The
popularity of blockchain technologies, including Bitcoin, has just begun to
reach peaks in 2017. Among new currencies called cryptocurrency where
transactions are made without a built-in intermediary (i.e. banks), bitcoin
stands out the most. Although cryptocurrencies have similar functions to other
currencies, they are not linked to a nation-state like traditional currencies.
The fundamental design, blockchain, can use the capability of a worldwide, open
arrangement combined with the cryptologic hypothesis for creating a secure,
trust-less implies of trading esteem or data [1,4]. Blockchain technology has a
wide range of applications in many food industries, especially in areas such as
traceability, logistics, and finance [1,9]. Blockchain technology has emerged
with the renewal of an old concept. Blockchain uses technology that can reduce
the reliance on external agencies in favor of cryptological evidence to improve
some of the disadvantages of private ledgers inherent in the business [1,8,9].
Thanks to the blockchain distributed across a mutually shared network, all
stakeholders of a supply chain and Key Data Items (KDEs) can be on the same
page to communicate traceability goals.
The
term "blockchain" was first used in an article, which conceptualizes chronological
data blocks linked via a networked cryptological chain, written in 2008 by
someone using the Satoshi Nakamoto nickname [4, 5]. The next year, Bitcoin was
created by Nakamoto based on this concept [1]. Although blockchain technologies
are a ledger with a large potential of features depending on the architecture,
its first iteration focused on creating a non-corporate currency [1].
Hash-based
cryptologies are used by a blockchain to ensure security and trust [4,5]. A
hash is called strings or an encrypted version of a string when it becomes
numerically impossible to derive a keyless original [5]. Combining transaction
details, transaction timestamp, a new hash combining the hash and details of
the previous transaction are the three basic data pieces of the blockchain [5].
Then each transaction is distributed across the network. During this process,
keeping a continuous encrypted record of the transaction ensures that it
becomes immutable when added to the blockchain [4,5].
An
analysis algorithm checks the pending transaction and then is distributed
across the network to the shared ledger. Thus, the changes in the blockchain
are verified [3]. When this verification process is completed, the transaction
becomes a permanent part of the chain. "Miners" are called nodes
through which transactions are verified [4,5]. Differences in blockchain
architectures are primarily seen in the choice of solving algorithms. Some
algorithms prioritize throughput and speed, others to decentralization and
anonymity [3].
Blockchain
users have two keys, private and public. The public key is the way to send
material to a specific person on the blockchain, while the private key verifies
transactions from the individual owner.
Blockchain in Supply Chains and Food Traceability Systems
Although
generally built on the basis of cryptocurrency exchange, most blockchain
applications can be applied to any situation, theoretically requiring
guaranteed or verified information. The great interest among technology and
finance and supply chain technology companies is based on the ability to rely
on peer-to-peer networks rather than central institutions [1]. Thus, companies
in the supply chain, which can have a more transparent and decentralized
system, will be able to enter data into the system with a degree of anonymity
and control that can encourage universal adoption. Another attractive quality
of blockchain systems is the data validation obtained from the cryptological
structure [9].
Factors
such as the query speed of traceability systems, the immutable and shared
nature of the system, and the simultaneous capabilities of anonymity and
transparency shape the value of blockchain use. It includes a central system
concern for traceability, a single point of failure, the opacity of such a
system, and the foundation of the provider's trust. Blockchain has the capacity
of parts of the food supply chain to enter data into a shared ledger that
reaches both ends of the market, covering the whole process from producer to
consumer. Companies can enter traceability information as well as keep
important proprietary or commercial competition information confidential [9].
Since
2018, supply chain and traceability solutions where blockchain technologies
have been applied have been preferred only in limited pilot studies. Open
source blockchain bases such as Ethereum or IBM's Hyperledger have begun to be
discovered by many companies for use in their supply chains [7]. Some of these
pilots appear to be combined with other technologies such as internet-enabled
sensors [2].
Many
of the benefits of blockchain systems don't have to be exclusive. Adopting
common KDEs can be made easier by using a distributed system that is implicitly
not owned by a particular organization. It is possible to use more fragmented
approaches for data collection and dissemination while having harmonized KDEs
in the industry [6].
Difficulties to Be Faced
Bitcoin's
popularity has revealed some drawbacks that should not be ignored before being
extensively applied to industries such as food traceability, logistics. The
most important of these disadvantages are the natural concession that exists in
the blockchain, such as limited transactions per second, that cause disruptions
in information exchange [3,4,9]. For an industry that processes between
thousands and millions of transactions per second, such interruptions are not
acceptable for scaling a blockchain plan. Also, the delay or time required to
add a data block to the chain is likely to be problematic [9].
As can
be encountered in any technology innovation, interoperability is likely to have
a huge impact on implementation delivery. In terms of blockchain, this could
mean agreeing on a common denominator platform to be used for a given supply
chain [6]. As a result, only existing business and transactional relationships
in an industry can be developed by blockchain. Nevertheless, KDEs will need to
be standardized.
There
will inevitably be speculative businesses and they use blockchain technology as
a questionable value-added service. If we are to give a similar example, as a
result of the dotcom boom in the 1990s, e-commerce companies sprang up. But
many of these companies were not aware that they were making bad business
decisions because they were fooled by the tears of new technology. The most
infamous example of this is Pets.com. For this reason, when investing in
blockchain technology to increase traceability, it is very important to be
sceptical of how effective the blockchain is at solving supply chain problems.
It is necessary to be careful with extraordinary promises. In supply chains,
cryptocurrencies don't seem to be completely necessary to use blockchains. For
this reason, it's necessary to be significantly sceptical concerning firms that
wish to take a position in cryptocurrency [6].
Conclusions
Especially when it comes to the food traceability industry, blockchain is not the only fish in the sea to be a solution. Almost every initiative that started using blockchain technologies has not made great progress and is still in its infancy. Many non-technology deterministic factors are influencing adoption. Besides, improved tracking capabilities with increasing visibility, collaboration and institutionalization can be an excellent way to find solutions to food traceability problems.
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CONTENT: Türkan Elçim
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