From groceries to fine art, blockchain finds widening appeal

From groceries to fine art,
blockchain finds widening appeal

  

 

Chronicled CEO Ryan Orr attends a daily briefing with employees at their office in San Francisco, Calif. on Thursday, April 6, 2017. Chronicled has developed blockchain authentication and chain-of-custody technology using small chips embedded into products, pharmaceuticals, and artwork.

Walmart is on a mission to forever change what people know about their groceries. The retail giant began in October to collaborate with IBM and Tsinghua University in Beijing to trace an array of food products moving through its vast global supply chain with an emerging technology known as blockchain.

The experiment, which will wrap up next month, will help Walmart understand how to make use of blockchain — a secure system of recording data that, many believe, could have a transformative effect on the world’s economy. The technology is already creeping into everything from supply chain management to banking to health care. “I’ve yet to come across an industry where it won’t have an impact,” said David Treat, a managing director at Accenture who leads the consulting firm’s financial services and blockchain practice group.

At its core, blockchain refers to an accounting system known as a distributed ledger. That ledger lives on a network of synchronized computers that communally capture and verify when a transaction takes place. Any time something of value gets exchanged, the data surrounding that exchange are recorded, encrypted and placed into a “block” visible by anyone granted access to the network.

Those blocks are then “chained” together chronologically, creating a timeline that can be traced to an initial transaction. That chronology is key to blockchain’s security since no individual block of data could be successfully altered without affecting all the other blocks in the chain. The technology would replace methods of accounting and tracking transactions.

“Whether you’re talking about a commodity or anything else, it’s a secure road map of where it’s been and who’s held it,” said Grant Fondo, an attorney, and co-chairman of the digital currency and blockchain practice at the law firm Goodwin Procter in San Francisco.

Blockchain technology emerged in the shadow of bitcoin. From the outset, a big appeal of the trendy digital currency was its ability to let users transfer funds without the need for a designated third party — like a bank, credit card company or other payment network operator — to verify the details of the transaction. But in recent years, even as the hype surrounding bitcoin has fizzled, blockchain’s secure ledger system is expected to endure by virtue of its versatility.

Chronicled, a San Francisco startup (unrelated to The Chronicle), is using blockchain technology to tackle counterfeiting. By placing microchips onto or inside of virtually any physical object, Chronicled can register critical identifying data about that object onto the blockchain, authenticating it as the original and tracking each step in its purchasing history.

“We don’t realize how bad the problem of copies and counterfeiting and clones really is,” said Chronicled CEO Ryan Orr. “But fake license plates, fake bottles of Champagne and spirits, fake Louis Vuitton handbags — we’re talking about a $2 trillion counterfeit market today.”

Chronicled’s anticounterfeiting technology has a particular appeal with the art world. In January, Chronicled teamed up with 111 Minna Gallery, a San Francisco art gallery and event space, for an event that was equal to parts art exhibition and tech expo. Each piece of art was assigned a chip that registered it on a blockchain. Equipped with a special app on their phones, gallery-goers could access a wealth of information about the works, and even purchase them, if they chose to do so.

“This is a secure system of identification and identity verification that’s never existed before,” Orr said. “So we can potentially solve this problem, and we can do a lot more on top of that once we can synchronize the physical and digital world identities, which was never possible before.” Walmart’s blockchain pilot program is limited to China, but Frank Yiannas, vice president of food safety, said that the company is considering expanding it.

So far, Walmart is offering scant details about precisely what types of foods are being tracked on its blockchain system, but Yiannas said the goal is to bring transparency into the food supply chain and to get the myriad players in that chain to harmonize the ways they keep track of products moving through it. The tracking device can be on a small sticker.

“Imagine if you could capture data at the farm level on a digital system, how something was produced, where it came from — any relevant information to a consumer,” he said. “What that allows for is a new insight that could provide a new era of transparency and insight we just don’t have today.”

Yiannas said the level of detail he hopes to capture with blockchain gets down to “an individual apple. You pick up an apple and you know where that apple came from,” he said. “Imagine the consumer, who is mostly removed from food production, being able to scan a food product and know the things they want to know about it,” he added.

Capturing data on a blockchain about a particular product as it moves “from farm to fork,” Yiannas said, will also allow Walmart to better respond to food safety recalls. Currently, it can take weeks to trace a tainted product back to its source — a process that, with a blockchain, could take seconds, since growers, packing houses and distributors would all be placing their data in the same place, where all parties can see it. Beyond supply chains, blockchain technology has also made significant inroads in the banking industry, one that has a constant need to quickly authenticate and record transactions.

Ripple, a blockchain developer in San Francisco, specializes in systems that allow banks to send payments to one another. Banks can save money by transacting directly with one another, rather than relying on a clearinghouse or other third party to verify and process payments. This month, a consortium of 47 banks in Japan announced they would be implementing Ripple’s technology after a successful pilot program.

Blockchains are also beginning to reach into health care. In January, IBM, a major vendor of blockchain software, announced that it is working with the Food and Drug Administration to research how blockchains could be used to securely and efficiently transfer large amounts of patient data pulled from electronic medical records, clinical trials, and even wearable devices.

And officials in Cook County, Illinois, said last year that they intended to start a blockchain experiment for tracking the transfer of land titles. “Distributed ledgers are a paradigm shift in how we process transactions,” said Jesse Lund, the head of IBM’s blockchain market development. “It saves businesses money and it empowers consumers. I definitely think that it’s a shift with global implications, from a human perspective.”

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

IBM Spells Out Its Views On Blockchain In Three ‘Key Elements’

IBM Spells Out Its Views On Blockchain In Three ‘Key Elements’

 
IBM Spells Out Its Views On Blockchain In Three ‘Key Elements’

IBM has outlined three “key elements” of Blockchain technology which senior executives should “evaluate” when considering exploring its benefits. In a post from its Newsroom this week, the computing giant specifically highlighted “potential to transform trade, transactions, and business processes,” “value in the ecosystem as the Blockchain network grows” and Blockchain’s ability to “significantly improve visibility and trust across businesses.”

The praise is the latest in a series of pro-Blockchain moves from IBM, which is actively partnering with global corporations to explore how the technology can improve processes such as trade deals. “Speed, cost efficiency, and transparency are among Blockchain’s most significant benefits in the enterprise and within ecosystems of companies conducting trade,” the company reports. Marie Wieck, the general manager of IBM Blockchain, the bespoke product through which IBM aims to deliver its own Blockchain services built on Hyperledger, added:

“The visionaries adopting Blockchain today are using the technology to reinvent many fundamental business practices. Working with clients to develop open source and permissioned Blockchain solutions for the enterprise, we are seeing firsthand how the technology is revolutionizing the way organizations recognize values and do business with one another.”

Most recently, IBM took its Blockchain ideas to China, partnering with Energy-Blockchain Labs to develop a proof-of-concept for cleaning up the country’s air. Carbon asset development and management could both significantly improve with the help of the new tools, it said.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Hong Kong Launches Blockchain Trade Finance Platform With Deloitte, Top Banks

Hong Kong Launches Blockchain Trade Finance Platform With Deloitte, Top Banks

  
Hong Kong Launches Blockchain Trade Finance Platform With Deloitte, Top Banks

With Deloitte as one of the Big Four auditors, the Hong Kong Monetary Authority (HKMA) and the region’s top five banks have officially launched a Blockchain platform for trade finance. Earlier this month, HSBC, Bank of China, Bank of East Asia, Hang Seng Bank and Standard Chartered co-introduced a proof of concept Blockchain platform for use with trade finance operations which include lending, issuing letters of credit, factoring, export credit and insurance.

Joshua Kroeker, the senior product manager for global trade and receivables finance at HSBC, stated that the Hong Kong government along with Deloitte and partner banks launched the Blockchain platform to demonstrate the technology’s potential in the conventional finance industry. More importantly, Kroeker emphasized that HKMA and the five participant banks are aiming to utilize Blockchain technology to increase efficiency, transparency, and security in trade finance while eliminating the possibility of fraudulent activities by automating most processes.

The vast majority of operations in trade finance are handled or settled manually due to their sheer complexity. Because multiple parties can be involved in a single operation or the settlement of a contract, companies within the trade finance industry manually approve the settlement of each operation. In addition, the wide range of services offered within the trade finance industry forces companies to maintain several servers and databases that each handles different operations.

Advantages

Blockchain technology enables organizations like trade finance companies and banks to handle various operations on a single platform. Using tokens and cryptographic signatures, banks can embed data onto the immutable Blockchain. Once data is broadcasted throughout the Blockchain network, every participant within the network can access updated data in real time.

This unprecedented level of transparency and the security of Blockchain technology allows banks to handle operations autonomously. Instead of recording the flow of transactions and settlement of contracts across various platforms, banks can embed all of the data in one Blockchain platform for autonomous processing.

In an interview with the South China Morning Post, Kroeker stated:

"As the largest trade finance bank in the world … we were interested in assisting corporates to track transaction flows, reconcile transactions through invoice or purchase order matching, and reducing the risk of duplicate financing for the participating banks. This development puts Hong Kong at the heart of a global effort to digitise trade, making it easier, faster and cheaper for businesses.”

Free of regulatory hurdles

Since the financial authority of the Hong Kong government is the initiator of the project, banks involved with the development and implementation of the trade finance Blockchain platform will not be required to pass the hurdles of regulatory conflicts.

In fact, HKMA Executive Director Li Shu-pui noted that local authorities will continue to collaborate with private companies and banks to test Blockchain technology’s applicability in the finance sector. Analysts including Paul Haswell, a partner at international law firm Pinsent Masons, praised the efforts of Hong Kong authorities to work with local banks to experiment with the technology. “HKMA’s work with the major banks is potentially groundbreaking and shows real commitment to use financial technology for the benefit of the market and consumers. this is encouraging for Hong Kong’s many fintech start-ups.”

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Blockchain Low Among Corporate Investment Priorities, PwC Finds

Blockchain Low Among Corporate Investment Priorities, PwC Finds

   Business, Data

'Big Four' consulting firm and accountancy PwC has published a detailed report on the current state of blockchain at large companies. The report provides unique insight into the blockchain industry in a very specific sample-set: companies with 500 employees or more but from the legacy banking sector and financial technology startups. If you read between the lines though, the message is clear: it's go, time. While investment last year was at an all-time high, future plans to invest show other technologies taking precedent. The technology is moving out of the lab, and dividends will likely be expected soon.

From the report:

"The technology is moving from hype to reality and we will likely see business use cases becoming more common."

Seventy-seven percent of respondents said they expect their companies to incorporate blockchain into their production by 2020. But a separate section about upcoming investment plans paints a different picture. While half of all financial technology companies intend to focus on blockchain in the next 12 months, only 19% of large banks made the same claim.

On a list of future investment areas related to technology among the same-sized companies, blockchain was near the bottom, with only 20% of respondents saying they would invest in the next 12 month. At the top of the list was 'data analytics' with 74% of respondents expecting to invest during the same period, followed by 'mobile' with 51% and 'artificial intelligence' with 34%, respectively.


PwC blockchain investments

Other interesting takeaways from the report include that 90% of payment companies are "heavily invested" in blockchain and plan to adopt the technology as part of a production system by 2020. Twenty-four percent of the respondents identified as "very or extremely familiar" with blockchain, an increase of 7% since last year, with North American respondents being the most familiar across regions. While 77% expect some sort of live implementation of blockchain by 2020, 55% say it could happen as soon as 2018.

As with the other so-called 'Big Four' accounting firms, PwC has been positioning itself as a leader in the blockchain industry. In November, the firm released details about Project Vulcan to study bitcoin, and last month, it joined the Crypto Valley Association in Switzerland. Going forward the report finds that the most likely business use cases for early blockchain implementations were payments infrastructure, fund transfer infrastructure, and digital identity management.

The report concluded:

"We have also seen growing interest in the technology from insurance companies in areas such as personal and marine insurance, including claims processes."

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Music Groups Band Together to Build Blockchain Rights Solution

Music Groups Band Together to Build Blockchain Rights Solution

Drums, Instrument, Music

Three societies tasked with protecting the intellectual property rights of musicians, writers, and other content creators have joined forces to build a blockchain solution to prevent piracy. Powered by Hyperledger's open-source Fabric distributed ledger, and managed by IBM, the nascent platform is being designed to create a tangible connection between the time content is created and the time it is consumed.

Founded by the American Society for Composers, Authors and Publishers; the Society of Authors, Composers and Publishers of Music; and PRS for Music, the joint project has the potential to help prevent online piracy by tracking more sophisticated data about music content on the blockchain.

In the face of generations-old concerns for the compensation of musicians and composers, however, it is worth noting that the blockchain solution currently being developed only has potential to help artists according to the rights granted by their contracting companies. The chief executive of PRS for Music, Robert Ashcroft, explained in a statement how real-time reporting of data about the digital consumption of content could empower a diverse set of stakeholders and lead to new business models.

Ashcroft said:

"If blockchain can help us achieve this, it will unlock opportunities for developers of new digital applications, increase accuracy of royalty payments and release value for rightsholders."

Similar to blockchain consortia in other industries, the goal of this joint music initiative is to create and adopt a shared, decentralized database that streamlines the flow of data. Unlike those consortia, however, the information the group wants to track is metadata about artistic works with real-time updates and more advanced tracking capabilities.

Although still in the early stages of development, the improved ability to track the ownership of legally protected creative works could eventually help confirm the legal owner of a work and the origin of disputed works.

Boosting artists

The formation of the joint initiative is the largest movement yet by what might be considered members of the legacy creative infrastructure providers. Since 2006, earnings for the US music industry alone have declined by about $5bn, largely due to the shift to the online streaming of music, according to The New York Times.

Of the total industry revenue, musicians earn on average about 20%, and one study found that 77% of the recorded music revenue went to just 1% of musicians. To help even that disparity, a number of blockchain startups have already responded to calls for a shared, distributed ledger to track artists' intellectual property and give them more control over their creations.

Startups like dotBlockchain Music (dotBC), Mycelia, MusicChain and Ujo Music have all, in their own way, set their sights not just on preventing piracy, but cutting out unnecessary middlemen.

Growing interest

However, based on today’s announcement, it would appear the music industry has come a long way since the early days of blockchain adoption. Once considered to be largely resistant to the transparency afforded by blockchain development, industry firms are now openly exploring the technology.

In April of last year, PRS for Music hosted a debate about blockchain technology, and two months later, SACEM was one of several legacy music companies to join the Open Music Initiative – aimed specifically at using blockchain to better serve musicians.

The least active of the three partners appears to be the historically litigious ASCAP, which has an online presence mostly limited to linking to articles about blockchain's dubious potential. Back in March, though, the group’s newly appointed CEO made a provocative statement first intimating at a potential change in tone. Describing her interest to increase international collaboration on technological solutions, Elizabeth Mathews concluded:

"If we work on these proof of concepts in areas like blockchain technology and others, the benefit will far outweigh the status quo."

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member