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Distributed Ledger Technologies & their applications: The Blockchain

3 April, 2023
Distributed Ledger Technologies & their applications: The Blockchain

Since the creation of Bitcoin and the cryptocurrencies-fever, Distributed Ledger Technologies have become popular, especially in their blockchain version. However, are they made just for cryptos? It is quite the opposite, the possibility of usage of blockchains is so vast and varies from field to field. An example is the new Horizon EU Project ALLIANCE, which aims to apply new technologies in the quality-labelled food area to make processes more transparent and efficient and fight the increasing threat of food fraud.

The Blockchain Technology

In recent years blockchain technology has become more and more famous, especially for its role in the development of Bitcoin and all the other cryptocurrencies. As a matter of fact, this model was created to register transactions. According to its definition, a blockchain is an immutable, distributed and digital ledger shared by several peers (so, decentralised) in a network that facilitates recording transactions and tracking the property of tangible (houses, cars, cash, land) and intangible assets (intellectual property, patents, copyrights, branding), virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved. Moreover, any transaction in the network is recorded, certified, and saved in a database and cannot be modified after that (Gupta, 2018; IBM, 2021a; Javaid & al., 2021; Bellucci & al., 2022; Merrell, 2022). Thus, a blockchain is a database where data are collected in “blocks”, which are linked together, forming a “chain”. This data chain is verified and validated by all the participants in its formation (which is the considerable progress introduced by Bitcoin), and the links between the blocks ensure that none of the information added to the sequence can be altered.

To further explain its functioning, a blockchain network is made up of three parts. The first part is the file containing the records of all transactions, which is the blockchain itself. The second is the peer-to-peer (P2P) network, which, as said, is Bitcoin's main contribution, where all the nodes interested in making use of such a blockchain that receives two keys: a public one for encrypting the messages sent to a node and a private one allowing a node to read such messages. Last, there is the consensus mechanism. Using it, the nodes verify and validate the candidate block, which is then added to the blockchain, marked chronologically and stored sequentially (Fernández-Caramés & Fraga-Lamas, 2018; Gupta, 2018; IBM, 2021; Urovi & al., 2022).

Blockchain Applications in the supply chain

Even if the first usage of blockchains was meant to support cryptos, there are other fields where this technology can prove helpful. According to Swan (Fernández-Caramés & Fraga-Lamas, 2018), the applicability can be divided chronologically, and at the beginning, there was the Bitcoin era with the blockchain 1.0. Then, blockchain 2.0 added the smart contracts feature, a computer code that sets pre-defined conditions that must be met for a transaction to occur, and when the parts comply, the agreement is automatically enforced (Urovi & al., 2022). Finally, now there is blockchain 3.0 that applies to justice, efficiency and coordination (Fernández-Caramés & Fraga-Lamas, 2018; IBM, 2021a; Javaid & al., 2021; Bellucci & al., 2022; Urovi & al., 2022).

The latest blockchain version can improve various areas, and multiple disruptive applications exist. For example, the private sectors that can benefit from this technology are e-commerce, manufacturing industries, healthcare service sector, agriculture industries, security and privacy facts, drone industries for tracking, and power sectors, to mention a few (Javaid & al., 2021). Moreover, it can also be a valuable tool for public institutions to fight corruption, increase transparency in election voting, and make the patent environment more straightforward, transparent and less intermediary (Javaid & al., 2021; Merrell, 2022). Nevertheless, in the end, one of the fields blockchain will improve the most is supply chain management.

By its nature, a distributed digital ledger is the best technology to keep track of a supply chain. As it is a dynamic structure made up of several different actors, a blockchain will help every single business trace an item through every process. In fact, it will register and protect product history step by step, from production to selling, helping traceability, accountability, and efficiency. Furthermore, integrating blockchains with Internet of Things (IoT) software and sensors will automatically provide access to the actual flow over the entire value cycle, proving possession and reducing counterfeiting (Javaid & al., 2021; IBM, 2021b). Transport and logistics will make the most use of these two technologies combined, as we see already in the US Naval Air Systems Command (NAVAIR), which tracks the maintenance, repair, and overhaul operations with this method (Asuncion & al., 2021).

In addition, traceability and transparency are two important values, especially for the food supply chain, which, along with the pharmaceutical sector, requires the highest standards to safeguard consumers’ health. In such areas, accountability and visibility should be enhanced as much as possible. With blockchain and IoT technologies, you can make the food system more innovative, efficient, and, above all, transparent (Gupta, 2018). Using this model, it is possible to trace when and where a fruit or a vegetable was picked, shipped and eventually processed, or the conditions in the middle of the ocean when seafood was caught, so freshness and sustainability will be assured (IBM, 2021a). For example, in China, there is a traceability system for Chinese agri-food supplies based on Radio Frequency Identification and a blockchain to enhance food safety and quality (Fernández-Caramés & Fraga-Lamas, 2018). In the meantime, in the European Union, a project aims to use blockchain and IoT to enhance the food supply chain in the same way.

ALLIANCE

In the Horizon Europe context for innovation promotion in the EU, there is the project ALLIANCE (A hoListic framework in the quality Labelled food supply chain systems' management towards enhanced data Integrity and verAcity, interoperability, traNsparenCy, and traceability) whose goal is a paradigm shift in the food supply chain systems’ management for the combat against food fraud. To safeguard data integrity and veracity, enhance traceability and transparency and reinforce interoperability in the quality labelled supply chain of organic, PDO, PGI, and GI food, the members of this project want to use distributed ledger technologies supported by IoT sensing devices to detect adulteration and verify food origin and authenticity. The final objective is ensuring quality & authenticity, increasing food safety while considering food products' climatic and environmental impacts (Cordis, 2022).

Thus, blockchain technology is one of the most disruptive innovations in the foreseeable future, and it is crucial to understand how each sector can benefit from it. This is precisely what projects like ALLIANCE do and why they must be endorsed.

References

  • Asuncion, F., Brinckman, A., Cole, D., Curtis, J., Davis, M., Dunlevy, T., . . . Warren, D. (2021). “Connecting Supplier and DOD blockchains for Transparent Part Tracking”. Blockchain: Research and Applications, 2(3), 100017.
  • Bellucci, M., Cesa Bianchi, D. & Manetti, G. (2022). “Blockchain in accounting practice and research: Systematic Literature Review”. Meditari Accountancy Research, 30(7), 121-146.
  • Fernández-Caramés, T. M. & Fraga-Lamas, P. (2018)."A Review on the Use of Blockchain for the Internet of Things". IEEE Access, vol. 6, pp. 32979-33001.
  • Gupta, M. (2018). “Blockchain for dummies”. Hoboken, NJ: John Wiley & Sons.
  • IBM. (2021a). “What is blockchain technology?”. Consulted at: https://www.ibm.com/it-it/topics/what-is-blockchain.
  • IBM. (2021b). “Blockchain for supply chain solutions”. Consulted at: https://www.ibm.com/it-it/blockchain-supply-chain.
  • Javaid, M., Haleem, A., Pratap Singh, R., Khan, S., & Suman, R. (2021). “Blockchain technology applications for Industry 4.0: A literature-based review”. Blockchain: Research and Applications, 2(4), 100027.
  • Merrell, I. (2022). “Blockchain for Decentralised Rural Development and Governance”. Blockchain: Research and Applications, 3(3), 100086.
  • Urovi, V., Jaiman, V., Angerer, A. & Dumontier, M. (2022). “LUCE: A blockchain-based data sharing platform for monitoring data License accoUntability and CompliancE”. Blockchain: Research and Applications, Volume 3, Issue 4.
  • Wang, G., Zhang, S., Yu, T. & Ning, Y. (2021). “A Systematic Overview of Blockchain Research”. Journal of Systems Science and Information, 9(3), 205-238.
  • Cordis. (2022). “A hoListic framework in the quality Labelled food supply chain systems' management towards enhanced data Integrity and verAcity, interoperability, traNsparenCy, and tracEability”. Consulted at: https://cordis.europa.eu/project/id/101084188.