What is Blockchain and where can it be utilized?
Blockchain is a peer-to-peer decentralized network and distributed
ledger system technology that allows a vast array of secured data to be
created and shared globally. Furthermore, it allows a globalized storage
system through its infrastructure that can be utilized for various
operations. Among other functions, blockchain records transactions and
changes in data, as well as allows enterprise developments virtually
anywhere in the world at minimum cost. Blockchain’s skilled resources
are remote and therefore do not require a ground unit to be deployed.
The technology can be positioned to communicate with existing data,
devices, and systems to gather insight and deploy functions. In a
nutshell, blockchain technology is capable of conducting operations,
storing-exchanging information, transferring real-world value, utilizing
decentralized labor force and infrastructure, and being adopted
immediately into the current scenario with massive future functional
opportunities.
In emerging economies that lack technology infrastructure, specific
skill sets, and utilization of current assets, Blockchain can still be
operational. For example, a farmer growing rice could need a system that
actively monitors droughts and provides him with planning and trading
options. He may have difficulty understanding the data and require it in
simplified terms of what he can grow, when, where and how he can grow
it, and when the best time to harvest and trade it would be. In a
traditional system, this would require an enterprise-grade system
actively communicating with data provided and other devices or existing
data sources. Additionally, key manpower with an understanding of
modeling systems in the agricultural industry would need to be utilized,
and communication with the farmer or ground unit would need to be
conducted to create a system. Existing infrastructure would need to
include devices and systems in place to actively monitor certain
changes, as well as to communicate with other similar systems to extract
certain knowledge or data. Such infrastructure would mean high cost,
complexity, and time, all of which emerging economies cannot usually
afford.
Blockchain simplifies the entire process by deploying a system that does
not require large scale infrastructures such as data centers, data
readers, or massive power input to power operations. Instead, existing
data collection devices, such as featured phones or even IoT devices,
could be leveraged as source inputs. Furthermore, an enterprise-grade
system that can curate data and create a model, can be built either on
the ground location or in a completely remote location. This is possible
because most data available in the decentralized network is easily
accessible within the system and does not come at a premium price like
traditional systems. At the very least, the decentralized network
provides the “utopian dream” of combining the size and quality of data
resources similar to Google, IBM, and Microsoft in single global storage
space. Most importantly, a decentralized skilled workforce can be
pooled, based on its expertise and understanding of multiple geographic
locations, to tackle the agricultural industry in emerging economies
rather than wait for emerging economies to build a workforce of their
own. But this is not the only advantage that blockchain technology
provides the industry. Blockchain technology has certain inherent
functions that could prove indispensable to the agricultural industries
of emerging economies:
- Provenance: This allows an individual to not only track goods, but
also to verify the authenticity of a product. Its direct application
in the agricultural industry would be providing indispensable
information about products from a particular source. This feature will
have direct implications on the supply chain and global trade
processes of the agricultural industry by addressing the various
discrepancies that exist around agricultural products of emerging
economies, such as the quality of goods and the adulteration of
products before they reach end consumers. It also opens new
opportunities to strike better market prices for products where higher
qualitative input has taken place, thus allowing global trade to be
further localized. For example, during the “Mad Cow Disease”
situation in the UK, where beef produced from the entire country
received international embargos, there were some uncontaminated farms
located in the UK that fell victim to the embargo without
cause.12
With blockchain, through clear provenance, one would be able to
differentiate those products from the adulterated ones on a more
microscopic level, thus preventing the entire industry from suffering
for the poor quality of some production.
- Identity: As mentioned earlier, most emerging economies lack the
necessary infrastructure to build a robust identity management system.
Identity plays a critical role in identifying individuals, activities,
and qualitative positioning in global markets. Through blockchain
technology, self-sovereign identity can be managed by users choosing
who, if anyone, they would like to share their data with.
Self-sovereign identity can enable emerging economies to build
farmer’s credit ratings, farm performance ratings, product ratings,
and more. Additionally, as blockchain leverages global networks, these
processes can be readily adopted and deployed, thus saving valuable
time and cost while developing across the nation.
- Crypto-Currency: Crypto-currency is currently a hotly debated topic
and is probably the most defined use case of blockchain technology. It
provides a new alternative to financing and trading agricultural
products. As discussed previously, the volatility of exchange rate
policies and liquidity directly affect the agricultural industry at
large. Crypto-currency provides a credible alternative to tackle these
problems using a fast and secured mechanism. While key challenges
remain in both understanding and regulating compliant use cases of
crypto-currency in the agriculture industry, there is a high
likelihood that a mutually beneficial relationship will develop
between crypto-currencies and emerging economies.
- Autonomous Execution System (Smart Contracts): Smart contracts are one
of the founding functions of blockchain platforms such as Ethereum.
These systems automate processes of contractual binding between two or
multiple parties based on specific task executions. In the
agricultural industry, extensive paperwork is required for a farmer to
acquire a specific asset from a service provider. This process is
lengthy and in many cases unfeasible due to lack of information or
structures needed to provide these services. A blockchain enabled
smart contract allows both parties to leverage existing data, verify
identities, and bind the parties through a contract related to
execution, financing, etc. There is no doubt that smart contracts will
not only play a critical role in existing scenarios but will also open
up new opportunities in the agriculture industry.
- Trust and Transparency: Blockchain enables every transaction/activity
across the network to be easily monitored by everyone within the
network. This means activities within the value chain, assets, and
funds can be securely monitored, and any discrepancies or manipulation
will be noticed by everyone within the network. For example, if an
agricultural product moving through the value chain shows a
discrepancy between its start and end cost, government bodies or even
end consumers can investigate the cost changes. Therefore, blockchain
has the potential to either lead to direct boycotting of some products
(extortion within value chain) or to reduce the end cost of the
product, thus drastically reducing the economic opportunities for
extortion while at the same time directly facilitating economic
empowerment of the farmers. In other words, in broken or corrupt
governance systems, transparency and trust can be established without
an overhaul of the current system.
- Security: Blockchain technology’s most potent tool is its
cryptographic immutability. As blockchain is a shared distributed
ledger connected through a peer-to-peer network, all transactions and
activities can be monitored and secured through a chain. This means
that in order to breach the system, the entire system needs to be
attacked, which decreases the attacker’s capabilities. In other words,
the attacker would need to be extremely proficient and lucky to be
able to bring down the entire system. Furthermore, even considering
such an attack would require both a massive amount of time and
resources. Financial incentives to hack a particular contract between
a farmer and a financial institution are not high enough to initiate
the launch of such an attack. While no system is unhackable, the
architecture of the blockchain system makes it the most robust system
of its time and primarily creates deterrence. In fact, till today the
entire system of blockchain is yet to be completely compromised, and
while most traditional system hacks would not be public information,
within the blockchain all information is readily available to network
peers. Such a secure and resilient system enables the safe movement of
assets, value, and data among parties. This is a particularly
important tool for emerging economies, which are constantly vulnerable
to cyber-attack strategic interferences, as can be seen in countries
such as Turkey, Georgia, and Vietnam.