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How Bitcoin’s Technology Could Make Supply Chains More Transparent

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Reid Williams is a senior designer and engineer at IDEO Futures, where he works at the intersection of technology, design, and new venture creation. Alongside Joe Gerber, he is kicking off the Bits + Blocks Lab, a pop-up blockchain startup creation lab hosted at the Harvard Innovation Lab.

This post, which examines how the technology behind bitcoin could make supply chains much more transparent, is part of the Humans + Bits + Blocks series.

Where does stuff come from?

Whether we buy a taco or an iPhone, we’re at the receiving end of a supply chain that often stretches around the globe. Usually we don’t think much about it, and this is a good thing. But sometimes it’s important to know more. Taking a bite out of a taco involves a certain amount of trust: trust that the kitchen that made the taco is sanitary, that the ingredients that went into it are fresh, and that the taco tastes good.

This trust is critical, but there’s so much more we could know. We could create entirely new relationships with the stuff we buy, namely where it came from and how it arrived in our hands. Blockchains offer a way to introduce transparency into supply chains and to create entirely new opportunities for participation.

As a shared, secure record of exchange, blockchains can track what went into a product and who handled it along the way, breaking supply chain data out of silos, and revealing the provenance of a product to everyone involved from originator to end user.

This transparency will impact all sorts of products:

  • Is this shirt manufactured with child labor? Which of my friends owns the same shirt?
  • Are there any hazardous materials in this couch? What other pieces of furniture are typically bought with it?
  • Is this really the car that Steve McQueen drove in Bullitt? Who else has owned it?
  • Is this bottle of olive oil just olive oil? Where can my sister on the other side of the country buy it?

Inspired by the bitcoin blockchain, Skuchain, and smart contract platforms, let’s see how these technologies might change one particular supply chain: the everyday experience of buying, cooking, and serving dinner to friends.

1. Seeing where your food was grown

2It’s Saturday morning and you’re at your favorite bakery, Tantric Flour & Co for a pastry and coffee. A strawberry tart catches your eye and your order one along with a coffee. The tart is amazing, and the strawberries, though baked into the tart, are some of the best you’ve ever tasted.

You’re curious about where they came from and pull out your phone to find out more. The bakery purchases and manages its ingredients inventory using a system that you can use too on your phone. You see all the ingredients that went into the tart and where they originated.

The strawberries came from a small farm about 200 miles away called Straw Hen Farms. Straw Hen records and shares many of the details of how it operates. This lets the farm share good practices with other farms and easily get certifications.

You see that Straw Hen grows strawberries in a field that uses drip irrigation and is certified organic and low water use. You can also see what else they’re growing right now: lettuce, carrots, summer squash, and kale.

From dinner at a restaurant to a bag of potato chips, every ingredient has a history. Blockchains provide a shared and secured record, letting users see where ingredients come from and how they were produced while letting producers see where their ingredients and how they’re incorporated into finished food products.

2. Buying local produce in more flexible ways

3While drinking your coffee, you follow a link to Straw Hen’s blog and read that they sell directly to individuals and that you can buy their strawberries. You’re an avid preserve maker and so you buy a smart contract, committing to buying 5 pounds of strawberries if the price goes below $5 a pound. Since the contract is binding and automatically executed, the farm can use it to forecast their revenue for the season.

A few weeks pass, and you get a push notification on your phone. Straw Hen is having a bumper crop of strawberries, and your contract has been executed. You have the option to pick them up in the next week at a few nearby farmer’s markets. You see that your neighborhood farmer’s market in Glen Park isn’t on the list (bummer). If you can get enough orders to be picked up there, the farm will set up a booth. You post a link on Facebook to your friends.

Saturday rolls around and it’s time for you to pick up your strawberries at the Glen Park market. Your Facebook post kinda went viral and enough people committed to orders that Straw Hen set up a booth this weekend. Excitedly, you head to their stall to pick up your strawberries.

Smart contracts built on blockchains create new options for buying goods that include naming your own price or automatic recurring orders.

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