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Thoughts

The massive assumption behind a lot of “blockchaining”

There are many dreams around the use of the blockchain for tracking products through a supply chain but at their heart is often an important step missing.

The hype and valuation craziness around Bitcoin has died down a bit at this point but there are still aspects to be interested in around this cryptocurrency. For starters, what it’s built on: 

Bitcoin is a currency built with the blockchain, a technology that allows developers to make unique, provable, unalterable “blocks,” attach them together (thus the “chain”), and keep track of every transaction occurring on said chain. You can see it as a gigantic, shared, digital ledger.

Proponents of the technology are working on dozens of different use cases for the chain, usually around things that are digital but could be made unique (where normally digital files can be copied over and over again without loss) or around things that are physical but could be associated to a block and thus tracked digitally. The latter is usually presented as a solution to all sorts of uses around the tracking of products, like containers being shipped around the world, car parts, or any other valuable “thing” that is inefficiently being handed from company to company in multiple steps across borders. This piece on private blockchains and the supply chains gives a good idea of what the system is currently like:

“With little or no automation, no streamlined communications disaster systems, no real visibility to anything during transport, and built on legacy systems over a century old, it is a pressing public safety problem.”

A more precise and very trendy version of the supply chain case is the idea of tracking the provenance of more organic “things,” like a box of mangoes, a free-range, no-antibiotic chicken, a roll of cashmere wool from a specific producer, a bag of organic fair-trade beans for a highfalutin coffee shop, etc. This way the consumer could know exactly where the product came from, how it was produced, how it was shipped, etc.

The end goal is laudable and the blockchain might even be the right solution. But here’s a trick for the next supply chain blockchain idea you hear about (or almost any blockchain project): ask if the process is already digital. As mentioned above, many of these concepts are actually looking at a largely un-optimized and analog system. The benefits heralded for a blockchain transition are dependent on first making everything digital: contracts, shipping bills, customs checks, etc. Attaching unique identifiers to each and making everything trackable might work well with a blockchain, but think of the hand-wavy assumption that a massive project would make it all digital in the first place. Then think of the scope of what that means. Still sounds simple?

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