What is blockchain? Is it the same thing as Bitcoin? How is blockchain technology likely to impact produce industry supply-chain business? How imminent are the changes? Will the results be productive and worth the disruption? When secure processing of payment and data transactions no longer requires a clearinghouse, astonishing speeds are enabled.
While blockchain may sound like a medieval persuasion technique, it’s actually a practical way to structure data and the underlying platform of digital currencies like bitcoin. Blockchain is not currency; rather it is a coding breakthrough that forms and combines “blocks” of transactions on a shared, distributed ledger across a network of independent computers to create a consensus community. Blockchain removes the need for a central authority; no single party has the power to tamper with the records: the math keeps everyone honest.
Blockchain is one of the most relevant technologies for produce and floral supply chains because:
1. Transactions can be verified and approved by consensus among the community, making fraud more difficult and significantly lowering the costs of validation and authentication.
2. Transactions are transparent. The full chronology of transactions that take place are tracked, allowing anyone to trace or audit prior transactions without having access to the underlying data.
3. The technology operates on a distributed, rather than centralized, platform, with each participant having access to the same ledger records thereby enabling near-instant reconciliation.
4. It enables smart contracts that self-verify conditions and self-execute by connecting data from various sources allowing people to set the intentions and computers to transact the business accordingly.
5. It promotes efficient and dynamic pricing depending on a broad spectrum of conditions.
6. It simplifies selling at the smallest unit, allowing for micro monetizing and equitable remuneration among value contributors.
Although transactions are in some ways anonymous (and can be entirely private), the blockchain ledger can link individuals and companies to purchases and ownership by allowing individual parties to exchange knowledge, process payments and verify transactions
Dozens of the world’s top financial and technology firms are deploying blockchain, including: Accenture, Deloitte, IBM, Intel, J.P. Morgan, Rabobank, Wal-Mart, Wells Fargo, and others. They see the long-play potential for a frictionless, trusted business climate that will fundamentally change the transformation of data to knowledge.
You may be asking, “As a packer, shipper or processor (PSP), what does blockchain mean to me and what can I do with it now?”
The following is a high-level picture of how a simple transaction works across a blockchain (aka distributed network). I’ve also included resources at the end of this article… they contain a few “what if” explanations and videos.
Note the absence of third-party intermediaries in the image – there are no central platforms or dominant data companies holding the keys.
To answer the “what can a PSP do with blockchain”, think in terms of applications (in the blockchain world, “Distributed Apps” or “Dapps” for short). The ‘killer app’ is Smart Contracts (see Ethereum open source software platform, used to build and deploy smart contract applications).
Smart Contracts are tamper-proof agreements that are able to self-verify conditions and self-execute without a third party or intermediary. Smart contracts fundamentally change how contracts are arbitrated and securely executed, without interference and with absolute trust among the parties.
Just think of the possibilities: connecting sensors, quality and volume data, buying and selling across borders and pool accounting, to name a few. Companies like IBM, Microsoft, Wal-Mart and Alibaba are already innovating across agriculture, and have implementations in the Produce Industry today.
Make no mistake, blockchain and the related tech are a part of your immediate and long-term future and it warrants attention; not only in terms of technology innovation, but innovation in governance and how we invest.
Where We Are Today
Do we really need blockchain to achieve what the industry or the market demands?
Before we leap into the utopian world of blockchain, let’s get practical about where we are today. There’s a “Digital World” and a “Real World”; the existing bridges are unclear and the risks are unknown.
As we innovate and deploy solutions, it’s important we’re clear on “Governance” in order to maintain stakeholder intent. There has never been a more crucial time in our industry to shape the governance by which our data is connected and how chains form around our knowledge.
The Digital World
New innovations (IoT, Sensors, coins, tokens, big data) now represent a new kind of value. And while many old problems go away, new challenges present.
The Digital world offers near immediate and virtually free transactions, smart contracts that can’t be broken, (Can they be hacked? ) and the ability to learn and improve (or steal) from generations while we sleep.
The Real World
There are some facts which cannot be determined through consensus (nor would we want them to be). Examples include:
- Where is this container right now?
- What are the specific timings and chemistries used on our crop to meet market demands?
- What is the carbon emission of this engine for the last 60 minutes?
- What is the strategic narrative of field sensor data?
Real-time trust, security and privacy represent the first of many matters that must be addressed to enable mass adoption of these new innovations.
The Criticality of Governance
Today’s most powerful companies have amassed more wealth and influence than ever before possible, based on the ever-increasing value of what you search, who your friends are, what you buy, when you shop and where you are.
As industry innovates with blockchain and related solutions, we owe it to future generations to lay the foundation of governance in equally new and innovative ways. Governance must be as innovative as the tech. We must embrace new concepts of economic organization, transparency, shareholder control, proof of stake, consensus and the creation of a single source of truth that upholds the individual's right to intellectual property.
A Pragmatic Approach
The produce industry includes some of the most innovative leaders in business with a heritage of rational experimentation which has fed the world for millennia. As we embark into a new era of distributed transactions, let us remember how the knowledge of past generations has become the intellectual property of today. Just because certain information can move at the speed of light doesn’t mean it should.
We’re creating a world where software and services enable better decisions from the farm forward across the supply value chain. Knowledge flows with purpose and intent, upholding stakeholders’ value.
There is more to the distributed data and processing conversation than blockchain. Already, there exists ample technology that can achieve real-time synchronization and verification without blockchain, as well as proven tech for deep learning, artificial intelligence and advanced data analysis, that we can deploy today. Author Drew Zabrocki is CEO of (( centricity )) www.centricityglobal.com and is connecting people and opportunities for global partnerships to address challenges in agricultural information standardization, alignment and equitable knowledge exchange. Readers are invited to connect with Drew, on LinkedIn. Drew maintains a position in cryptocurrency markets and is actively involved in private blockchain deployments and governance initiatives. Links are provided for convenience; no endorsement is expressed or implied.