How the technology behind Bitcoin can fuel a new wave of sustainability
The chances are that over the last year or two, you have come across a bunch of magazine articles praising the mystical power of Blockchain. The whole financial sector seems to be torn between fascination and horror, trying to understand the disruptive potential of… well, whatever this Blockchain thing is.
Because let’s be honest, the technology is relatively complex, and very few people bother to look under the hood. This might explain why the Blockchain phenomenon has been largely ignored outside of FinTech and InsurTech. A missed opportunity? Before we take a closer look, let’s start with demystifying the Blockchain technology a bit.
In its simplest form, a Blockchain is a digital ledger. There, that was easy!
OK, things can get a little more complex from here. But if we stick with the ledger concept, there are just a few extra properties that make Blockchains so attractive.
First of all, the ledger is distributed and can even be public, meaning that the ledger is nearly indestructible.
Another key factor is security. Only authorized parties can add transactions to the ledger, and once recorded the information can never be altered.
The ledger can also trigger predefined actions once certain criteria are met, which makes it particularly attractive to the insurance industry — think integrated broker or escrow (“Smart Contracts”).
So if we combine these building blocks, the disruptive potential for the financial world becomes fairly obvious: Intermediaries like lawyers, brokers, and bankers could potentially become obsolete. But why would anybody else care? Well, there is a factor that permeates any kind of transaction, online and offline, B2B and B2C: Trust. Whether we’re in the market for a gas turbine or a nice side of salmon, we need to be able to trust our supplier, right?
Given how much the food industry has been rocked by scandals in recent years (horsemeat anyone?), it seems out trust may not always be justified. So how can Blockchain technology help?
Let’s look at the fishing industry for example. Sustainable seafood is a massive growth sector and therefore bound to attract black sheep (a 2013 study found that 59% of the tuna consumed in the US wasn’t actually tuna).
As a retailer, how can I be sure that my supplier hasn’t broken the chain of custody? As a consumer, how can I be sure that I am “really” buying line caught tuna and not contaminated trout? In other words, how can I trace a number of transactions back from my plate all the way to its original source? This is the perfect Blockchain application. Catch, freeze, transport, process, package… This is a chain of individual transactions, with clearly defined dependencies, performed by well-defined actors — all of which can easily be mirrored in a digital ledger.
Real life constraints can be mirrored as well — the causal relationships for example. Any chain of transactions must always start with a catch and gradually progress from there. Nobody can conjure up tuna steaks out of thin air, and the ledger can reject any chain that starts with “random bits of tuna.” How about a mobile device that allows fishers to tag and photograph their catch, then adds timestamp and GPS location, and uploads that information to the ledger? Back on shore, the fish is cut in half by an authorized party, so the “Fish Block” is branching out into two new blocks, with photo, timestamp, and signature. At some point, a factory might turn some smaller blocks into fish-sticks. The same principle applies: Old block becomes a new block, photo, signature, done.
There is complete traceability from any point in the chain back to its point of origin, along with timestamps and signatures — and a photo of the original catch, which should be a VERY marketable feature. Time to get the ball rolling!
About the Author(s)
Volker Konietzko is a Business Developer at Digital Business Design agency Brains & Hearts (www.brainsandhearts.de).