Using digital identities to link physical products & distributed ledgers - addressing a $460 Billion problem.

Why is Product Provenance Important

Michael Queralt
Feb 1, 2019 · 5 min read

In a competitive global market place, where products are sourced from local markets and distributed all over the world — organizations have been focused on differentiating their product, via investments in marketing, brand awareness and security, but still the sale and purchase of counterfeit products represented a market loss to original products of $460 Billion[1,2] in 2013.

Why digital identities for physical products ?

By focusing on the early stages of the process, organizations can ensure that the information created is accurate and rooted on the proper trust vectors. Trust vectors that are recognized by external parties and become foundational for the traceability and assertions by external parties of the product journey into its supply chain, creating an immutable identity that is enhanced during its journey through the supply chain.

Digital Identity and Provenance Claim

In the following example of traceability for wool product; The process starts by creating a digital identity for the goat, composed of cryptographically signed attributes that will be written into the RFID tag and will be a component of its provenance.

In the early stages of the process, it could be utilizing Passive RFID tags that have the digital identities and necessary attributes of the goat, its owner and other information.

The data acquisition methods will morph based on the requirements and integrated during key events of the supply process and will be linked to the distributed ledger.

To provide accurate tracking of the product from birth to consumption, organizations must be able to capture information from multiple data acquisition methods, partners and processes. All of them should be identifiable and recorded during the journey.

One of the key events for the provenance process is the information on the first block of the ledger. To achieve a strong level of assurance, the approach is to create digital identity for each goat and use that information to create the provenance claim.

The identity could be composed of multiple and vetted attributes, like:

  • Identity of the farmer
  • Location attributes
  • Birth attributes of the goat

The identity and attributes should be cryptologic encapsulated within a digital certificate and written onto both the RFID tag and the first block into the ledger .

One by-product of this approach is that it mitigates risk of external events affecting the access to the blockchain, as individuals would be able to gather provenance information written on the RFID tag and trust the source of the information due to the cryptographic signatures, all by using an RFID reader or standalone application.

Entering the blockchain process with a strong assurance on the identity of the goat and its attributes, ensures that all following transactions and assertions will be made based on a strong root of trust — delivering a solution that can be verified from its origins to its end state.

Once the wool of the goat enters the wool handling process, its identity or key attributes (attributes like: owner, location, quality, etc.) can be aggregated with others to create a bale of wool. This information can then be used to generate a unique QR code to track the bale, and it can also create a new provenance claim into the blockchain, which will refer back to the individual goats that compose each bale.

The QR code can become the method to aggregate information at handling, transportation, and manufacturing steps. For example, when the QR code is scanned upon arrival at the manufacturing plant, this step is recorded on the ledger. Along with the identifiers and key attributes assigned to the QR code, this aggregated history prevents the same QR code from being fraudulently used on other bales.

The QR code will follow the product to the manufacturing point, where it will be aggregated with other bales, repeating the previous process, creating an aggregated hash of information. This provides the ability to view the original transaction and all of the steps of the journey, with trusted assertions signed by the proper parties.

Manufacturers will be able to include the QR code with the final product to show consumers the source of the wool. Creating an unbroken chain in the physical world that is properly linked to the ledger and can be verified by the end consumer via the use of a QR scanner and reading the final QR code of the product.

Interoperability

A success factor to ensure total traceability of the product is a rapid integration into current processes for the gathering of assertion or verification purposes.

To achieve this objective, organizations should look to employ two different methods;

One is the deployment of an API gateway for the communication and interaction with systems that are capable to communicate via this process.

The second one; is the use of smart contracts to manage such interaction, and the use of a common development languages as a way of integrating it into current applications or developers. Making its adoption much more prevalent as external developers will not have to abide by the rigidness or have knowledge of blockchain protocols to interact with the chain.

This approach would enable for faster adoption at lower cost by current providers, by lowering the technical barrier of entry into the information chain. Creating greater value in the types of assertions or interactions that can be performed, without the requirements of employing experts to work on such task.

Key points to remember:

A provenance solution must;

  • Identify the most basic starting point of the supply process.
  • Deploy cryptographic tools and methods to identify all of the actors within the process.
  • Ensure interoperability with external systems via API gateways or the use of standard protocols and languages for faster integration and adoption.
  • Focus on usability — focusing on the various parties using the system, and their language, technology, and process knowledge we drive as simple as possible user interface that simplifies and localizes the complex technology underneath.

Data integrity is the key component for product provenance:

There are many reasons for brands to implement a provenance solutions. On this post we have focused at the value of its identity, but there are improvements in the management of the supply chain, reducing intermediaries, lowering operational cost & others.

Whatever approach and solution organizations decide; it starts with the accuracy and trust that can be derived in linking that physical asset to electronic and distributed ledgers — the impetus of driving innovation in the supply chain, organizations would be well served by spending time in taking an identity centric approach to the product, otherwise if that linkage between the two activities is questionable, the whole process will be fall apart.

[1] https://www.adweek.com/brand-marketing/counterfeit-goods-are-a-460-billion-industry-and-most-are-bought-and-sold-online/

[2] http://www.oecd.org/industry/global-trade-in-fake-goods-worth-nearly-half-a-trillion-dollars-a-year.htm

Michael Queralt

Written by

Entrepreneur with over 30 years of experience.Bridging business and technology — focused on digital identity, authentication , privacy & access— www.caumike.com

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