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Should food producers invest in Blockchain?

The exaggeration on Blockchain is real, according to Petter Olsen, a scientist from the Norwegian research institute Nofima.

"There is a big problem that Blockchain is oversold at the moment, that technology providers pretend to automatically have authentic products if you use them, which is completely wrong, and I am negative about these exaggerated claims.

But that does not mean it can not be useful for the food industry.

"Blockchain has very important attributes that can solve two fundamental problems in the food industry " He said.

What is Blockchain?

Vice president of the food sector at the certification agency Bureau Veritas Vincent Bourdil gives this definition: "Blockchain is a short name for a distributed chain of blocks that tracks transactions and resources, which is encrypted, timely and non-removable information that is shared openly on a log by many thousands of computers at once."

Technofobes do not need to be running. There are easier ways to think about it, according to Olsen.

"Whenever someone says Blockchain, you should mentally replace it with the word database"He said. "A Blockchain is a database that is always online, with many identical copies, synchronized every 10 minutes and encrypted, which means it is incorruptible."

"Do not overly complicate it, it's simply a database with these extra properties."

The first scenario in which Blockchain can play a role consists in discouraging frauds thanks to the incorruptibility of the information it stores. Once the Blockchain information is saved, a continuous peer-to-peer verification system means that it can not be changed.

For example: a consumer collects a fish pie in a supermarket that contains cod. It is not possible for him to say it, but the cake actually contains haddock, a cheaper fish. This fraud is possible because somewhere along the supply chain, between the fisherman, the wholesaler, the producer, the distributor and the retailer, a player sold haddock as a more expensive cod.

"If the information on haddock that suddenly turned into cod were delivered on Blockchain, the lie would be visible. That false declaration can not be overwritten. This is a fairly important problem that we have currently solved with Blockchain, " Olsen told FoodNavigator at the FoodIntegrity conference held in Nantes this week.

(However, Olsen noted that there is no guarantee that the information stored on the Blockchain will be true in the first place.) If false information is added to the Blockchain, it will remain falsified.)

The other advantage refers to the best story.

"In the current system, it is not possible for you – as a buyer or supermarket consumer – to see the whole chain first, all you see are the final declarations on the product that appear on the label. Atlantic, Scottish origin ", but we do not know where these statements come from.Freakchain allows you to view these statements with detailed information from every record that was made on the Blockchain."

Counting the costs

The environmental impact of Blockchain, however, is a growing concern. According to a 2014 study,The Bitcoin network Used approximately the same amount of electricity in Ireland. Recent estimates suggest more than Switzerland.

Fiona Delaney is a software developer and CEO and founder of Origin Chain, an Irish company that provides manufacturers and manufacturers with a Blockchain-based service for traceability of the supply chain and proof of origin.

"I work with organic producers who are really concerned about sustainability and public Blockchain uses a phenomenal amount of electricity. Yes, it solves the problems but the demonstration of the work is an absolutely shocking waste of electricity, resources and processing power. So if we are trying to create a better world for our children, we must take it into account. "

Bitcoin, Ethereum and Public Blockchain use an energy-intensive "test-of-work" method to validate transactions in contrast to the most energy-efficient game testing method that is also available.

But any Blockchain used to store data will be more expensive than, for example, an Excel spreadsheet.

"Like your e-mails, Blockchain keeps growing and you have to pay to save it"Delaney said. "But if you've built your Blockchain system and the trust element is at the center of everything, you can not just shut it down, but break the contracts, so you have to be very careful about how much data you're putting there because it's very expensive."

Investment recovery

A big question for producers who are considering investing in Blockchain, so it is the return on investment.

Companies that moved from manual registers to electronic databases 15 years ago saw a return on investment after 18 months at most, according to Nofima data. Blockchain, however, is an emerging technology and the data is not there yet.

However, Delaney said there are many ways in which a company can selectively use Blockchain to store certain sensitive data.

"I do not put all the data on the Blockchain, I use it to store some sensitive data.In three years, we will not only talk about Blockchain, it will only be a way to store data".

So is it worth it?

A company that tries to evaluate the pros and cons will have to consider the ways in which Blockchain can protect and improve its existing business model, avoiding risks and recalls.

"All companies make business decisions about risk" Olsen said. "Very few are in this for idealistic reasons." They do not want to be in a situation like Tesco's during the horsemeat scandal.It was on the front page of every newspaper, while Marks & Spencer said, "We guarantee that there is no c & # 39; It is horse meat in our products ".

"We are also talking about potential added value benefits, such as storytelling, so based on the company profile, they will assess the risks and benefits and decide how ambitious they want to be, how much they want to invest."

A well-known consumer of the Blockchain food industry in the US retailer Walmart, which has introduced mandatory Blockchain for its suppliers s Green leafy vegetables to combat listeria.

If other supermarkets go in the same direction as Walmart, this could be a strong incentive for producers who want to be considered as potential suppliers of the supermarket in question.

Just because it works for some companies, it does not mean it works for everyone.

"Blockchain is a solution" Olsen added. "As a food company, you have to ask yourself: what problem do I have that you can solve?"

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