The emergence of blockchain technology has given rise to a whole host of new decentralised solutions. What does this mean for the future of the food and beverage industry?
Nowadays, bitcoin and crypto currency are all over the media. Smart contracts are being called the future of business relationships and decentralized finance the base of the new economy. All of this is based on a new technology: blockchain. But this new technology is still growing. Even though we all have heard about it, very few are aware of how it works, what can we use it for and what problems can we solve.
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in the business context. But, what does this really mean? The essential characteristics of immutable and shared are the key of this new technology. Since it’s shared, every user, every node of the “chain”, has to validate the new transactions, and it’s informed of every modification concerning the information on the blockchain. The immutable part of it means that, once something is added to the chain, it can’t be destroyed, making this perfect to follow and record information.
Every block on a chain contains an encrypted bit of information related to the previous block (hash), since, creating a chain and a random number that resembles an address (nonce). It contains a timestamp, in order to record when said transaction took place, and data about the transaction. For all this to happen, there has to be a consensus between each one of the nodes, making it so that every block is aware of the rest of the existing blocks.
This has some very powerful applications in the world of traceability. The act of manually recording the source and the addressee of a product, all the way through the production process entails several risks. The most obvious one; the human one. A typo on a number, a miss-click on a box or something alike could happen and, in case of needing to trace back the product, it can create confusion.
In addition, some things such as cars, that require large amounts of pieces that need to be made, shipped and assembled also require a very complex tracing network and care. A solution the blockchain technology provides, can be a smart contract associated to each piece. Said contract, when certain requirements are met, generates an automatic response. Associating a smart contract to each piece and making every node verify the transaction, will generate a dataset with all the information needed instantly, therefore, reducing the chance of errors. Tracing back from here would be easy, since every new block, every new transaction, will have the hash of the previous one.
As futuristic or complicated as this may sound, there are already many companies working with this technology, investing large amounts of money on it, and getting a head start. As an example, Facebook recently changed its name to Meta, related to the metaverse, deeply intertwined with blockchain technology.
Another example could be Glenfiddich. This company has minted NFT’s (Non-Fungible Tokens on the blockchain) that represent a set of their most special whisky bottles. Instead of having the bottle move around, it is safely stored, while it is the NFT the one that moves around. The company can see who and when it owned the bottle. Any owner at any given time, can ask the company for the bottle. It has also been used by the company BrilliantEarth to prove the origin and process of their diamonds. Even Walmart is using it to identify and flag recalled foods and trace some drugs and ensure the safety of their costumers thanks to this technology.
Food related NFTs could become more than a marketing asset for food and beverage processing, distribution, traceability of products or copyrighting of recipes. Remember main goal of Blockchain technology is to facilitate the detection of any transaction or asset, reducing the risks and costs for all involved.
An NFT for food and beverages holds information of provenance and product history enabling easier interactions between farmers, consumers, suppliers, certification, and inspection in a network dynamic. It helps streamline the supply chain and audit trail, being the representation of a physical product that mirrors its states, behavior, position across its lifecycle. NFTs can offer transparent traceability, store products’ details -shape, weight, taste, variety- current production state, public data about freshness and quality labelling, transaction -importer, stockage, reseller-, but also provide best-before-date and guaranteed shelf life, helping reduce food waste, collect data, make better product management and sales decisions. It can include product data, pictures, description, traceability, and certification information to interact with ERP and IOT to mirror actual state of the product.
Another advantage is that NFTs will make easier to food producers to get certification such as organic labels and improve auditing, insurance or marketing and reward smallholders for their production and contribution to a safer and secure food system.
Blockchain might sound as the future, but it is already here. It can change our finances, our production methods and our lifestyle dramatically, and not being ready for such a change can be a bigger risk than staying where we are at right now. Traceability’s world is about to change. It will get cheaper, faster and more reliable and blockchain is to blame.
References:
https://medium.com/@jrepusseau/digital-twins-nfts-for-farm-products-933d8551bc13
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