De Beers is putting diamonds on the blockchain. Walmart is putting lettuce on the blockchain. Startups are putting skin care and liquor and fancy watches on the blockchain, even with art. By now, it may be safe to say that if someone, somewhere is selling something, someone else is thinking about how a distributed ledger with a buzzy name might help them do it
- Introduction: Understanding blockchains
- I. When the cryptocurrency bubble pops, these tokens are built to survive
Blockchainis new but very efficient!
- Ill. Blockchain could also be a hope for
a betterdiamond traceability.
- IV. Art Meet Blockchain World
- Conclusion: What Does The Future Of Blockchain Hold?
Introduction: Understanding blockchains
A blockchain is an electronic ledger—a list of transactions. Those transactions can in principle represent almost anything. They could be actual exchanges of money, as they are on the blockchains that underlie cryptocurrencies like Bitcoin. They could mark exchanges of other assets, such as digital stock certificates, list of products. They could represent instructions, such as orders to buy or sell a product, a stock at a certain price.
Using a decentralised network, Blockchain tracks and store data using blocks linked together to form a continuous line (non-destructive way to track data changes over time). No single entity controls the ledger. Any of the computers on the network can make a change to the ledger, but only by following rules dictated by a “consensus protocol,” that requires a majority of the other computers on the network to agree with the change. If any of them tries to add an entry to the ledger without this consensus, or to change an entry retroactively, the rest of the network automatically rejects the entry as invalid. This limits data tempering: This produces an immutable, shared record of the “truth,” one that—if things have been set up right—cannot be tampered with.
When a creation of a block is made, a cryptographic puzzle must be solves. Computer that solves the puzzle shares the solution to all the other computers on the network. The network verifies the proof-of-work. If verified, the Block is added to the chain. Users can interact with the data in real-time. So, yes, no more intermediaries and you cut the middle-man (peer-to-peer interaction) – It is a time-consuming, expensive, yet necessary process.
I. When the cryptocurrency bubble pops, these tokens are built to survive
Over than 2000 cryptocurrencies today and more are on their way!
A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange without the government controlling it. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency.
Bitcoin & more…
Launched in 2009, valued today at $163 billion, is the largest and most popular blockchain network. Growing demand has stressed bitcoin’s network, making transactions expensive. The relatively fast system (can proceed up to 7 transactions per second) nonetheless guzzles electricity owing to its consensus protocol, proof-of-work, designed to make mining labor intensive.
Blockchain is a mathematical structure for storing data in a way that is nearly impossible to fake. It can be used for all kinds of valuable data. Why not use it in Energy, social media advertising, Food and agriculture, medicine, elections, etc…?
Il. Blockchain is new but very efficient!
- Inventory management: Even solving just the first part of the puzzle (understanding and knowing where your inventory is) would be hugely lucrative to retailers and the logistics firms that service them, giving companies better control over their shipments, and ultimately over what goes on their shelves. For consumers, this could mean fewer frustrating trips to the store only to discover whether an item is out of stock or not — something retailers, too, want desperately to avoid. Take beacons in new Amazon store that already tracks the items on shelves, items purchased by customers instantly, let you pay cashless and orders supplies automatically.
- Product safety: Hand-in-hand with knowing where your inventory is, knowing where it came from in case something goes wrong would be the next safety issue – understanding the complete supply chain would change the life of both retailers; in the other side, brands may want to consider a similar process to restore customer trust and avoid liability in the future.
- Anti-counterfeiting: The cosmetics and fashion industries are plagued with problems of counterfeits and diverted products ending up on marketplaces like Amazon or eBay. While diversion isn’t technically illegal, unauthorised resellers can’t guarantee the chain of custody on their products, meaning customers may be getting fake or expired product (neither of which is good news for a cosmetics brand either). For something like a designer handbag, blockchain could help assure customers of its provenance — an ongoing challenge in the luxury gray market, which currently relies largely on the subjective expertise of authentication specialists or auction houses for the luxury and antique sectors.
- Ethical supply chains: In 2003, the United Nations implemented the Kimberley Process, an international initiative to eradicate conflict diamonds by mandating more transparency around the mining and distribution of rough diamonds, though it has also been criticised in the years, yet failing to address issues like worker exploitation, community displacement, and corruption. As consumers, we increasingly care about the provenance of what we buy. In response, many retailers have ramped up their transparency efforts, such as Tiffany and co and DeBeers. Blockchain could back up brands’ claims about ethical supply chains and sustainability, offering a verified record of where a product came from and whose hands it passed through to get to the consumer.
- Managing customer data: As essential as mastering the supply chain side of the retail equation is understanding and knowing one’s client. Some portion of the trouble, obviously, is security and privacy: Shoppers want to maintain control of their personal data, but they also want their shopping experiences to be tailored perfectly to them. They likewise unquestionably don’t have any desire to be trailed around the web by frightening promotions. As a decentralised system, blockchain provides a means for retailers to utilise their customers’ data to tailor things like product recommendations while not actually storing the data on their servers — which has proven to be a liability for many retailers in the wake of widespread hacks.
- Payments: While the lack of standardisation in blockchain will pose a challenge, the technology presents an interesting option for companies that want to bypass credit cards in payment processing. Retailers tend to operate on very thin margins — groceries, for instance, run at an average margin of between 1 and 2 percent — so the increasingly high fees that credit card companies charge businesses can put a significant dent in profits.
Ill. Blockchain could also be a hope for a better diamond traceability.
Blockchain technology is coming to the jewelry industry, and it’s coming fast. Ultimately, this means absolute trace-ability of every element in the jewelry supply chain; from the mine, to the refinery, to the alloy manufacturer, to the production company, the retailer, and on to the consumer. That’s what blockchain does: It tracks raw materials – like gold or diamonds — from the mine, to the refiner (for metals) or gem cutter, through distributors and manufacturers, to the retailer, and on to the consumer. Only, instead of keeping a paper log, the raw material is assigned a serial number, and data is entered into the supply log, or digital ledger, as it moves from place to place, throughout the material’s transformation. Blockchain systems cannot be edited and they are extremely secure, so the data that is entered for each step of the process is permanent.
Everledger Diamond – a traceability initiative built on a blockchain-based platform for the diamond and jewellery industry. The aim is to engage all industry participants including manufacturers, retailers and consumers to know a diamond’s story from the origin to the end customer.
Trustchain – a blockchain created by IBM that proves the provenance of jewelry by following the supply chain from mine to store. It includes a consortium of companies involved in every step of the supply chain: Asahi Refining, the precious metals refiner; Helzberg Diamonds, a U.S. jewelry retailer; LeachGarner, a precious metals supplier and The Richline Group, a global jewelry manufacturer. It even includes some third-party verification with UL Labs for the skeptical among you.
Vitreus – a blockchain that build innovative solutions in markets where provenance matters and where transparency is key to ensuring ethical trade. This new type of 10 record-keeping has been heralded as an efficiency that could transform industries like shipping, insurance, and finance. But the diamond business has been one of the first to embrace the technology wholeheartedly. The technology will enable diamond suppliers (and intermediaries like border agents) to replace a paper certification process with a blockchain ledger. Shopper one day will be able to use a smartphone to determine a gem’s provenance. While Vitreus right now is focused on diamonds, the possibilities are endless. You can add other luxury goods to the blockchain.
IV. Art Meet Blockchain World
- Blockchain Reduces Art Forgery with Improved Authentication, Verification, and Provenance : The art market is widely considered as the last unregulated market. While this lack of transparency makes the art trade alluring and lucrative for some investors, it causes more harm than good for the art world. Bitcoin, the best-known use case for blockchain, cuts out banks and credit card agencies by decentralising trust and making direct peer-to-peer payment possible. The most obvious use of blockchain (and closest to my heart) is to fight art forgery through the establishment of better authentication and provenance. Like banks, auction houses such as Christies act as trusted intermediaries between buyers and sellers. Some key benefits of blockchain for the art world are notably: Simplified transactions, Increased transparency, Increased trust, Increased security, Sharable, immutable data, Empowered users. Verisart certifies and verifies artworks and collectibles using the Bitcoin blockchain. They are fighting art forgery by providing an “airtight” authentication methodology that allows for real time verification of artworks using distributed ledger and image-recognition technology. (for more informations, check this link or link)
- Blockchain Could Help Artists Profit More from Their Creative Works: Anyone who follows the cultural industries — art, music, publishing, theater, cinema — knows of the tussles between artists and those who feed off of their talents. The traditional food chain in movie-making, for example, is a long one: Between those who create a film and those who pay for it — movie goers, cable subscribers, pay-per-viewers, advertisers, rights licensees, and institutional sponsors such as the National Endowment for the Arts — is a multitude of middlemen: online retailers (Amazon, Walmart), streaming video services (Netflix, YouTube, Hulu), theatre venues (Wanda’s AMC, Regal, Cinemark), product placement and media agencies (Propaganda GEM, Omicom’s OMD), film producers (Columbia Pictures, Marvel Studios, Disney-Pixar), movie distributors (Sony Pictures, Universal, Warner Bros.), home marketers (Fox, HBO), cable and satellite services (Comcast, DirectTV), video syndicators (PMI, TVS), film libraries and archives (Eastman House, Getty Images), and talent agencies (WME, CAA, ICM), each with its own contracts and accounting systems. That’s a staggeringly long list. Each of these middlemen takes a cut of the revenues and passes along the rest, with the leftovers typically reaching the artists themselves months later, per the terms of their contracts. Combine this powerful new technology such as blockchain with an artistic community that values inclusion; integrity; transparency in deal making; respect of rights; privacy; security; and fair exchange of value, and you’ve got yourself a new ecosystem for motion pictures, video games, and other creative pursuits. In this new ecosystem, we see a place for Netflix and YouTube; a place for studio curation; and a place for fan-generated content. The film industry will still need people to sift through the hundreds of millions of hours of video created every day all over the planet. The key point is that the artists themselves will finally be feasting at the center of their own ecosystem, not starving at the edges of many others. (for more informations, check this link)
- Blockchain and DigitalScarcity will Create a Massive Market for Digital Art and Crypto Collectibles: A big problem with producing and selling digital art is how easily it can be duplicated and pirated. Once something is copied and replicated for free, the value drops and the prospect of a market disappears. For things to be of value they need to have scarcity. Blockchain helps solve this for digital artists by introducing the idea of “digital scarcity”: issuing a limited number of copies and tying them back to unique blocks proving ownership. – DADA.nyc provide a decentralized marketplace where you can buy limited-edition digital artworks with IP protection, proof of ownership and Authentication/Attribution.
- Blockchain Democratizes Fine Art Investment: In 2018, the company Maecenas will be launching the first open blockchain platform that democratises access to fine art. Now people who have always dreamed of owning famous paintings can buy shares in a Picasso, Warhol, Monet, etc. On the flipside, galleries, museums, and collectors can offer up works from their collection for bid on Maecenas to raise money for the purchase of future works (while leaving their collection intact). This may sound like a regular art fund, but remember that blockchain cuts out the middleman, greatly reducing the transaction costs. The transaction cost with blockchain is so low that Maecenas can theoretically let you invest as little as fractions of a penny using cryptocurrency without taking the hit of transaction fees.
To more understand the four major areas where blockchain will disrupt the art market, click this link.
Conclusion: What Does The Future Of Blockchain Hold?
Digital Trends is taking a deep dive into the blockchain space. Ultimately, though, the promise of blockchain — putting power in the hands of the many rather than the few and restoring some semblance of trust to a society increasingly devoid of it — seems as good a goal as any for retail to pursue. Though, we’re going beyond Bitcoin and homing in on applications that might reshape democracy, economics, advertising, and more. Blockchain’s impact on these concepts could truly change how we function – but, of course, revolution is often a messy business…
- By 2030, most governments around the world will create or adopt some form of virtual currency: Distributed ledger technology (DLT) is here to stay. Dubai has vowed to replace all government systems with DLT-based digital structures by 2020, which indicates that DLT will just grow over time.
- One of the areas of advancement in blockchain will be the standardisation of interoperability among the different blockchains. While it is inevitable that there will be several blockchains with a specific business purpose, true benefits for the consumer or enterprise will be realised when they are able to “collaborate” in an open standard.
- Blockchain Identity for All: A cross-border, blockchain-based, self-sovereign identity standard will emerge for individuals, as well as physical and virtual assets (- Government records (e.g., date of birth, etc.), Reputation & trust scores (e.g., credit history), Certificates & attestations (e.g., university diploma), Healthcare & medical records, Tax identification records, Employment records…)
- Most of world trade will be conducted leveraging blockchain technology: One of the most promising areas where blockchain can provide significant business value is global supply chain. In its current state, world trade is conducted via a chaotic, fragmented set of business relationships among parties that are untrusted. This results in inefficiencies, errors, and fraud. This is a set of real-world business problems that are currently unsolved and cannot be fully solved without using blockchain technology (Counterfeit medicines in the pharmaceutical industry, Food supply chain in China, Fake Louis Vuitton handbags and other fashion apparel in Asia, Counterfeit auto parts in North America, Grey market or counterfeit electronic equipment, including medical devices,…)
- MIT technology review – Blockchain – Vol 121 no. 3 – May/June 2018
- Blockchain explained to your grandparents – Medium – by Rachel Vanier
- How blockchain will allow for fewer counterfeit goods and faster product recalls
- The Jewelry Industry Prepares For Supply Chain Trace-Ability
- Blockchain beyond Bitcoin