The blockchain traceability bubble.
Provenance, Farm-to-table, Supply-chain, Product tracking, etc.
Every day there are new blockchain based supply chain and traceability start-ups, coop, or intiative. From IBM, Walmart, JD.com, to small start-ups like AgriDigital, TE-food, BatchBlock, Arc-net and Blockgrain. They all claim to apply the immutable features of a blockchain, to physical goods in a supply chain, often “guaranteeing”, to the consumer, the source and authenticity of the purchased products. These products include pharmaceuticals, fashion garments, and food/animal products. The blockchain solution is hailed as blockchain’s early real world application, here to solve key public issues such as product quality and safety, in industries strife with counterfeit goods, counterfeit labelling and contamination. However, these claims are all false. None of what is stated is actually true, and behind all the smoke and mirrors, nothing has changed. Especially the consumer’s ability to trace the origin of their product.
Image Source: https://www.blockchainsemantics.com/blog/blockchain-is-transforming-supply-chain-industry/
There are many certainties when it comes to blockchain technologies and most of these are due to the underlying complex mathematics, cryptography and internal economic incentives for the network of users providing the security. However, these certainties do not apply to the tangible or physical world, unless of course, the item can be uniquely identified and differentiated from another identical item. All of the existing supply chain faults, issues and points of failure remain. It is still possible for counterfeiting labelling, contaminated goods, and substituted goods to occur. Currently, the counterfeit market value is estimated above $120 billion per year. (1) This risk is still here even after the industries rebrand with Blockchain features.
To understand why, you must accept that the original aim of blockchain technology, which is the breakthrough technological achievement allowing cryptocurrencies to function, is that trust is not a factor. It is not required for any stage of the cryptocurrency processes e.g. transactions, mining, decentralised consensus, etc. You may have heard the term “trust-less”, which does not mean “trust us”, but rather “don’t trust, verify” for yourself. If your system, which you wish to be secured with blockchain technology, requires a hint of trust at any stage (e.g. third party distributors), the entire point is invalid. Blockchain technology does not provide any trust or certainty for physical items. Blockchain technology cannot verify that the most important step of item verification is happening correctly, or even maintained. A recent article in the Harvard Business Review “What Blockchain Can’t Do” provides an example of this blockchain traceability fallacy with respect to tracking babies within a maternity ward.(2)
With respect to physical goods, all of these new blockchain companies think they are securing them by adding QR codes to the packaging. They claim these codes, or unique stickers, allow traceability throughout the supply chain, amongst all stake holders. However, they do not mention at all, how the package contents are uniquely identified. Blockchain says nothing about what is inside the package. In fact, all of the above proposed methods of unique labelling can easily be copied. Counterfeit labelling is already a huge industry, and quickly replicated. Just look at any of these new blockchain company’s white papers as they have already outlined how big the counterfeit industries are. But what they fail to recognise is that it still applies to them. If a package is replicated and an substituted product is inserted, the consumer, producer or logistics team have no way of knowing this happened.
Here is a list of false, but published, claims supposedly highlighting a blockchain solution.
“The blockchain provides openness, transparency and irrefutable data history from [product] creation through to consumption”. (3)
“Allowing shoppers to trace the entire journey of organic food from the field to the supermarket shelf”. (4)
“It can provide consumers a guarantee of complete product traceability, [meeting] the growing desire for transparency from farm to fork”. (5)
“proof of legitmacy for products in pharmaceutical shipments, or proof of authenticity for luxury goods”. (6)
“Blockchains helps to assure the traceability and provenance of a product,…. The transparency and tamper-proof nature of products underpinned by blockchains can allow consumers to buy with confidence knowing the product they buy is what they think it is – ie Australian beef, not lower priced substitute of unknown origin packaged and sold as Australian Beef”. (7)
“Every step in the food production and transportation cycle is verified (through the consensus of those involved) and recorded onto the Blockchain – guaranteeing security and immutability.” (8)
“enable themselves to be future-proofed from a traceability or a provenance perspective” (9)
“BatchBlock can verify the authenticity and contents of each shipment. It also allows end users to verify the authenticity of their drugs, preventing them from using any counterfeits and enabling them to effectively report any packages that cannot be verified.” (10)
These are only small quotes of larger claims, from a select few new companies, but they all state the same thing. With all of this misinformation, we should look at what would be required for their false claims to be true:
1) Trust-less: Each point of the supply chain (producers, packagers, distributors, suppliers, repackages, and Consumuersetc) must be the same entity (the same person). i.e. you only need to trust yourself. But that is impossible, unless you are omnipresent.
If you are working with multiple other parties, then trust is inherently required. In fact, many of the above mentioned blockchain companies state that increase trust and compliance is required for their models to work.
So, it then require each and every step in the supply chain to be performed by verified stakeholders. Wait…. What?!?!?!. Wasn’t the whole purpose of blockchain is to remove trust? Now we go back to trusting everyone again? And now if any point of trust breaks down, the whole system collapses. None of the claims become true.
So ironically, the proposed system requires trust, collaboration and honesty. If that alone is achieved through concerted efforts and trusted authorities, then what is the point of saying it is enabled by Blockchain?
With respect to real-world interpretation of digital units (e.g. the product), “In the case of food there are many Organizations and authorities that can have an interest in labelling the food with their certificates”,… but the “authorities’ credibility release on their labels being used properly buy farmers, produces” and distributors. “The ability to trace who uses the label, and preventing it from being double spent (copied, replicated), is there for key”. (11)
2) Uniquely identified product. Not the packaging, but the product itself. Many of these start-ups and initiatives claim complex QR coded or tamper resistant packaging. Well, those alone are already a problem in supply chains. Counterfeit operations have already bypassed those safeguards. Adding any unique labelling to a package says absolutely nothing about the contents inside.
“In some cases it is not possible to attach sensors to the good itself due to its size, material, or in order to preserve its integrity.” (12)
Blockchain does not help, or add some magical immutable guarantee here either. The answer here is a unique identifier, embedded in the product itself, that is recorded at production, and verified by the consumer at purchase. Something that also cannot be replicated. Hypothetical unique identifies in food have to be safe for human consumption, present on every piece (e.g. each grain of rice), and in the purpose of increasing efficiency, be easily applied and then verified at each stage. Nothing in this hypothetical is possible, nor would it be cheap.
But wait… There is one company (Arc-net) that claims to include DNA samples of the animal product in the unique identifier produced at the start. (3) Perfect, DNA is very unique, and perhaps easily recordable as a digital signature? But this feature makes absolutely no sense in terms of verification for the consumer, or every other stage of the supply chain. Do they imagine some DNA sequencing machine at the check out of every supermarket? Or are they still saying, “Trust us”.
Consumers need to be aware that nothing has been solved for their own peace of mind in terms of food or product safety, authenticity or origin.
The blockchain traceability bubble will soon pop. And sadly it will be devastating for an unfortunate group of consumers. They will either be mislead into thinking their purchase is genuine, or that the food their family is eating is safe and authentic. When they get sick, everyone will realise that these claims were false, and the blockchain solution failed. It would be great if all these start-ups and initiatives stop with the BS, and state the limitations of their system. When the inevitable failure happens, there will be a cast of doubt on blockchain itself. It is therefore extremely important knowing the limitations of blockchain technology.
Some of these companies will state that instead of guarantees, blockchain allows for improved efficiencies for supply chain tracking. But again, when a fault occurs, they have to look at each stage to find out who was the untrustworthy participant, amongst all of their trusted and certified members. Well… we are back to square one.
In the end, these companies are merely proposing better collegiality, collaboration and trust. Nothing that Blockchain provides…..but don’t forget about their upcoming ICO.
References:
1) Anti-Counterfeiting. Packaging Digest. (http://www.packagingdigest.com/anti-counterfeiting) Accessed July 9th, 2018
2) What Blockchain Can’t Do. By Catherine Tucker & Christian Catalini. (https://hbr.org/2018/06/what-blockchain-cant-do) Accessed July 9th, 2018.
3) https://arc-net.io/platform/ (accessed July 9th, 2018)
4) Soil Association Certification launches blockchain trial. By Kevin White. (https://www.thegrocer.co.uk/home/topics/technology-and-supply-chain/soil-association-certification-launches-blockchain-trial/554187.article) Accessed July 9th, 2018.
5) Carrefour launches Europe’s first food blockchain. By Tony McDougal. (https://www.poultryworld.net/Meat/Articles/2018/3/Carrefour-launches-Europes-first-food-blockchain-261170E/) Accessed July 9th, 2018.
6) “Blockchain in Logisitcs. Perspectives on the upcoming impact of blockchain technology and use cases for the logistics industry” – 2018. (https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-report.pdf) Accessed July 9th, 2018.
7) “How Blockchain can beef up cattle supply chains”.(https://www.beefcentral.com/features/ntca-conferences/how-blockchain-can-beef-up-cattle-supply-chains/) Accessed July 9th, 2018.
8) “How to find health food – with blockchain”. By Andrei Povarov. (https://www.itproportal.com/features/how-to-find-healthy-food-with-blockchain/) Accessed July 9th, 2018.
9) “Q&A: Blockchain Traceability Startup CEO On Selling Blockchain to the Food System”. By Emma Cosgrove. (https://agfundernews.com/blockchain-traceability-startup-agridigital.html) Accessed July 9th, 2019.
10) “Batch Block: Fighting counterfeit drugs with Blockchain.” By Muhammad Ali Ishaq. (https://vhive.buzz/batchblock-fighting-counterfeit-drugs/) Accessed July 9th, 2019.
11) “Blockchain use cases for food traceability and control”. Axfoundation, SKL Kommentus, Swedish county councils and regions, Martin & Servera, and Kairos Future.
12) Continuous interconnected supply chain. Using Blockchain & Internet-of-Things in supply chain traceability. Deloitte. (https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/technology/lu-blockchain-internet-things-supply-chain-traceability.pdf) Accessed July 9th, 2018.
