Transparency on Blockchains for Food

What does transparency mean in the food system? Do people want to be transparent? Do we care about transparency? How does that fit into blockchains?

Consumers are demanding more transparency into their food, and the industry is racing to meeting it. Media headlines are filled with how blockchain promises to bring transparency to an otherwise opaque food system. In our previous blog post we covered the meaning of trust and truth in blockchains. The third T we often hear is transparency. However, transparency may not be as clear cut of an issue as complete exposure of supply chains. What does supply chain transparency mean in the context of blockchains?

Transparency isn’t an inherent property of blockchains. When we return to a basic definition of a blockchain, a blockchain is simply a ledger that records transactions with cryptographic links such that those transactions are extremely difficult to retroactively change. How those transactions are accessed and read is left up to the designers of the protocol or the community, if the community is the governing body. A protocol here refers to the rules and governance of a blockchain system. Bitcoin may be a relatively transparent, auditable system, but the properties do not necessarily transfer 1:1 to the design of a protocol for the food system. Let’s take a moment to understand what we mean when we say public or private and permissioned or permissionless before we discuss the issues involved in transparency for the food system.

Public, Private, Permissioned, Permissionless

Public and private deal with the access to the protocol. In a public chain, anyone can join without restriction. A private chain imposes identity restrictions upon joining the community, such as an invitation by certain members in the network. Typically such restrictions imply that a member who joins a private network is trusted or known by at least some of the existing network. Note that public and private relate to the ability to join the network, not the ability to know the identity of a given user of the system or read information in the network. Information published to a public chain may still be encrypted and require the owner to grant permissions rather than being fully public.

Permissions in a protocol determine what a given user can do in the system. In a permissionless protocol such as Bitcoin or Ethereum, anyone can join the system and participate in the consensus validation of block transactions as well as run and create smart contracts. Permissioned systems restrict such actions, including reading information from the chain, or transaction validation.

There is one more detail to cover which is the consensus algorithm. There is an implication of transparency when discussing consensus methods and how entities on the chain validate transactions. In the Bitcoin system miners validate that wallet balances have sufficient funds to execute a transaction prior to inclusion in a block, and so have some amount of transparency into the system through their ability to read account balances. A user can then join and follow the chain of transactions and state changes to arrive at today’s state. As we’ve discussed, there are not rigorous methods for validating or invalidating the authenticity of food data in the system. Even if transaction information are fully public, that does not necessarily allow another entity to validate the authenticity of a transaction.

Consider the relatively simple seeming claim that I am eating an organic salad for lunch as I write this. I wish my salad looked like the above. There are multiple levels of assertions here made in a single sentence:

• I am the one who has the salad (identity, ownership)
• It is a salad (object identity)
• It is organic (object attributes)
• It is lunch (time)
• I’m consuming it (change of state)

Each of those assertions are difficult to validate without the assumption that I am a good actor, and exponentially more difficult on the scale of thousands of pounds of food moving through hundreds of actors. Exposing supply chain information may provide a deterrent force to incentivize me to report honestly, but in most implementations of blockchains for food supply chains around the world, full transaction information is a permissioned privilege. What does it mean for a private, permissioned system to be transparent? No idea, you tell me.

It’s further important to point out that although transparent systems help generate trust by allowing checks, blockchains for physical systems can never fully force their users to post all information on the chain. As a result, consensus mechanisms in food and supply chain protocols should primarily be interpreted as witnessing an ordering of events, not an agreement of truth.

The Key question is: do people really want to be transparent?

We know consumers care, in theory. Whether they are willing to pay a premium for it is questionable. We do know that it’s impractical to think that a consumer will scan and read the full supply chain of every product they consider in the grocery store when they just want to go home after work and cook dinner. But having labels which consumers trust has shown to shift sales, even if they never bother scanning the label. Having the ability to check matters, even if they don’t exercise it. I can't remember the last time I actually scanned a QR code.

But what about the supply chain? The economy is built off of information asymmetry- I know how to do something that you don’t know how to do, so I can sell something to you and save you the time and effort of doing it yourself. As a result, we’re protective of such information. Vendors, formulations, prices and amounts are all confidential information. The Coca-Cola Company has spent decades protecting their formulation- and the publication of a complete supply chain and processes poses the threat of reverse engineering such products.

Although concealing numerical amounts may help, a comprehensive ingredient list presents a finite, not infinite, number of combinations of such ingredients. Once we begin to conceal certain attributes, where do we draw the line of what must be disclosed and what can be kept hidden? We may say we want transparency, but what we really want is for other people to be transparent.

What we found while running our pilots at ripe.io was that in general, people really don’t want to be transparent. We took the tomatoes project we’d done in with a leading farmer to the broader New England farming community, which viewed a completely transparent blockchain as a death sentence for their businesses.

Not everyone can be, or afford to be, the most sustainable. The number of farmers in the US is dwindling each year. Blake Hurst, a third generation Missouri farmer wrote an op ed on the issue, noting it may be a guillotine for farmers like him. Although transparency is important, we should be careful in designing systems of considering the broad impact of our solutions and how we can design accessible, sustainable platforms.

Building a Future

Transparency is nevertheless important. Today, companies struggle to get information as to who their vendor’s vendors are, and how goods are made but that information is necessary in order to make the right claims. Last year, the top reason for recalls was undeclared allergens in the US. Did those companies maliciously hide allergen information? Unlikely. It’s probably more likely they just didn’t know.

Information redundancy poses a heavy administrative burden and misinformation causes expensive mistakes. Transparency helps identify where those mistakes are and enables quick corrective action. We’ve shown that coordinating data through supply chain actors creates new forms of optimization that have never been possible before.

Disruption of an age-old industry is a much needed change, and could pave the path for substantial improvement. However in doing so we should take care to design a system that is both practical and implementable. Bitcoin didn’t reveal the third parties and then try to remove them. We already knew who they were. Bitcoin created a new way to transact without needing to go through the banks. At Ivy we’re working on a new way to access information, and remove the redundancy of going through each step of the chain.

Nathan
Talk to me about food.

Images from Unsplash and Pixabay.