The blockchain’s potential for foodtech companies

Summary

If we believe its most fervent advocates, the blockchain is a revolutionary tool that could change our lives dramatically, just as printing and the Internet did in the past. It has the immediate potential of completely changing the organization of transactions, and has great appeal for governments, big companies, investment funds and entrepreneurs.

22Déc.
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Numerous foodtech start-ups see the blockchain as a way to truly revolutionize the food industry. By guaranteeing the complete traceability of all operations, could the blockchain restore confidence between breeders and consumers, between farmers and producers? Could it put an end to the information asymmetry deplored by the public at large? To understand all these promises, we take a look at the system.

Behind the blockchain: a new way to manage information and organize action

Developed in 2008 to make the virtual currency bitcoin work, but broadened since then to hundreds of other currencies and digital applications, the blockchain, in practical terms, is a technology for storing and exchanging information between users that records all transactions in a secure ledger: a kind of large digital accounts book.

The particular feature of this database, which contains the entire history of exchanges (information transmissions, transfers of assets, votes, etc.) between the members of the network, is that it is distributed, i.e. shared by all the participants’ computers, with no central body in charge. This guarantees its reliability, because the machines involved in the network constantly carry out checks to ensure that everyone has the same version and thus no fraud can be perpetrated.

In brief, nobody controls the blockchain, because everyone controls it. And that’s where all its breakthrough potential lies: it enables individuals or companies that do not know each other to exchange information and transfer money securely, with no need for an intermediary or central operator. For a modest sum, it is thus possible to organize the action of a large number of independent players, preserving traces of their actions.

Graph explicatif blockchain

For example, a blockchain can record all the property transactions in a given zone, and function as a secure, automatic land registry. A blockchain keeps traces of all financial transactions, ensuring that no participant spends the same sum several times over – thus playing the role that traditionally falls to banks. Another application in the sphere of energy: a blockchain can facilitate the automated exchange, practically in real-time, of electricity quotas between households that have installed solar panels. Alternating as producers and purchasers of the electricity generated in this way, these households would have a peer-to-peer structure without the need for a big company to record a summary of exchanges: the blockchain takes care of it. More generally, any situation where a trusted third party is needed can be redefined by a blockchain, potentially making various institutions obsolete, such as notaries, banks, contract lawyers and land registries.

Because it redefines information management by decentralizing it and making it more transparent, the blockchain is also of keen interest to the foodtech world. The aim is to improve the traceability of foods and products throughout the production chain using this technology.

The blockchain: a new white gold for the foodtech industry

The start-ups that have begun using the blockchain in the sphere of agriculture include Provenance.org, a small British firm that uses this technology to trace the authenticity of certain high quality foodstuffs. To guarantee the quality and origin of tuna caught in Indonesia and served in Japanese restaurants, it uses a system of tracers with RFID chips, whose references are automatically updated in the blockchain. The fish is followed throughout its journey until it runs into the fishermen’s nets in order to guarantee its provenance.

Using the same idea, a number of firms are looking at the possibility of encrypting animals’ genetic data and storing them in a blockchain. Consumers could then access this information with a smartphone app before buying their meat in the supermarket, for example. Meanwhile, the farming cooperative Farmshare uses a blockchain-based local currency to buy products certified as coming from this community. The blockchain seems to be a highly promising solution to restore confidence in a food market that is often opaque.

Genuine breakthrough or passing fad?

However, there are still limitations. The first concerns its use. If it is to work, a lot of educational effort is needed. In addition, it is a fantasy, at present, to imagine that all players in the food production chain (consumers, breeders, producers, etc.) will convert to a still-emerging technology. Its use by large-scale players (companies and institutions) in the sector is what will probably make the blockchain more widespread – like the banking and insurance sectors, where very large companies are creating consortiums to experiment with the blockchain.

Another question, raised by Prof. Phil Godsiff on the American site The Conversation, is whether the digital certificates generated by a blockchain could serve as a descriptive label sufficiently clear to guarantee ethical practices for consumers. It is up to the pioneers to use their ingenuity and creativity to evangelize the stakeholders – starting with the customers themselves. For this possible revolution involves not only consumers being able to understand labeling, but above all the importance of choosing products based on virtuous agricultural, social and environmental methods.

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