to note that there has been much hype, and much myth, surrounding its potential. With this research we hope to show industry what is actually possible and give a realistic appraisal of the limitations of this safety-enhancing technology," the researchers say.
Suffice to say, blockchain as a technology still has many hurdles to overcome before it can become mainstream, and the study is transparent about those issues, whether in terms of the analog nature of many supply chains or the energy costs associated with mass adoption of blockchain as a technology.
Similarly, the lack of standards across blockchain systems deployed in supply chains can cause significant interoperability problems, especially for consumers trying to access data on a multitude of devices and apps. If the cost of implementing such systems is passed onto the consumer, it might prove a cost they’re unwilling to bear.
The paper suggests, however, that the reputational issues are perhaps the biggest hurdle blockchain faces if it’s to move beyond the somewhat dubious use cases seen thus far. Such issues are notoriously hard to overcome, but with a number of interesting projects underway, work is clearly being done to do just that.