We have all seen the use of (and hype about) blockchain in the context of bitcoin, the digital currency that first brought blockchain to mainstream media and investors. While bitcoin remains in the news, the applications and potential of blockchain are spreading well beyond cryptocurrency.
Before we take a look at how the agriculture industry is using blockchain, let’s do a quick blockchain 101.
What is Blockchain?
One way to think of blockchain is as a technology that allows users to transfer value, or assets, between each other without the need for a trusted intermediary. The exchange is recorded in a ledger that is shared by all users of that blockchain. Users rely on this shared, or “distributed,” ledger to provide a transparent view into the details of the assets, including who owns the asset, as well as descriptive information such as quality or location. The running history of the transaction is called the blockchain, and each transaction is called a block. Today, when you hear about blockchain, what most really mean is ‘blockchains.’
There exist multiple different forms of this distributed ledger technology, each suited to distinct use cases. One popular blockchain technology is Ethereum, which its founders launched around the idea that blockchains can do more than simply record information. This concept, called ‘smart contracts,’ is central to Ethereum and allows users to codify significant parts of a workflow process, agreement, or task. So, when a transaction occurs, the software automatically executes an action, or set of actions, according to the specifications in the smart contract. One example is smart locks; locks that automatically open after receiving the correct fee.
Recently a few other potential use cases for blockchain have emerged, such as tracking goods throughout supply chains (e.g., SkuChain) and IoT-enabled “smart farms” (e.g., Filament). Though we haven’t yet seen the large-scale commercial adoption of blockchain, investors like the Bill and Melinda Gates Foundation and various venture capitalists are paying attention to this space. The R3 consortium has also been in the news for its Corda platform, which enables trade finance and the exchange of letters of credit between its members.
But what about agriculture?
Though agriculture technology is gaining popularity — and capital — there has been very little talk of blockchain applications within core agricultural areas. There should be, though.
Blockchain has huge potential in three key areas of the agriculture industry:
1. Provenance and radical transparency
2. Mobile payments, credits, and decreased transaction fees
3. Real-time management of supply chain transactions and financing
Enabling Provenance and Radical Transparency in the Food Chain
Consumer demand for “clean” food, including organic, is skyrocketing, but producers and manufacturers are often struggling to verify the accuracy of data from farm to table. Blockchain can help.
Currently, there’s no easy, accurate and efficient way for manufacturers to know about issues like slave labor and pollution, or to identify the exact origin of a commodity. Yet consumers, especially within niche markets like organic food, are increasingly willing to pay for products that provide this information. To date, solutions have revolved around certifications and regulations, both of which add costs, are hard to enforce, and can be confusing to consumers. How do free-range and cage-free chickens differ, and what do the labels actually mean for animal welfare?
Startups liked Provenance and FarmShare are using blockchains to solve this problem for businesses and consumers. The value of blockchain here is its ability to make the supply chain entirely transparent and rich with immutable provenance data from farm to table. In other w...
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