Blockchain is everywhere and everywhere is blockchain. It’s hard to read a magazine or general news blog these days without reading something about cryptocurrency and the blockchain technology (BCT) that supports it. It’s often touted for its potential to ease a wide variety of social ills, mostly economic but wading into administrative and cultural solutions as well. It’s even been suggested that it could be used to help farmers in developing countries pull themselves out of poverty.
But how much of this is hype and how much is practical? I’m not going to lie to you – I’m a blockchain fanboy. I think it could disrupt some institutions which could use a bit of disruption (ie banks). However, I’m level-headed enough to realize that you can’t just jump feet-first into unknown waters without knowing if there are rocks right below the surface.
Which brings us to the question of the role of BCT in agricultural supply chains. Although the blockchain and its supporting distributed ledger technology (DLT) seem a natural fit for supply chains of all kinds, the response of the ag community worldwide has been relatively muted, with only a few studies coming up on a Google search.
What studies are out there, however, are optimistic about the potential of BCT in its ability to verify transactions, promote transparency and – thanks to the lack of third-party intermediaries (again, ie banks) – promote savings throughout the value chain.
A report by the Wageningen Economic Research department of the Wageningen University in Netherlands is similarly optimistic but tempered with some sober second thought. In the midst of an almost dizzying amount of hype, the report dares to ask how much we really know about blockchain. Is agriculture ready for it? Is it really the be-all and end-all of supply chain management or is it just another tool to complement existing solutions?
The answers on offer aren’t exactly earth-shattering, but they provide some common-sense baselines for whatever point the Canadian agricultural industry inevitably starts poking its nose around BCT.
The Wageningen report starts by identifying the most relevant potential benefits of BCT to agriculture. A big one is its ability to improve transparency in a society demanding more – and more detailed – information on how their food is produced. As a result, various groups have responded with a number of certification schemes of variable quality, increasing the risk of fraud in the value chain as products are sold carrying unqualified labels or claims.
In addition to leaving doors open for fraud, the report says the current system of verifying compliance to regulations is inefficient. Much of the compliance data and information is audited by trusted third parties and stored either on paper or in a centralized database. However, paper-based systems are notoriously inefficient and costly, while both centralized databases and paper are vulnerable to fraud, corruption and error.
The key tool in the Netherlands study was a small-scale demonstrator intended to determine the ability of a blockchain to record the movement of South African table grapes from the farm to the end-use consumer. This demonstrator was based on a detailed analysis of the table grape supply chain and the interactions between farmers, certifiers, auditors and table grape traders to enable a digital representation of a box of grapes associated with a digital certificate. Aside from a few commodity-distinctive traits, I wouldn’t imagine this supply chain would be too much different from organic or other certifiable commodities commonly grown in Canada.
From a purely practical perspective, the main takeaway is that the demonstrator, well, did what it was supposed to do. There are a few caveats, however.
The demonstrator couldn’t measure for scalability. The proof of concept demonstrator was very simple and small-scale, featuring one smart contract that all participants could read and write to. A supply-chain-wide blockchain, however, would have to handle a very large number of transactions and feature a huge variety of smart contracts for different contractual relationships, at the same time keeping data visible only to relevant participants. The report conceded that the demonstrator research – while not exactly setting the world on fire – presented opportunities for further research.
Are farmers and other stakeholders ready for blockchain? Is blockchain ready for them? Blockchain tech is still very new and unfamiliar to a lot of people and, despite the hype, may not necessarily be superior to existing IT solutions. The report says BCT is far from being well understood by both technology developers and agriculture stakeholders, and what they do understand is not always accurate. For example, according to the report, a blockchain cannot store as much data as people would expect from “putting data on the blockchain.” Rather, only references to databases are stored in the blockchain.
This information is new to me and I do not quite understand what it means. I do know proof of transaction calculations can be extremely slow at this point thanks to the incredible amount of processing power they require, but that’s a factor being worked on and improved every day. Not surprisingly, the report recommends further study.
How do we build a social-economic order through code? This last point is a little on the esoteric side but one worth thinking about. The report says the implementation and adoption of blockchain is likely to be a lengthy process due to its “foundational nature.” The following statement is worth quoting directly:
“The implementation of BCT implies the organization of a social-economic order through code rather than through institutions—this requires joint effort and concerted actions of different parties that by default have no trustful relationships among each other.”
We see this happening already as banks decide they want a piece of the cryptocurrency pie as well, even though blockchain and cryptocurrency were intended to bypass such institutions in the first place.
The report emphasizes the importance of dialogue among stakeholders and institutions “to achieve better understanding of each other’s interests and stakes and identify common grounds for applying BCT.” The researchers recommend meetups where different use cases are presented and discussed by a variety of stakeholders in order to “grow the ecosystem of BCT in agrifood.”
Personally, I think the Internet itself is a good precedent for building a “social-economic order through code.” Institutions fought for their own interests in the wake of that ever-expanding technology; some were able to adapt or reinvent, others did not. Unless we can figure out a way to make this new BCT technology more inclusive, I have no doubt there will be similar casualties as BCT grows in use and profile.
I’m afraid the key takeaway of the Netherlands study isn’t exactly an exciting one: the implementation of BCT requires time and research. Time to bring stakeholders on board and educated enough in the technology to function, and enough research to know how to develop systems that work and benefit the most people and institutions in the value chain.
Know more
Just about everyone who writes an article on blockchain technology feels compelled to explain how it works. I’ve done a lot of reading on this subject – perhaps too much to drill down to the basic concepts the nominally-interested layman would want to know. The simplest, cleanest description of the technology I’ve ever read can be found in this white paper on www.hackernoon.com. It claims to be able to inform you about 95 per cent of everything you need to know about BCT.
But how much of this is hype and how much is practical? I’m not going to lie to you – I’m a blockchain fanboy. I think it could disrupt some institutions which could use a bit of disruption (ie banks). However, I’m level-headed enough to realize that you can’t just jump feet-first into unknown waters without knowing if there are rocks right below the surface.
Which brings us to the question of the role of BCT in agricultural supply chains. Although the blockchain and its supporting distributed ledger technology (DLT) seem a natural fit for supply chains of all kinds, the response of the ag community worldwide has been relatively muted, with only a few studies coming up on a Google search.
What studies are out there, however, are optimistic about the potential of BCT in its ability to verify transactions, promote transparency and – thanks to the lack of third-party intermediaries (again, ie banks) – promote savings throughout the value chain.
A report by the Wageningen Economic Research department of the Wageningen University in Netherlands is similarly optimistic but tempered with some sober second thought. In the midst of an almost dizzying amount of hype, the report dares to ask how much we really know about blockchain. Is agriculture ready for it? Is it really the be-all and end-all of supply chain management or is it just another tool to complement existing solutions?
The answers on offer aren’t exactly earth-shattering, but they provide some common-sense baselines for whatever point the Canadian agricultural industry inevitably starts poking its nose around BCT.
The Wageningen report starts by identifying the most relevant potential benefits of BCT to agriculture. A big one is its ability to improve transparency in a society demanding more – and more detailed – information on how their food is produced. As a result, various groups have responded with a number of certification schemes of variable quality, increasing the risk of fraud in the value chain as products are sold carrying unqualified labels or claims.
In addition to leaving doors open for fraud, the report says the current system of verifying compliance to regulations is inefficient. Much of the compliance data and information is audited by trusted third parties and stored either on paper or in a centralized database. However, paper-based systems are notoriously inefficient and costly, while both centralized databases and paper are vulnerable to fraud, corruption and error.
The key tool in the Netherlands study was a small-scale demonstrator intended to determine the ability of a blockchain to record the movement of South African table grapes from the farm to the end-use consumer. This demonstrator was based on a detailed analysis of the table grape supply chain and the interactions between farmers, certifiers, auditors and table grape traders to enable a digital representation of a box of grapes associated with a digital certificate. Aside from a few commodity-distinctive traits, I wouldn’t imagine this supply chain would be too much different from organic or other certifiable commodities commonly grown in Canada.
From a purely practical perspective, the main takeaway is that the demonstrator, well, did what it was supposed to do. There are a few caveats, however.
The demonstrator couldn’t measure for scalability. The proof of concept demonstrator was very simple and small-scale, featuring one smart contract that all participants could read and write to. A supply-chain-wide blockchain, however, would have to handle a very large number of transactions and feature a huge variety of smart contracts for different contractual relationships, at the same time keeping data visible only to relevant participants. The report conceded that the demonstrator research – while not exactly setting the world on fire – presented opportunities for further research.
Are farmers and other stakeholders ready for blockchain? Is blockchain ready for them? Blockchain tech is still very new and unfamiliar to a lot of people and, despite the hype, may not necessarily be superior to existing IT solutions. The report says BCT is far from being well understood by both technology developers and agriculture stakeholders, and what they do understand is not always accurate. For example, according to the report, a blockchain cannot store as much data as people would expect from “putting data on the blockchain.” Rather, only references to databases are stored in the blockchain.
This information is new to me and I do not quite understand what it means. I do know proof of transaction calculations can be extremely slow at this point thanks to the incredible amount of processing power they require, but that’s a factor being worked on and improved every day. Not surprisingly, the report recommends further study.
How do we build a social-economic order through code? This last point is a little on the esoteric side but one worth thinking about. The report says the implementation and adoption of blockchain is likely to be a lengthy process due to its “foundational nature.” The following statement is worth quoting directly:
“The implementation of BCT implies the organization of a social-economic order through code rather than through institutions—this requires joint effort and concerted actions of different parties that by default have no trustful relationships among each other.”
We see this happening already as banks decide they want a piece of the cryptocurrency pie as well, even though blockchain and cryptocurrency were intended to bypass such institutions in the first place.
The report emphasizes the importance of dialogue among stakeholders and institutions “to achieve better understanding of each other’s interests and stakes and identify common grounds for applying BCT.” The researchers recommend meetups where different use cases are presented and discussed by a variety of stakeholders in order to “grow the ecosystem of BCT in agrifood.”
Personally, I think the Internet itself is a good precedent for building a “social-economic order through code.” Institutions fought for their own interests in the wake of that ever-expanding technology; some were able to adapt or reinvent, others did not. Unless we can figure out a way to make this new BCT technology more inclusive, I have no doubt there will be similar casualties as BCT grows in use and profile.
I’m afraid the key takeaway of the Netherlands study isn’t exactly an exciting one: the implementation of BCT requires time and research. Time to bring stakeholders on board and educated enough in the technology to function, and enough research to know how to develop systems that work and benefit the most people and institutions in the value chain.
Know more
Just about everyone who writes an article on blockchain technology feels compelled to explain how it works. I’ve done a lot of reading on this subject – perhaps too much to drill down to the basic concepts the nominally-interested layman would want to know. The simplest, cleanest description of the technology I’ve ever read can be found in this white paper on www.hackernoon.com. It claims to be able to inform you about 95 per cent of everything you need to know about BCT.