Reid Williams writes at Conidesk about “How Bitcoin’s Technology Could Make Supply Chains More Transparent”. Specifically, he focuses on the supply chain of food. He describes examples of how this might work, using blockchain, cryptocurrency, and digital signatures.
“At the core of this is the ability to assign identity to people, to organizations, and to goods, to track in a transparent way the provenance of goods as they pass from one organization to the next, and lastly, as goods change hands, to exchange payment between the two organizations.”
His use cases are:
- Seeing where your food was grown
- Buying local produce in more flexible ways
- Seeing how your food got from farm or sea to plate
- Rewards programs that cross traditional boundaries
- New kinds of markets that create new ways to participate
- Knowing exactly what went into your food when it really matters
This all makes sense, even if the examples aren’t earth shattering.
Technologically, he describes a relatively straightforward mash up of mostly old technologies, as he states: identity, provenance, and payment. So what does a blockchain and cryptocurrency add to the picture?
Open identity systems have been under development for years, and digital signatures of various kinds are well developed. These systems do their job with or without a blockchain, and, notably, Bitcoin and other cryptocurrencies are designed to hide identity, which actually defeats the transparency described in the scenarios.
Provenance is very important concept in many contexts. I worked for a while on some pioneering efforts on this topic , so I can tell you that Williams is correct about this, and provenance is far more important that just these scenarios. One of the principles of making machine-readable provenance possible is that there must be assertions about “who said so”, as well as who, what, where, when, and how things happened. That is, provenance boils down to trust.
In that light, we can see that a blockchain may be useful for publishing key assertions about provenance, but trust in those assertions will depend on other factors, including identities of the alleged parties. Using a blockchain does not actually help with issues about trust, indeed, it is designed to be a so-called “trustless” system.
Generally speaking, provenance systems are designed to reason across multiple trusted sources. I.e., decentralized reasoning about “centralized” authorities. Why? Because expert knowledge is often centralized, and I can define who I trust about what kinds of questions. The local “Better Berry Association” really, really knows about the quality and sourcing of strawberries, so I am willing to trust their ratings a lot more than crowsourced or other ratings..
Unpacking this a bit more, provenance systems are about reasoning, taking various digital records (“assertions”), and constructing a trusted story about the object in question. A blockchain is one way to obtain records to reason about, but it doesn’t, in itself, contribute to the reasoning process. A blockchain may be a useful source, of course, if there are no other ways to get the data or the data may be fudged.
So, identity and provenance are important, and quite compatible with blockchain technology. But a blockchain is neither necessary nor sufficient for either open identification or provenance. The third technology is, of course, payments, including micropayments, and peer to peer schemes.
Here we start to see some new capabilities, which have been universally recognized. We already have co-ops farmers markets and even farm-to-table financial schemes. As Williams discusses, cryptocurrency can simplify and elaborate such schemes, and couple them to other digital technologies such as social media. I don’t think that Bitcoin is necessarily all that different from digital coupons or similar schemes, but there are advantages of scale and universality. The same scheme that I use to purchase local foods will also let me, on occasion, purchase anywhere in the world. (Hey, there ain’t no local grown coffee where I live.)
To sum up: Williams gives some believable possibly useful scenarios, and describes a very believable technology. Most of this could be build without a blockchain or cryptocurrency, but it all fits together in a pretty nice package.
I have to add a word of caution. A blockchain is only as transparent as the identities of the parties inserting records (“assertions”) on it, and the information on the blockchain is only as trustworthy as the parties involved.
If you want to see what I’m talking about, glance at the Coindesk report by Stan Higgens about “Former Exec Hits Back at OKCoin Amid Contract Dispute”. Despite the use of digital signatures and “transparent” contracts, there is still a savage dispute, little different from so many other such crack ups. Using a blockchian or Bitcoin was certainly not sufficient to prevent this dispute.
The blockchain is neither necessary nor sufficient for creating trustworthy systems, but it may be a very useful tool—along with other technologies.
- Moreau, Luc, Juliana Freire, Joe Futrelle, Robert McGrath, Jim Myers, and Patrick Paulson, The Open Provenance Model: An Overview, in Provenance and Annotation of Data and Processes. Springer, Berlin, 2008, 323-326. http://dx.doi.org/10.1007/978-3-540-89965-5_31