By Pedro Tufic Bouchabki, Felipe Melo and Bruno Sanches
Ten years ago, an unpretentiously rationale capable of revolutionizing business and somehow transforming human interactions emerged: blockchain. Having as its foundations the democratic access to information and each individual as an integral part of the process, one can say that concept brings in itself a disruptive potential and can be applied in different ways.
Blockchain is similar to other two types of technology that are present in our daily lives: electric power and the Internet. Two economists – Boyan Jovanovic and Peter Rousseau – used the term ‘general purpose technology (GPT)’ to compare electric power to the Internet, two technologies that changed human relationships, the way of thinking, and power relationships. In this sense, some critical blockchain characteristics, such as control decentralization and distribution of information, give more autonomy and power to users involved.
Blockchain is a rationale used for organization, validation of information and transactions concerning currency, processes or documents. It is a distributed form, in which people in the network can directly transact with one another, peer to peer. There are not third-parties or intermediaries in that type of transaction.
The rationale acts as a public ‘record’, a permanent virtual space where all information between the group of people that form that ‘place’ is stored. ‘People share information that is contained in the same ledger, where the accounting transactions are made’, says André Salem, blockchain expert (please see the video with the interview in Drops). In other words, all participants in the network, such as producers of goods and services, consumers and certifying bodies, have the right to access the same information.
Each group within the blockchain previously establishes how to validate the information inserted in the network, and this will be equally applied to everybody – therefore, a rule of consensus is created. Once they decide to participate in a certain network, they agree with the operation rules. In addition to that, another blockchain characteristic is the security in information chaining.
As explained in the video, the consensus between them, which is automatic, given by an algorithm, validates the transaction and generates a block. ‘This block is my transaction with yours, plus everybody else’s validation. The next transaction to occur in that network, not necessarily mine and yours, will generate a following block. And that block brings information from the old block’. It is, therefore, a mechanism to add trust to an ‘insecure environment’.
Blockchain allows for not only transparency in the processes themselves, but also in the information present there, preventing modification or fraud. Another element to offer security is the fact that blockchain is based on encryption (an internal language of codes), in such a way that all information that enters the network is translated by the internal language and cannot be read by ‘nonmembers’.
For a technology to be considered general purpose, three conditions are required, and blockchain also seems to fit in that aspect. First and foremost, the technology should be able to be improved, i.e.; to be enhanced as time goes by. Another condition is that it should be able to invent and produce new products, processes or even new technologies. Lastly, it should spread to different sectors of the economy.
In addition to applications in the agricultural sector, blockchain is being used worldwide in many other fields: transportation, banking, elections, power distribution, and even music. And also in Brazil. One example is the company Caipira Express. That e-commerce of handmade food in Araxa (State of Minas Gerais) uses blockchain to certify and validate the provenance of cheese, tracing back the entire production and distribution chain. Thus, consumers can visit the company’s website, enter the identification of the cheese they purchased, and have access to information, such as details about the input, manufacturing place, and people responsible for their production and resale.
Another organization that uses blockchain to ensure the product quality by tracing back the entire production chain is Walmart, jointly with IBM. André Salem gives as an example the consumption of spinach, and explains the process: spinach reaches the supermarket aisle with a QR Code and, when consumers want information about the entire input production chain, all they need to do is turn on their mobile’s camera and point it to the code assigned to the product.
Blockchain could be applied both to a Participatory Guarantee System (PGS) and to certification audit. The differences would be only the consensus rules; a certification audit would be more centralized in its validation form, if compared to a PGS (read more about the topic in the article entitled Certification).
In a model of certification audit – either individual or collective – an external agent is responsible for certifying certain characteristics of one or more produces, or even batches of a given product. The auditor may work for profit or non-for profit, but what matters is that he or she represents the consensus rule. There is also a modality in which a group of farmers is responsible for self-certification trough a control system in which they pay for the costs themselves.
In a PGS system, neighboring farmers are divided into groups and make technical visits to the properties of system members in order to ‘certify’ their agricultural practices. Thus, that type of model is naturally more distributed in its consensus rule and it is easier and more feasible to use blockchain.
Questioned about the difficulties in the certification process in a PGS, Roseilda Lima Duarte (Rose), a family farmer and a member of Cooperapas Agricultura Orgânica, located in Parelheiros, in the South Zone of Sao Paulo, says: ‘Just like many farmers, it’s hard for me to use the computer. There are many reports to fill out. Besides, my Internet connection here is not good.’
‘In fact, communication is still a problem. If you walk by a house in the rural area and happen to see a person on the roof, don’t you think he or she is fixing the roof, no, that person is looking for signal to try to communicate’, says Vilson Câmara, an organic farmer in Ilheus (State of Bahia).
But let’s image smallholders use blockchain. They could have an application on their mobile with a template for a certification report, on which they would write down what has or has not been done, in addition to making specific remarks, and they could save the file on their own device. That process would not need to be completely online; whenever a farmer got to a hotel in a place with Internet connection, he or she could download the file from the blockchain network.
All members of Cooperapas, for instance, who issue an organic certification using the PGS model, could benefit from using blockchain. With the development of an application and using the network, it would not be necessary anymore to store all your documents and reports at home or in some physical location as it is currently done. Another farmer from another Cooperapas group could have instant access to a certification issued recently by Rose’s group. Looking at it from a different perspective, consumers who are part of the network would be able to identify the origin of a product more easily; or, else, the route of the products could be allocated in a more efficient manner.
In this sense, both models can be beneficial in different ways. In addition to providing enhanced transparency to all members in the network, both allow to reduce operational costs, gain more reliability with other agents and include smaller players, such as smallholders.
Blockchain, which emerges as a globally revolutionary technology, also affects the local level, being able to provide a number of benefits to different sectors in the society. But, beyond technical aspects, introduction of blockchain into the scenario of small production can bring other consequences that should not be neglected.
As stated by the sociologist in his book entitled Post-Urban Landscapes, ‘the introduction of a new medium in a culture changes the ‘sensorial balance’ and, consequently, the forms and practices of interactions’. It is a reference to Marshall Mcluhan’s idea that ‘the medium is the message’. And it is a warning to point out the introduction of new technologies should also be thought of in terms of culture (please read more about the topic in the article entitled Supply II).