Unless you’ve been on a vision quest somewhere outside of the bounds of data coverage, you’ve probably been hearing quite a bit about blockchain recently. It is the technology upon which cryptocurrencies like Bitcoin depend, and as the value of a Satoshi continues to climb, so too do the potential applications for blockchain in other areas of global commerce.
Companies have begun to test blockchain technology within the global food chain, with startups and well established corporations alike trying their hand at what may be the next big leap in the Internet of Things. If you’re still at a loss as to how blockchain works, how it could be applied to things like tomatoes or olive oil, and why it might make a difference don’t worry, you’re not alone. Blockchains are a complicated concept that even the most tech savvy people have a hard time explaining but beneath all of the jargon is a system that could make a huge difference in the food that makes its way to your table.
Blockchain Explained: A Primer
Imagine an old timey General Store like the ones in a Western that your grandfather used to watch. There was inevitably a wise old store owner who kept records of everyone’s purchases on his ledger, and he might apply his own unique codes to each purchase whether he was to be paid in cash, or in trade. As long as the store owner was able to keep track of the ledger, ensure that it was kept up to date, and keep it in a safe place, this could be quite an effective system. Indeed, relationships like these, based on mutual trust between merchant and client, were often the backbone of local economies.
Now imagine that the same ledger were to be used, but with no old timey shopkeeper and instead of tracking the transactions of a local business, the ledger would keep a record of large sums coming in and out from around the world in a sort of intergalactic general store. How could you be sure that it would be kept safe? How would you be able to track all of the transactions? How could you trust anyone in the system, if you didn’t even know who they were or where they were from?
Enter blockchain. This digital ledger is administered and monitored by a peer-to-peer network that records, observes, and encrypts every single economic transaction, not only of money but of pretty much anything and everything that has value. Each transaction that is recorded and encrypted becomes a block, and when the transactions continue they form chains. As such, no blocks can be altered without altering every other block that follows it in the chain, and that requires the approval of everyone monitoring the system. Because the system is so vast and those virtual hall monitors are themselves rewarded when more people sign on to the ledger, there are a lot of checks.
With these controls, Blockchain makes it possible to establish an economy based on trust between individuals that is decentralized and incorruptible, and which opens a financial system to everyone. In a blockchain based system, individuals don’t have to worry about their credit rating, a bank branch that will see them, or a loan for which they might not meet the strict criteria set up by a bank or financial institution. All you need is a smartphone, a bit of bandwidth (ok, a lot of bandwidth) and something of value that you want to be included in the ledger. The old timey general store is dead, long live the old timey general store.