Left to right: Nicola Claxton, co-founder and COO of yave; Joe Madden, co-founder and CEO of Xpansiv; Peter Patterson, Blockchain Market Leader at IBM; and Steven Fish, founder and CEO of ESG Ledger. | Image credit: Nicole Palkovsky

For some, blockchain is the disruptive technology that promises to solve transparency problems by creating one version of the truth; for others, it is all hype with no great real-world application other than cryptocurrency. I attended an SB’18 Vancouver workshop on “How Blockchain Technology Can Power Superior Supply Chain Innovation and Understanding” to move closer to understanding blockchain and its applications.

Steven Fish, founder & CEO of ESG Ledger, opened the session by sharing his goal to demystify blockchain, and help us “move away from the idea that blockchain is Bitcoin.”

The first challenge for a lot of people is simply wrapping their heads around this new technology. Fish suggested starting with a simple example, like buying a house. Here is how it would work: Start with a simple block — it could be purchase price, renovations, etc. All of it written in an immutable record, ideally when the home is first built. As things change — permits are applied for, the furnace is replaced — each item is recorded on the ledger. Nothing can be erased, so if a mistake is made you can create another block to correct it, but everyone sees everything. You can capture both quantifiable and qualifiable data. For example, you could scan deed of house and attach it. When the next person buys the house, they join that ledger and can see everything that has ever transpired. No more guessing if a permit was pulled, or what was changed when.

Building a blockchain. As each transaction occurs, it's put into a block. Each block is connected to the one before and after it. Transactions are blocked together, creating an irreversible chain: a blockhain.
Click to enlarge. | Source: IBM infographic

If you want more of an overview, I found this IBM infographic and Dummies Guide to Blockchain very helpful. They also have a technical white paper.

Peter Patterson, Blockchain Market Leader at IBM, shared several current, real-world applications. First up: Diamonds — an industry fraught with smuggling, fraud and unethically mined stones. Blockchain allows supply chain players to keep a record of high-resolution photos of every stone, track real-time payments, maintain certificates of authenticity, as well as product details such as cut, clarity, color, carat and serial numbers. Basically, blockchain allows endless attributes to be attached.

Let's see how it works in one industry. Tracking diamonds from mine to final consumer is complex. Smuggling, fraud, counterfeit diamonds and unethically-mined stones pose real challenges. With blockchain, it's possible to: Keep a record of high-resolution photos for each diamond at every touchpoint along its journey; Track real-time records of every payment transaction; Hold certificates of authenticity; and Maintain product details like cut, clarity, color, carat and diamond serial numbers.
Click to enlarge. | Source: IBM infographic

Another application is improved food safety and authenticity, i.e., how do you know if your chicken from China is really organic? Blockchain is allowing industry leaders to track chicken (pork, beef, you name it) from farm to store. With a QR code on the package consumers can scan the package and quickly see the entire life of the animal they are about to eat. The hope is it will also improve food safety. Walmart partnered with IBM back in 2016 to track the movement of pork across its supply chain. By using blockchain, all of the players are aligned and can see data such as time in transport, storage temperature and expiry date, which significantly improves food safety.

Nicola Claxton, co-founder and COO of yave, is focused on solving another problem: third-wave coffee price premiums making their way back to the farmer. Claxton and her partner saw that the rise in third-wave coffee prices in the developed world wasn’t making it back to coffee farmers. In fact, many farmers who produce some of the finest beans are struggling to make ends meet. Enter yave, a platform designed the let you “see through coffee.”

Coffee has a digital ID that follows a physical product. Smart Contracts commit all actors directly and in real time. Glass pipeline substantiates quality standards and certifications. Source of record accessible to all parties.
Click to enlarge. | Source: yave

yave coffee is given a unique identifier; this may happen with farmers texting yave and being given a digital marker that they write on the bags. The coffee then flows through the supply chain to consumers, where ultimately a consumer can scan the QR code on the bag, learn about the coffee, and in the moonshot state (dream not yet a reality), send a tip directly back to the farmer.

Denver-based Bext360 is using blockchain for coffee, as well. The startup created the “bextmachine,” which takes a three-dimensional scan of each bean to help producers learn how bean quality and characteristics translate to taste in the cup. Its blockchain program is used to track the bean from farm to coffee shop, and with a quick QR scan consumers see it all. Founder Daniel Jones believes his company can help standardize quality assessments and reduce paperwork across the supply chain, which ultimately reduces costs.

The application of blockchain seems promising on discrete items such as pork chops, diamonds, even a bag of coffee — but what about blended commodities such as conflict minerals, cotton, natural gas and oil?

A commodity-focused company, Xpansiv is working with blockchain to correct the market failures abundant in commodity markets — imperfect information, environmental impacts, and operational inefficiencies. Joe Madden, co-founder & CEO, shared his company’s approach. I’ll confess this portion of the session went a bit over my head, perhaps moving too fast while I scrambled to take notes and photos. Here’s what I did gather.

Xpansiv takes the massive amounts of data available at the source — for example, a natural gas extraction site — it then refines the data into attributional profiles (attributes attached to the commodity that have significance), which is then attached through blockchain technology so the commodity in question can be identified as frack-free for example.

How We Do It: We take unrefined data from the source - to extract and refine attributional profiles of the underlying commodity - resulting in a differentiated asset class of Digital Feedstock.
Click to enlarge. | Source: Xpansiv

I’m oversimplifying it here. The main takeaway is, blockchain has the potential to address commodity supply chain transparency, which has been a huge hurdle to overcome.

Clearly, blockchain has a ton of potential applications. If your curiosity is sparked and you want to learn more, Claxton recommends exploring Hyperledger — a simple, open-source, step-by-step, build your own system. “All you need to know is how to put the data into a single database,” Claxton said. It takes three simple steps.

Step 1: Identify your asset

What is the asset, what are we tracking?

Step 2: Engage participants

Who are all the players? Get them on board and participating.

Step 3: Determine the transactions

What transactions are we tracking? Chain of custody, attributes — get clear on what data needs to be tracked.

Conceptually, that is all you need to get started. Simple and powerful, right? Certainly, but my jury is still out. I am excited about the potential and some applications — like the Plastic Bank, which creates currency out of plastic waste — are incredibly cool, but it still seems to be a lot of hype. I find myself asking, does every application of blockchain really require blockchain or could it be solved more eloquently with another solution? Also, we are talking about storing all of this encrypted data as though it can’t be hacked or fail, but recent cyber attacks suggest otherwise. Additionally, skeptics point to the fact that humans enter the data, allowing for corruption, inaccurate information and simple errors.

Clearly, blockchain is going to impact business — the question, is when and how.





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