When Satoshi Nakamoto published the original Bitcoin paper, aptly titled “Bitcoin: A Peer-to-Peer Electronic Cash System”, he (or they) produced one of the most elegant and robust innovations for a social need that hadn’t undergone any major transformation in decades (perhaps since we dropped the gold standard). An airtight and decentralized system of currency, sustained without oversight by a ledger of transactions between a network of users.
Presumably there was no way to predict the true potential of such a system, and it wasn’t before long that numerous competing cryptocurrencies cropped up. Each represented an experimental treatment of blockchain technology. In adjusting parameters, augmenting architectural components, and combining with other systems, we began to get a handle on what were the range of ways the ledger could be leveraged for other social needs.
More recently we have seen the advent of non-financial applications including contract fulfillment (Ethereum) and identity/data verification (Keybase, Tierion); even the NASDAQ exchange found some functionality in creating and managing assets. Perhaps the most promising characteristic of blockchains is the full-proof user accountability the system necessarily creates. In the context of an ever-globalizing world, where the interconnectedness of firms continues to grow, the ability to track data and metadata independent of any single organization’s control has profound implications.
Beyond being able to mediate the process of transferring ownership of products, a blockchain can actually integrate the full production or services processes of a group of firms in a way that is entirely transparent, but continues to protect their intellectual property. For example, an electronics manufacturer might require its suppliers to join a supply chain network, and develop provisions for verifying all sorts of data regarding individual components (think shipping, manufacture date, and maybe most interesting, source of origin). Because suppliers will have to attach unique “verification tokens” or “signatures” to their products, and those verifications being uniquely assigned to a specific facility or even production line, their compliance is guaranteed. This will be of growing importance as our appetite for electronic gadgets increases, and the volume of key raw materials sourced from impoverished parts of Africa follows suit (for the uninformed, do research on coltan mining in Rwanda, the Democratic Republic of Congo, and Burundi).
Companies like Provenance based out of the UK have already brought solutions to market in this capacity. They are providing everyone from retailers to producers with the ability to verify everything from the source of raw materials to the social impact of a particular product. Specifically, they have had success in applying the technology to the fishing and agriculture industries. This will go a long way in aiding us to manage our over-stressed fisheries and drought-stricken agricultural land.
Everledger offers something to a similar effect, but geared towards financial assets and open-market exchanges. One interesting initiative has been their attempt to create a ledger of diamonds and their relevant characteristics. The system was designed such to necessarily prohibit the introduction of conflict diamonds. For jewelers, the value of this blind and incorruptible accountability is obviously immense.
Of course more robust and integrated applications will require significant investment in the digitalization of our businesses (conveniently already well underway). As advancements in tracking systems (e.g. RFID chips), sensors, and new manufacturing technologies are rolled out, we will necessarily undergo massive redesigns of our production/service processes. Firms will have an opportunity here of integrating blockchain-based supply chain software into their backbones, and taking corporate social responsibility out of corporate hands.
Existing in a decentralized environment means two things for the stakeholders along the value chain: 1) a reduction in the amount of redundant and error-prone work (entering and consolidating records), and 2) an implicit building of robust trust between them. When corruptibility has been taken out of the equation, rich relationships can begin to take hold. What would follow is difficult to measure, for example, as the need for supplier audits or legal action will quickly begin to diminish. In its place the pioneering spirit of business that has brought us this far will be given a new lease on progress. We as consumers will feel a little more comfortable knowing with certainty that our habits aren’t destroying environments or lives.
Written by Farah Tamer
The verification tokens might be a very important step in tracking the complex and non-transparent supply chain of some of the products, like forage fish. Because forage fish is used in the growing aqua-culture industry and pet food production, illegal over-fishing is depleting fisheries worldwide. New York Times also reported (link below) that the industry is notorious with “slavery” as the low profit margin of this commodity leads to the exploitation of refugees and other impoverished people. According to the article, the lack of tractability in the forage fish industry is a problem in fighting the practice. If only the cryptocurrencies could show where our dog food comes from, perhaps consumers could pressure their governments to take action against such practices. At the very least, we could change our buying patterns.
https://www.nytimes.com/2015/07/27/world/outlaw-ocean-thailand-fishing-sea-slaves-pets.html
I wonder how the supply chain technology will deal with the immutability of the records, including the impossibility to delete such records. Would you say that the technology shall be adapted to allow some centralized correction/deletion of the records?
In case there is an error by one of the members of the supply-chain (e.g. a token is mistakenly assigned to a specific group of products), there will no possibility to change the records in order to correct the mistake, right? This would have implications for the coming constituents of the supply (retailers, tax authorities, consumers etc.).
Thank you for reviewing the current progress of blockchain technology’s use for social impact. In addition to supply chain management (agriculture, fishing, diamonds etc), it also has high potential to be used for human rights activism.
In 20 years, what is the adoption rate you expect globally? What about in the social impact sector?
Reference: http://blogs.cuit.columbia.edu/rightsviews/2017/04/17/applying-blockchain-technology-for-social-impact/
A nice introduction to blockchain’s applications – I enjoyed reading this. Thank you. I particularly look forward to a time “when corruptibility has been taken out of the equation”