Potential of the Blockchain in the Food Sector

The blockchain is based on distributed ledger technology. Here, ledger stands for the general ledger or the ledger in which accountants conscientiously record all business transactions. "What's written there is considered the truth," says Markus Jostock. But long before the cadastre, our forefathers relied on a different wisdom - that truth only comes in twos. In order to document their sensitive data such as debt levels, tax payments or production figures between two parties, they invented the tally stick in the distant past. The principle is as simple as it is ingenious. Stroke-like symbols are carved into a length of wood in a transverse direction. They count the thalers owed, the taxes paid or the ore mined. Then the wood is split lengthwise. And each party keeps one half. When payday is around the corner, both halves are put back together. A manipulation of one of them would be noticed immediately. The system was so effective that tally sticks were still common into the 19th century.

The modern version is called a blockchain and brings the tally stick into the digital world. This is because, for example, it can be used to create tokens. These are digital snippets that can count something. For example, bitcoins. Or screws that a machine outputs. Or tablets. "A blockchain records entries like these in a very secure and resilient way," says Markus Jostock. "It consists of a network of computers that all generate a permanent, unchangeable list of these entries at the same time." So the tally stick here has not just two, but many more parts to compare. And the blockchain can do even more. "It always knows who has sent data. That's because when I write something in the blockchain, I have to identify myself," explains the IT expert. "It also records when data has been changed. So it time-stamps them," he continues. "And the blockchain never forgets. This means that no one can subsequently delete an entry or insert it with a manipulated time stamp."

But how can this technology help make the food supply chain more efficient? "To put it mildly, the topic of the blockchain still plays a very minor role in the food sector," Markus Jostock knows from experience. "Like any new technology, it can only catch on if it puts more money into companies' coffers. Or avoids trouble." Especially with regard to the latter, the expert sees a first area of application in food safety. Due to regulatory pressure.

"Similar to the pharmaceutical sector, there has to be conscientious documentation here," he says. However, if a regulating body then examines the documents - for example, to make a decision or to clear up a food scandal - there is always a crucial question: Are the documents submitted actually still in their original form. Or perhaps they have been manipulated in the meantime. "We offer our clients an interesting approach to this," Markus Jostock explains. "We create a digital fingerprint of the corresponding document - for example, a lab report - and store it in the cloud." This works through a mathematical procedure that calculates a certain numerical value from the document's data. Then only this is stored in the blockchain. The laboratory report does not leave the company. "During an audit, the digitised laboratory report is then presented to the authority, the digital fingerprint is calculated again in their presence and this is then compared with the one in the blockchain." If both match, subsequent manipulation of the document can be ruled out. Because the blockchain never forgets. And what if the document was tampered with on the computer? Then a new calculation also results in a new fingerprint. "In this way, companies can efficiently digitise and fulfil their documentation obligations."

"We see great opportunities for the blockchain - namely in the area of sustainability. That's because quite a lot of pressure could soon arise here - in the form of the European Union's Green Claims Directive. As a reminder: The EU is preparing a directive that will require companies to prove all claims about the environmental impact of their products. Whether "CO2-free shipping" or "climate-neutral production" - anyone who wants to advertise this in the future will have to prove it. "The carbon footprint of a production step can already be determined very well in the machine," Markus Jostock explains. "The sensors already record how much electricity, how much gas and how much water the processing has consumed. It's not difficult to calculate a CO2 equivalent from this. And this could be stored in the blockchain. "Do I need the blockchain for that? Not necessarily," he says. "But when I calculate the footprint in my ESG report, I have auditors. And I have to be able to verify the data with them. And what could be more logical than tamper-proof sensor data? "Suddenly I have a digital infrastructure that makes the auditing process cheaper for me than traditional paper technology can ever be. And then the blockchain is also financially worthwhile."

Sensor data, laboratory analyses, production parameters, test protocols. And all this in the blockchain? Now at the latest, the alarm bells should be ringing for the responsible persons. Doesn't the blockchain rely on a worldwide network that anyone can access? Don't I then also provide my competitor with deep insights into my company free of charge? And what about the high energy consumption involved? Doesn't that make a joke out of my sustainability efforts? "For first and second generation blockchains like Bitcoin and Ethereum, this is indeed true," Markus Jostock explains. "They are public blockchains. Anyone can join in." To ensure that the system can't be manipulated despite this, energy has been added as a "currency". "If you want to write a transaction to the Bitcoin blockchain, for example, you have to solve an energy-intensive mathematical puzzle," he says. "You would have to use a gigantic amount of computing power to undermine this proof-of-work procedure." For industrial applications, protocols like these are unsuitable and also completely unnecessary. "We rely on the third generation of blockchain technology protocols. And on the private blockchain." This means that energy-intensive access control isn't necessary. This is because it's a private network. Only those who clearly identify themselves via their user account can participate. "For the user, it's simply a software solution that runs in the cloud," explains the IT expert. "It's operated by service providers like us." Unrestricted access is therefore excluded from the outset. And there's no need for energy-guzzling puzzles. In return, blockchain applications of this kind can then be adapted to different industries. The food sector will work with different solutions than the pharmaceutical sector. The ones used by the financial world will differ from those of mechanical engineering. Markus Jostock is certain of that. "There will be a multi-chain future. Several blockchain networks with different blockchain technologies will exist at the same time. Each with its specific advantages and disadvantages. And they'll be interoperable."