That solitaire you own, that diamond ring you gifted your spouse, or that gold wedding ring – do you know where it is coming from? Have you ever wondered about the origin of these items? Found in the mines of Africa, sent to India for designing, and exported to the US as a wedding ring which Joe finally gave to Sandra – these precious metals travel across the world before being bought.
But why is their origin and history important? For a very long time, we paid no attention to the fact that child labor was employed, human rights were abused, and labor regulations were violated to get products to the consumers. Companies were careless about conserving the environment, and in the process, this approach caused irreversible harm to the indigenous people, to animals, and to forests. Consider the case of blood diamonds; they were sold to indirectly finance wars, insurgencies and other dangerous activities.
Now comes the buzzword of today – blockchain. Blockchain is a distributed ledger technology, which is immutable. What does it mean? Everyone on the blockchain platform has their own ledger that records transactions happening on the platform. Once stored on the blockchain, no one can go back and alter these transactions.
Okay! Now how does blockchain help in provenance? Let’s take that ring that perched on Sandra’s ring finger and roll back time. Ngozi found the diamond in the mines of Kalahari desert in Botswana. From the miner, the diamond traveled to a manufacturing company, along with a Kimberley Process Certificate (which assures it isn’t conflict diamond). The manufacturer employs Jiteshbhai to work on the beautiful wedding ring. The ring has key characteristics such as carat, color, cut, and grade, among others. After completion, the ring is exported to the US. Finally, Joey purchases the ring from a store.
This entire information is stored on the blockchain. You can track where was the diamond found and by which mining company. You can see accompanying certificates, track where was it designed and where it was shaped into a ring. You can see the characteristics of the ring, and see who imported it to the US. This information is available for Joey to see, and know who were the stakeholders involved in bringing the ring to him, checking if the wedding ring is authentic.
Provenance is not just applicable to precious metals. As consumers become more conscious of their choices, use-cases are emerging for tracking food items, fashion, and handicraft, among others. And, if there is a genuine audit trail backing a purchase, the resale value is much higher.
Provenance is something that companies are incorporating through their Responsible Sourcing Programs. Some of the leading global IT companies have been instrumental in helping strengthen the audit trail via blockchain.
The Way forward
Now, blockchain has solved only a part of the problem. While no one can deny the genuine information on the blockchain, this will not be able to guarantee that a product is authentic. Someone can easily swap the original with a duplicate without getting noticed. Therefore, the area of counterfeiting remains unaddressed, but is gradually becoming recognized. The use of RFID/ NFC chips is gaining popularity, but the costs are prohibitive except when used for luxury/expensive goods. The idea is to put NFC chips into the product, read the chip via a device (like a simple smartphone) and check the authenticity of the product. Once we can protect for counterfeiting, the data to uniquely identify the item can be stored on a blockchain, and this will be a single source of truth.
What started as health crisis has, in a short span of time, snowballed into a financial turmoil.…
Insurance companies play a crucial role during the current Covid-19 pandemic. They decrease…
In January 2020, reinsurance markets started in an organized enough manner –programs were…
In the past, being able to download open-source code or clone it and then subsequently modify…