Recognising a lack of transparency in the wine supply chain, OLIVER ORAM, founder and CEO of Chainvine shares his insight on how blockchain is putting a cork in fraudulent practices.
The food and drink supply chain is vulnerable to counterfeit and fraud. The wine industry specifically is opaque due to a lack of knowledge and high fragmentation within the system. When I first began to investigate the problem with fine wines I came across the story of Rudy Kurniawan. He was one of the greatest wine fraudsters of our time who bottled wines himself and sold them for a fortune to unknowing collectors. His story is brilliantly told in the documentary Sour Grapes.
The wine market sees many people with a lot of money but limited knowledge about wine. This means that they can easily be tricked by a good conman with access to materials to fake the physical dimensions of wine quite well!
We recognised this as the perfect opportunity to employ blockchain as a solution to this fraud. My company Chainvine, is a digital identity and asset management service for a digitised economy. We create audit trails and chains of command & custody in the highly fragmented world of wine production. Blockchain serves as a base on which we built our platform. The applications we design differ according to clients, depending on what kind of user interface is involved. Our three-step process to implementing blockchain into the wine supply chain involves taking a modular approach. We begin with identity management followed by asset management and finally encryption management.
The beginning of blockchain
I first heard about blockchain when I decided to investigate digital currencies a few years ago, one of which was Bitcoin. I was fascinated by the concept of a decentralised currency and how it could be secured. This happened whilst I was pursuing a masters on topics focusing on fiscal decentralisation and the global supply chain. I knew then that I would work with what is essentially Blockchain technology.
A ledger with a difference
I see blockchain as a ledger where no one has direct control nor is able to manipulate the data. This makes for a strong and incorruptible source of data. Blockchain offers a transparent and secure way to digitally track asset ownership, especially in fragmented systems where there is need for a chain of custody and command. I believe blockchain provides transparency, accountability and trust.
Currently, blockchain is used mainly in the transactions of cryptocurrencies. However, the financial industry has begun to diversify how blockchain technology is applied to other industries, such as insurance. I am positive that there is a place for blockchain in the food industry. The food supply chain is multidimensional with many stakeholders along the journey of origin to final product. In our case, we are employing the blockchain methodology to the wine industry.
The more you know
With blockchain tracing every step in the journey a bottle of wine makes, consumers have access to knowledge about the authenticity of what they buy. Suppliers and distributors can better protect themselves through greater transparency and accountability. This technology cuts out the cost incurred from relying on intermediaries that will ensure compliance in the supply chain.
Blockchain is certainly a burgeoning technology to watch as investment in this industry now exceeds early internet investment. The adaptation and experimentation around this technology continues to grow. I believe that companies that collaborate and take a realistic approach to the capabilities and limitations of blockchain will push this technology out there faster and find great success.