Digitalizing Food Chains: How Blockchain is Shaping the food industry?
Part I: BLOCKCHAIN TECHNOLOGY AND ITS SUSTAINABLE CONTROVERSY
Blockchain is a known term in the financial sector, fueled by the constant news of the boom and decline of cryptocurrencies in mass media. But more than that, blockchain is a powerful technology that can be applied to multiple sectors. This article explores what blockchain is and how it works and navigates across the current sustainable controversy.
Secure transactions
Blockchain is a digital system governed by protocols (or rules) that allow recording data in a decentralized and secure manner. It acts as a decentralized database or digital ledger. It is a disruptive solution for managing data transactions among multiple trading participants trustfully and autonomously.
How blockchain works
The principle is simple, once new information enters the blockchain system, it is shared between multiple participants (computer nodes) in the network, who should approve by consensus that the information is valid in a process called “proof of work” or “proof of stake” (last one being more energy efficient). In essence, this process is needed because there is not a single or centralized entity that validates the data, but a decentralized network system that autonomously (without human interaction) acts as a third party. Once data is validated and verified by the nodes or network participants, is chained to the predecessor’s blocks of information with a timestamp, which confers immutability to the data. Blockchain data is therefore stored on a network of computers (nodes) that participate in the validation and verification of transactions and maintain a copy of the entire blockchain, which is continually updated as new transactions are added to the network. [1]
As the information on blockchains is scattered across the network, and every block is uniquely identified and chained with previous and next blocks, is more difficult to tamper with it. In other words, it’s not enough to hack one node and one block of information to corrupt the data, as will happen in a centralized environment. Other copies in the system will invalidate inconsistent information. Specifically, a hacker should simultaneously corrupt 51% of copies or more to cheat the consensus system. [2]
Public and private networks
In public blockchains, anyone who understands the blockchain protocol can access the blockchain network, view the transactions, participate in the validation and verification processes, and store a copy of the blockchain. Therefore, public blockchains are permissionless and decentralized.
On the other hand, private blockchains are controlled by a central authority, only verified nodes can participate, and data storage can be more centralized in some participants. Therefore, private blockchains are permissioned and distributed. [3]
Smart contracts
There are existing blockchain protocols (like Ethereum), that on top of the secure transaction capabilities of blockchain explained before, incorporate a Smart Contracts functionality. A Smart contract is a piece of code containing contractual clauses. It has the ability to be executed autonomously and automatically to validate a binding agreement when a set of predefined conditions are accomplished. Therefore, the technology itself plays the role of intermediary in any transaction, making it unnecessary for a third party to attest to contractual obligations between trading parties. There is an existing handicap of Smart Contracts and it’s related to the computational cost associated with the complexity of its protocol, together with the energy and bandwidth use. To solve it, new solutions explore consensus through assigned nodes (federated) or weighty nodes of the network (Proof-of-Stake). [3]
IoT
Blockchain can be combined with IoT (Internet of Things), which will allow using devices to enter new information into the blockchain network. For example, IoT/QR codes of products can be scanned, and track the life cycle of a product across the supply chain, using blockchain technology and an internet connection.
Protocol layer and application layer
A protocol is a series of rules that provide a common language between machines to communicate or run some action. For example, the internet works under TCP/IP protocol, and mail transfer uses SMPT protocol. Blockchain nodes also need a common protocol to participate within the blockchain network. Over this protocol, software developers build applications that explode the benefits of blockchain networks and generate new business models among others to run their businesses. A token or cryptocurrency is needed to access and operate a blockchain protocol and use the applications developed over it.
Pros and cons. Blockchain sustainable controversy.
At this point, one could foresee that blockchain offers a digital solution good for making transactions in a trusted way, reducing the need and costs of intermediaries. But on the other hand, this technology also has its drawbacks as its robustness and security are directly linked with the number of participants and it requires a lot of energy consumption when, for example, running the consensus algorithm. This technology creates controversy in an environmental sense as some news and research pointed to the increase in greenhouse gas emissions due to its use. For example, it was computed that mining/producing 1 USD of Bitcoin, a blockchain digital cryptocurrency, in May 2020, led to the generation of 1.56 USD in global climate damage value and that mining Bitcoin was causing huge amounts of air pollution or carbon emissions, as its highly energy-intensive proof-of-work consensus algorithm consumed a lot of electricity and most of it came from fossil fuels, such as coal and natural gas. [4] However, current research is focused on exploring new energy-efficient consensus algorithms, such as proof-of-stake [5], also on how to run blockchain systems using renewal energy sources, and furthermore, on developing applications over blockchain platforms focused on reducing carbon emissions and improving social welfare [6]. In a second article, we will explore the benefits of blockchain applications in the agri-food industry, such as its ability to track a product lifecycle, avoid food loss or waste, and hence, decrease greenhouse emissions, and assure environmental and food safety compliances.
Evaluating IT systems from an environmental perspective is a must, and one should always compare the benefits of using some technology against others. For example, a blockchain alternative could be IOTA, which also allows saving transactions in a decentralized way using its own consensus algorithm (Tangle) that is designed to allow high, fast, and energy-efficient transactions, but is less secure, so probably less confident to be used in financial applications. [7]
References :
[1] Where does your data go: Inside the world of blockchain storage, by Kerem Gülen. Available at: URL link
[2] Blockchain Facts: What is it, How it works, and How it can be used, by Adam Hayes. Available at: URL link
[3] Blockchain: La revolución industrial de internet, by Alex Preukschat. Available at: URL link
[4] Technology: UNM researchers find Bitcoin mining is environmentally unsustainable, by The University of Mexico. Available at: URL link
[5] Is Blockchain Environmentally Friendly? Challenges explained. Available at: URL link
[6] 7 Ways the Blockchain can save the Environment and stop climate change, by FutureThinkers. Available at: URL link
[7] What is IOTA? How does it work? Available at: URL link
