Application of blockchain technology
The term blockchain has yielded much attention in many industries in the last 10 years. The emergence of blockchain is due to the lack of trusted system in the market. It has been used in various industries such as finance, logistics, retail, energy, health, education and more. However, the common use of blockchain is found in the finance sector.
In short, blockchain is a system linked in a peer-to-peer network maintained across several computers that records transaction made in bitcoin or another cryptocurrency. Here, blockchain represents a distributed ledger in a peer-to-peer network and yet, each peer holds a copy of the ledger. This proves that blockchain is a secured model, more advanced and convenient to our day-to-day transactions.
Furthermore, blockchain system is decentralised and it is beginning to change the way we do things, especially in business transaction and asset management.
There is a lot of potential offered by blockchain technology. In terms of its revenue, according to the report by ABI Research titled Blockchain and Distributed Ledger Technologies, the revenue will peak $10 billion by year 2023. Moreover, venture capital funding in just last year went $3.1 billion. The potential has opened up windows of opportunities for collaboration between companies.
Since blockchain system does not require trust, it is widely accepted and the unique feature – smart contracts help to execute all agreements according to pre-determined values. The term smart is derived from the fact that it could operate according approved contracts without human intervention. It auto calculates and settles payment based on pre-determined agreements.
Blockchain in agriculture industry
Since we have discussed at length blockchain model and system, what about its application in the agriculture industry? What role can blockchain play to resolve the challenges faced by not just the farmers, but also companies, consumers and the government?
The concept of blockchain in agriculture industry started to gain attention in recent years. One of its utmost important role is to track and trace the origin of food products. This helps to reduce fraud and false labelling by some dishonest parties to hijack or manipulate the market. Take for example the price for papaya in Taiwan. It is discovered that some farmers sold their crops for the same amount but middleman and companies trade it at exorbitant price, resulting in expensive papaya in the market. While some consumers blame farmers for the hike in pricing, but many did not know that the monopoly comes from various parties. However, without blockchain, we are left in limbo as we are unable to trace our food and crops.
With blockchain technology, market participants, authorities, and consumers will be able to obtain the information of the agriculture of food produce, from the farm that it was planted, the factory it was processed and/or produced, to the market’s shelf where the consumer will do their purchases. The whole process is documented into unique blockchain system, which is decentralized, immutable, and transparent.
Coupled with blockchain technology is the DLT technology. DLT technology, also known Distributed ledger technology is a digital system used to record transactions in multiple places at the same time. There is no central database and each component is decentralized to prevent fraud or amendment by any parties.
One really good example of corporations practicing such transparent exercise is DSTE Capital Limited. With its DSTE chain, it will improve the condition in 3 major areas in the agriculture industry, namely food supply chain, food safety and financial services. The application of DSTE CHAIN and DLT technology in agricultural supply chains would provide a digital database that records, tracks, monitors and transacts physical and digital assets.
Blockchain’s DLT enable higher-quality transactions and enhanced traceability. The technology can integrate and manage each process and transaction throughout the agricultural supply chain in real time. Each transaction that is processed on the distributed ledger can carry transaction details and specific attributes for the product which can be added by supply chain actors. Supply chain market participants can identify and examine the produce and product’s movement along every step in the supply chain from the agricultural inputs and practices (fertilisers, fodder, water practices, harvesting, etc.) used on the farm to the transportation and storage conditions and details as the product moves to the retailer and consumer. The DLT then stores immutable records that are transparent and, in theory, accessible to any user registered and approved with the blockchain system. This technology has the potential to create vast efficiency gains for each actor in the supply chain.
By enabling transparency and recording every detail of the production and processing of agricultural goods, the ability to ensure compliance with food and sustainability standards will be improved and data will be available on the products’ quality, safety and sustainability.
With blockchain, businesses and government authorities are able to track and monitor those on non-compliant with international standards and improve their ability to control plant and animal diseases in order to maintain disease-free status. This will be beneficial as WHO reported that 420,000 people died every year from food contamination. Not only that, every 1 in 10 people fall ill from eating contaminated food every year. With blockchain system, the authorities should be able to easily, quickly and confidently issue export certifications. Virtually all of the required information associated with the product will be in the DLT and certifications could even be automated. If there is an outbreak, the condition will be swiftly contained as blockchain will identify where is the source or outbreak and exercise speedy strategy.
In a nutshell, there is no doubt that blockchain has altered the way things work in the agriculture industry. The time has come to educate all parties, especially the farmers to step up and take charge of this new phenomenon. Let’s anticipate a time of digital and IoT in the near future for agriculture industry where all farmers will hold digital device to monitor, sell, trade and conduct agriculture activities, all from one device.