Crypto-Anchors and Blockchain Link Physical to Digital in the Supply Chain

April 8, 2018
Crypto-Anchors and Blockchain Link Physical to Digital in the Supply Chain

We’ve previously discussed blockchain’s use in the food supply chain to speed up tracking, and to aid in responsible sourcing and sustainable use of resources. Now let’s consider how it can combat supply chain fraud.

Blockchain could potentially verify the authenticity of products.  It’s estimated that the annual cost to the global economy of counterfeited items exceeds $600 billion. In some parts of the world, over 40% of aftermarket auto parts are counterfeit.  And, in some countries, over 70% of pharmaceuticals are counterfeit, resulting in the loss of life.

Part of the problem is the global supply chain itself, exacerbated by e-commerce.  Counterfeits can be substituted at almost any place in the supply chain.

Blockchain technology can digitally trace a product through the supply chain. However, one aspect is still missing.  How do you tie this digital record to the physical product?

Crypto-anchors will provide that link, according to IBM, which is developing several cryptographic products, including a computer as small as a coarse grain of salt. IBM considers this blend of digital and physical technology to be one of the top 5 innovations that will change our lives in the next 5 years.

This post is based on the Maritime Executive article, IBM Builds Tiny Computer to Fight Supply Chain Fraud, by MAREX, March 21, 2018 and the IBM Research post, 5 in 5: Five Innovations that Will Help Change Our Lives Within 5 Years, March 20, 2018. Image source: Shutterstock / Zapp2Photo.

Discussion Questions

1. What design characteristics do crypto-anchors need?

Guidance:  IBM describes crypto-anchors as “tamper-proof digital fingerprints.”  So, they need to be digitally linked to the blockchain information, tamperproof, and unique.  Other features should include low cost, and ease of reading the information on the crypto-anchor—possibly including the final customer accessing the information.

2. Besides the tiny computers and optical codes that IBM is proposing, what else could be used as crypto-anchors?

Guidance: Anything that provides the needed properties could be used.  RFID tags, QR codes, bar codes, and serial numbers are possible examples, although they may not have all of the desired properties.

3. What advantage do the tiny computers offer as a crypto-anchor?

Guidance: Tiny computers have the ability to communicate, store, and process information.   Information could be collected as the item travels through the supply chain to insure that it was handled correctly.  This could be very important to products that are easily damaged during transport.

Items that require a cold chain would fall into this category.  For example, several pharmaceuticals require constant refrigeration.  Other items such as food and cut flowers also are impacted by the conditions encountered in the supply chain, and proper handing in the supply chain is critical to the quality of the product the customer receives.

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