Traceability for End Users Through Blockchain Technology
When we think about blockchain technology, one of its highlights is without a doubt, the possibility to provide traceability in a whole range of different industries. On this blogpost, we analyze some of the typical situations where blockchain technology can enormously contribute to the process.
Traceability on Supply Chain Management
Supply chain management traceability is the best guarantee to prove the quality of a product or service. There are literally millions of goods and services where multiple providers participate in the production process (suppliers, freight forwarders, customs agents, logistics companies, etc). On this context, blockchain technology can provide a tamper-proof information layer where both product developers and end consumers can assess the provenance of the product. Provenance, Grassroots, Bext360 and IBM Blockchain for Supply Chain are good examples. RSK’s partner dexFreight, is literally transforming the way logistics is managed through blockchain technology. As stated on their website, dexFreight is powered by an ecosystem of open source protocols using smart contracts and machine learning that delivers unprecedented visibility & transparency. The blockchain-based verified identity and objective reputation system, allows shippers and carriers to meet, find business and negotiate deals in a peer-to-peer marketplace with less friction. Moreover, tokenized payments with instant and cross-border payments, reduces costs on a peer-to-peer ecosystem.
Traceability on the Pharmaceutical Industry
Providing end-to-end traceability within the pharmaceutical industry is of paramount importance to prevent drugs counterfeit. As we’ve analyzed on a previous post, Mediledger, Farmatrust, Medrec & Modsense are good examples of how blockchain technology can be used for traceability purposes within the health industry. Blockchain technology on the pharmaceutical industry, will deeply contribute on the process of verifying the authenticity of drugs, preventing counterfeit & increasing compliance in the pharma industry supply chain as a whole.
Traceability on the Food Industry
There have been multiple scandals within the food industry on recent years when assessing the quality of the products end-consumers purchase. The milk scandal, where approximately 300,000 babies on China were sick from contaminated milk, is one relevant example of why consumers need tamper-proof technology that can enable them to check each step of the production process. Traceability on the food industry would exponentially mitigate the risks of food poisoning and also enable vegetarians, vegans and organic food lovers to properly track the provenance of a product. Grassroots, Bext360, Provenance, TaelPay & Alibaba´s Food Trust Framework are good examples. Walmart has also published a detailed case study where they explain how they are using Hyperledger Fabric to provide unprecedented transparency to the food supply chain.
Traceability & Predictability on Monetary Policy
One of the main drawbacks of the legacy monetary system, is that citizens do not have any direct control over the rate of inflation nor the cost of money (interest rate) in the long term. On a stable money system, the principle is that there’s an authority in charge of controlling the supply of money so that fluctuations on its value don’t turn into a financial crisis in the form of recessions or deflation. Could blockchain technology provide a framework where citizens would have more certainties over the purchasing power of their currencies in the long run?
CBDCs (Central Bank Digital Currencies) have been a topic of extensive research by different countries. The IMF paper entitled Casting Light on Central Bank Digital Currencies and IBM’s Central Bank Digital Currencies report are good examples of how this technology is being explored. Moreover, if we take into consideration the fact that apparently J.P. Morgan Chase will be the first major U.S. bank to create its own cryptocurrency, that Goldman Sachs purchased Poloniex back in 2018 and the recently published paper from the IMF on this topic, these are all clear indicators that blockchain technology could indeed become a technological framework for monetary policy development.
So, how could blockchain technology contribute on the process? Programmable money could provide a new monetary framework where governments would have the possibility to develop monetary policies with a fixed issuance rate. In other words, governments would no longer be able to print at will and they would have to stick to a strict inflation rate. This could of course create more credibility, as citizens would have more control over the inflation rate. Credibility and trust are the foundations of a healthy economy and on this particular aspect, blockchain technology could deeply contribute if different governments respect the monetary rules they define. However, citizens may also not like the idea of losing privacy if cash is completely removed from the system. Additionally, negative interest rates has also been a topic of extensive research by many central banks and citizens would prefer in many cases to preserve a form of value (such as paper money) that yields no interest rather than a variation that could yield a negative rate. Will CBDCs set the basis for a new monetary global framework? Time will tell, as this is probably one of the most controversial uses of blockchain technology. If you are interested on this particular subject, don´t forget to check RSK´s CEO post on paper to programming and our recent blogpost about central bank digital currencies.