Iberdrola Uses Blockchain to Authenticate Clean Energy for Corporate Customers

The Spanish utility Iberdrola this month said it had used ablockchainplatform to certify delivery of green energy to one of its corporate customers.

The company used a platform developed by Energy Web Foundation (EWF) to provide real-time Guarantees of Origin for renewable energy delivered to Kutxabank, a bank based in Basque country in northern Spain, and Kutxabank’s south Spanish subsidiary Cajasur.

Iberdrola said the energy was sourced from its San Esteban hydropower plant in Ourense, Galicia, and two wind farms: Oiz in Biscay and Maranchón near Guadalajara.

Following a power-purchase agreement signed last July, Kutxabank is also due to get renewable energy from Iberdrola’s 391-megawatt Nuñez de Balboa solar plant, the largest in Europe, which Iberdrola is building in Extremadura in southern Spain.

At its most ambitious, energy blockchain could create decentralized, peer-to-peer energy trading. Initial uses of digital distributed ledgers, though, have proven less revolutionary. Instead, they tend to focus on more mundane back-end accounting processes for large energy companies.

In this case, blockchain technology helped Iberdrola cut costs and eliminate intermediaries by allowing smart contracts to be executed automatically, the company said. Kutxabank executives were able to monitor the supply of energy as they wished via a web-based user interface. 

This blockchain application “provides efficiency, flexibility, transparency and savings to the Guarantees of Origin process,” Iberdrola said in a press release.

The company said it had already implemented several initiatives using blockchain, including a project for peer-to-peer transactions in wholesale gas and electricity markets.

Iberdrola’s Kutxabank pilot used EW Origin, a customizable, open-source decentralized application for renewable energy and carbon markets, confirmed Jesse Morris, EWF’s chief commercial officer. 

Iberdrola was one of two major Spanish energy companies using the software, he said.

Last month, the renewable project developer and owner Acciona Energía revealed it had also begun to use the EW Origin blockchain platform to authenticate the source of the energy produced at its plants.

Acciona Energía said it was the first company to trace renewable energy using blockchain in Spain and Portugal. The company said it had created a commercial demo to trace renewable generation from five wind and hydro facilities in Spain through to four corporate clients in Portugal.

Acciona’s project, called Greenchain, was developed out of an earlier project where Acciona used Traceblock, a blockchain platform developed by the Spanish firm Tecnalia, to track energy production from battery systems at a solar plant in Tudela and a wind farm in Barásoain, both in Navarre.

“Tracing the renewable origin of energy is an ever-increasing demand, associated with the growth of the corporate contracting market for green energy,” commented Belén Linares, Acciona Energía’s director of innovation, in a press note.

“Blockchain technology can facilitate this service considerably to clients in any part of the world,” she added. “We are very pleased to take this first step along a route that will surely set the trend over the next few years.”

Morris said having two major Spanish energy companies using EWF’s blockchain technology is “encouraging, especially in a country with massive solar resources and an evolving regulatory landscape.”

For Acciona’s Greenchain project and others like it, Morris said EWF is working with a Spanish affiliate called FlexiDao, which uses blockchain technology to stamp the provenance of electricity and automatically assign it to consumers.

FlexiDao has also worked alongside Iberdrola. In December, EWF and Iberdrola staged a blockchain hackathon in Bern, Switzerland, in which FlexiDao emerged as a winner after developing a device registry for devices feeding electricity into the grid.

The Iberdrola and Acciona initiatives come as blockchain companies settle down to the business of getting results after many were able to raise substantial sums of money via “initial coin offerings” in late 2017 and early 2018.

Growing interest in energy-related blockchain applications led some observers to point out that the underlying digital ledger technology, based on Ethereum, was not ready to support certain applications, such as peer-to-peer energy trading.

In response, EWF has led moves to create blockchains designed specifically for the energy industry. This month, GTM listed EWF as one of the four energy blockchain ventures that experts believe will be most worth watching in 2019.

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IBM Brings Blockchain Technology to Cobalt Mining — The Motley Fool

Today, determining whether minerals like cobalt are mined and processed responsibly relies on third-party audits to verify compliance. It’s not enough. Most of the world’s cobalt, a necessary component for lithium-ion batteries, comes from the Democratic Republic of Congo. Terrible working conditions, human rights violations, and child labor aren’t uncommon.

Blockchain, the distributed database technology that underlies cryptocurrencies, could provide more transparency to the cobalt supply chain. International Business Machines (NYSE:IBM), along with Ford Motor Company, Huayou Cobalt, LG Chem, and RCS Global, announced a pilot program on Wednesday aimed at building an industrywide blockchain platform to trace and validate the various minerals used in consumer products.

A hand underneath a hologram of a globe.

Image source: Getty Images.

An immutable audit trail

The pilot program, which will focus on cobalt at first, is already underway. The system is built on the IBM blockchain platform, and it’s initially aimed at large-scale miners. But one goal is to increase transparency among small-scale miners, allowing raw materials produced by smaller outfits to be sold in the global market.

Based on a simulated sourcing scenario, the pilot program is tracing cobalt produced at a Huayou industrial mine in Congo all the way to a Ford factory in the United States. An immutable audit trail is produced on the blockchain, which allows participants in the network to be validated against responsible sourcing standards. This system can be used along with third-party audits to improve supply chain transparency.

The program is expected to be complete by mid-2019. In addition to cobalt, other minerals like tin, tungsten, and gold are expected to eventually be traced by the platform.

Building platforms

This isn’t the first blockchain platform with the potential to become an industrywide standard that IBM is involved in. Its blockchain platform charges a monthly fee for each participant, so the goal is to build large-scale networks with many participants. Network effects should come into play, as the larger each network becomes, the more necessary it becomes for industry participants to take part.

IBM Food Trust is another example of an IBM blockchain product. Food Trust is a blockchain platform that can trace food from the farm all the way to the grocery store shelf. The system can improve food safety, allowing for tainted food to be traced to its source of origin quickly, and it can reduce food fraud and food waste by increasing supply chain transparency.

Walmart has embraced Food Trust in a big way. It announced last year that it would require its leafy-green suppliers to use Food Trust to trace their products by Sept. 30, 2019, with direct suppliers required to achieve one-step traceability by this Jan. 31. With Walmart responsible for more than one-quarter of U.S. food sales, Food Trust has the potential to become an industry standard.

Other IBM blockchain efforts include TradeLens, a platform jointly developed with Maersk aimed at the global shipping industry, and we.trade, a trade finance platform used to open up financing to small and medium-size importers and exporters.

It’s too early to say whether IBM’s blockchain efforts will translate into meaningful revenue down the line. But the company is one of the leaders in this nascent technology, and its blockchain platforms have a lot of potential.

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Final Fantasy, Tomb Raider creators bullish on blockchain gaming

Epic Games might have recently poured cold water on our steamy blockchain-gaming dreams, but another major video game publishing company has stepped up to keep hope alive.

Square Enix, the publisher of smash-hit, gaming franchises Tomb Raider, Kingdom Hearts, and Final Fantasy, is preparing its investors for a foray into the world of blockchain.

Recently, the president of Square Enix, Yosuke Matsuda, published a letter to his shareholders in which he laid out the company’s vision for 2019. And topping the list for the company’s “potential for new services” is Matsuda’s growing crypto curiosity, citing—interestingly—the crypto crash of 2018 as the impetus:

“With the subsiding of the cryptocurrency bubble, the use of blockchain technology has spread to a variety of non-cryptocurrency domains as well,” he said. “One has been the gaming space, where there have been some interesting developments with games and game platform services using blockchain technology.” The head of Square Enix went on to say that the company is also “very interested in potential applications for blockchain technology in the digital content space.”

A growing number of major video game publishers and distributors have already begun testing the utility of blockchain. In November, game-development company Arcade Distillery announced a deal with Sony to release the first blockchain game on a major console; “Plague Hunters” is slated to land on the PlayStation 4 early this year.  Other major players include Ubisoft, the makers of Assassin’s Creed and Rainbow Six.

Indeed, a number of  blockchain-focused companies, including Ubisoft, ConsenSys (which funds Decrypt, an editorially independent site), Everdreamsoft and Ultra, launched the Blockchain Game Alliance last fall. Ubisoft’s Strategic Innovation Lab spent the better part of 2018 exploring blockchain’s potential to decentralize and individualize gaming experiences, as well as to provide gamers with “true ownership” of their digital assets.

Nicolas Gilot, co-CEO of Ultra—a blockchain-based “next-generation games distribution platform”—is equally bullish on the blockchain gaming future. He told Decrypt that the technology is “already proving its potential beyond the ownership of in-game items and providing groundbreaking, innovative solutions.”

Says Gilot: “Looking at the future of gaming, in three to five years time, I believe the industry will be completely unrecognizable to where we are now by virtue of the incorporation of blockchain.”

And with Sqaure Enix considering joining the campaign, we may soon count another elder role player among the blockchain bold.

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HSBC settled $250 billion in forex trades on blockchain

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UK-headquartered global banking giant HSBC has announced that it settled $250 billion in forex trades in 2018 using blockchain, per The Financial Times. Since February of last year, HSBC’s blockchain project, dubbed FX Everywhere, has been used to handle over 150,000 payments and settled over 3 million forex trades, according to the bank.

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Although HSBC has not revealed data for forex trades it settles using traditional processes, it’s said those settled on blockchain so far represent only a small proportion, per Reuters. HSBC now intends to make the platform available to its clients, especially financial institutions (FIs) that manage multiple treasury centers and cross-border payments.

Using blockchain has allowed HSBC to optimize FX trade processes and reduce costs.HSBC conducts huge volumes of FX transactions internally, across multiple balance sheets and numerous countries, according to the bank’s global head of currencies, Richard Bibbey, cited by The FT. Blockchain has allowed it to automate the traditionally manual processes involved in FX trades, lowering costs and increasing the efficiency of these internal transactions.

The move to blockchain has also meant multiple executives at the bank can simultaneously use the system and view trades from execution to settlement, reducing the risk of discrepancy and delays. In the process, FX Everywhere has enabled HSBC to reduce its dependence on external technology providers like CLS, a market infrastructure group that delivers settlement solutions for currency trades.

HSBC’s announcement could stem worries over a lack of results from blockchain investments.FIs have invested heavily in blockchain to leverage the technology’s potential to improve and optimize processes. In 2017 alone, the financial services industry spent $1.7 billion on blockchain technology, per Greenwich Associates. This initial flurry of activity has seen some results go live — CLS rolled out its blockchain-based solution for foreign exchange markets in November last year.

However, by and large, FIs have struggled to move their blockchain projects from testing to large-scale implementation, often due to scalability and security issues. This has led to frustrations that, despite heavy investment in the technology and its perceived potential, little of substance has been delivered.

HSBC’s latest announcement should mollify some of these concerns, as it suggests FIs are beginning to see returns on their early investments. This year, we expect to see more firms begin to roll out their projects and explore new use cases for blockchain technology.

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Ford drives cobalt supply chain transparency with IBM blockchain

Ford has become the latest company to jump on the blockchain pilot bandwagon.

The American car manufacturing giant is conducting a blockchain trial in a bid to trace cobalt, found in the lithium-ion batteries used by electric cars, from a Chinese-owned mine in the Congo.

Ford is using decentralized ledger technology to ensure that none of the cobalt mined is linked to human rights abuses.

South Korean cathode maker LG Chem and China’s Huayou Cobalt are also participating in the pilot.

The project will leverage IBM’s Blockchain Platform, which is powered by the Linux Foundation’s Hyperledger Fabric.

The pilot, due to be completed in mid-2019, is a prime example of how blockchain technology can potentially be used to increase the transparency of supply chains and comes amid increasing pressure for companies to behave responsibly when it comes to sourcing materials.

Speaking to Reuters, Manish Chawla, general manager of IBM’s mining and industrial sector business, said: “There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy. Blockchain has been proven to be a very effective technology in raising the bar.”

IBM‘s Blockchain Platform seems to have proved popular among enterprises, with mainstream financial giants such as Visa and Danish conglomerate Maersk also using the tech company’s proprietary tech to conduct their own trials.

Published January 16, 2019 — 15:15 UTC

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Technologies That Will Revolutionise Energy

Long-term sustainability requires more than the incorporation of renewable technologyKenueone

Societal pressure and emissions policies are speeding up innovation in the world of energy. At the same time, increasing competition is pushing companies to become more efficient.

A range of businesses from the likes of Google and Facebook to Nestle are now opting to use more sustainable energy sources such as solar and wind. However, to make the most of renewable technology, business will need to embrace new technologies.

At Schneider Electric we see first-hand that companies are increasingly willing to test out new cleantech to create operational efficiencies, reduce environmental impacts, and cut costs — or even potentially generate ROI. However, long-term success requires a rethink of energy and the incorporation of new technology, from generation to distribution and the management of excess power. 

Here are four technologies with the potential to change our outlook on energy:

Microgrids: empowering the local market

Today there is a shift from a highly centralised power system and a return to smaller scale, localised systems that optimise power demand, consumption, and management. Microgrids are emerging as one of these decentralising technologies. They bring together a combination of clean technologies such as distributed generation, batteries, and renewable resources to help organisations operate autonomously from the traditional electrical grid.

Commercial, industrial and institutional energy buyers can now see instant cost savings by implementing technologies embedded within a microgrid. These insulate their facilities from the risk and changing cost components of an ever-evolving energy market.

Energy Storage: an opportunity to decarbonise at scale

Batteries and other types of storage play a vital role in enabling companies to embrace clean, low-cost, renewable energy at a higher level. Renewable power sources can face intermittency issues. Energy storage helps remove this significant barrier which previously prevented greater adoption of wind and solar resources.

As the price for batteries and other storage solutions drops, corporate buyers will be well positioned to maximise energy investments, while contributing to the clean energy transition. Additionally, with microgrids on the rise, energy storage, in conjunction with other new energy opportunities, may become commonplace for companies.

Fuel Cells: Investing in the future

Fuel cells electrochemically combine a fuel with oxygen and convert the resulting chemical energy into electricity without any form of combustion. Because they require a constant, steady source of fuel to produce electricity, fuel cells are able to provide a continuous, baseload source of clean electric power. This provides facilities with a need for a reliable minimum supply of energy, from manufacturing plants to hospitals, to incorporate renewables into their energy mix without compromising the safety and stability of their baseload.

As a baseload resource, fuel cell technology helps bridge the gap where other renewable energy sources face challenges. The intermittency issues that wind and solar must overcome are not a concern for fuel cells. Partnered with other renewable technologies, fuel cells can balance the difference between demand and generation of intermittent resources. Although the technology is new, and expensive as a result, in the same way other clean technologies have found success, they should become a vital technology to consider.

Blockchain: efficient transactions

Blockchain technology is a distributed, digital ledger used to record and track transactions. It uses sophisticated algorithms to validate, encrypt, and instantaneously record transactions for virtually anything of value in a secure and decentralised manner. Energy is one area of interest for blockchain applications, particularly when it comes to certifying the energy sources you are using.

With the increased autonomy that blockchain introduces, corporate energy buyers may find it easier to accomplish these goals — and at a lower cost and time commitment.

Secret to success

Combining the benefits of all four technologies is vital to the future of energy efficiency. Businesses must take control of their own energy to avoid potential disruption from changes which are out of their hands, from price fluctuations to the intermittency often associated with renewables.

Thinking strategically can transform a company’s energy management and should be the foundation of implementing these new technologies. By developing an efficiency and sustainable energy strategy, businesses can tackle whatever the future brings.

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How Blockchain Will Shape The Future Of Your Organization’s IT Strategy

For most people, blockchain technology is something they hear about only when the value of Bitcoin makes a headline-making leap to dizzying dollar values or plummets to jump-off-the-nearest-bridge depths — perhaps all in the same day.

But blockchain is about a whole lot more than cryptocurrencies like Bitcoin. It has the potential to solve very thorny security issues that your IT teams and security vendors have been wrestling with for years — security challenges that have become boardroom issues over the past decade because they represent existential threats to businesses. From an executive standpoint, security is no longer someone else’s responsibility. It’s something every executive needs to understand and devote attention to, which is why blockchain needs to be on your radar screen.

Edge Computing Makes Security Even More Important

One major trend that is making blockchain particularly relevant is the increasingly distributed nature of data center infrastructure. In the past, companies had one data center where they focused their security strategy. Now, edge computing is placing valuable company data and assets in locations that are much harder to protect with traditional security measures.

Blockchain enables digital assets to be tracked and protected just like physical assets you can hold in your hand and put behind lock and key. That’s the concept, anyway. And it’s a concept that has the potential to radically change how companies protect their most important data and IT operations.

Why Blockchain May Be The Answer

One of the reasons blockchain is so well-suited for a world of distributed IT infrastructure is that it turns a weakness into a strength by using the open nature of the internet as the foundation for protecting information and assets.

Rather than using a centralized security methodology that tries to keep information behind walls, blockchain is a way to protect data that is out in the open or that resides in many locations throughout the public and private internet. Using a distributed database structure, blockchain establishes trust between counterparties that limits access to information and tracks all access to that information. Based on its distributed structure, blockchain offers a degree of security not found in traditional centralized IT configurations. By distributing and replicating information across both the chain and an unlimited number of physical servers, blockchain eliminates the single entry point that hackers seek to gain entry for their attacks.

Blockchain In Your Data Center And In The Cloud

Views on the potential impact of blockchain methodology vary widely, with many predictions and emerging applications focused on utilizing it to develop new applications that can deliver more secure transactions that come with a clear paper trail of digital documentation. This will impact the apps that live in data centers, but blockchain technology will also impact the physical operations of data centers.

The most significant role that blockchain may play with IT infrastructure is in the cloud. Since it has been developed to enable use across a distributed infrastructure, blockchain promotes the expansion of secure autonomous operations. This allows companies to put more data, applications and other mission-critical assets in the cloud rather than within a central data center.

There are, however, a few limitations to a blockchain-based cloud. For example, the need to use highly secure transmission protocols for communications between its distributed nodes can make blockchain more costly than traditional cloud operations.

The Future May Be Blockchain As A Service

Even though blockchain won’t replace the operational structure of the cloud anytime soon, we may see cloud providers using blockchain in more limited but impactful ways in the meantime with blockchain as a service (BaaS) offerings. While BaaS offerings from providers like IBM, Microsoft, AWS and Google are still in their infancy, they offer potential blockchain users a more accessible path to incorporating blockchain-based applications into their operations. Among the benefits of the BaaS model are:

• Seamless blockchain provisioning experience

• Interoperability with other platforms as a service offering

• Simplified operation

• Easy to program

Blockchain is poised to have a very big impact on how companies protect digital assets and deliver services to customers. You typically hear about blockchain in the context of Bitcoin, but not long ago, clouds were just something in the sky. And look how big a role clouds play in your corporate strategy now.

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Blockchain Makes Inroads Into Banking

In Asia, blockchain continues to get a boost from government and regulatory efforts, especially in the realm of trade finance done across borders.

In one example from the past several days, the China Banking Association (CBA)  the regulatory agency tied to the sector  has launched a new blockchain-underpinned initiative focused on trade finance. The platform is in the midst of being rolled out for live deployment, with several pilot programs having already been completed. The banks that have signed on include HSBC, China Merchants Bank, Postal Savings Bank of China and others.

The CBA pilots, as reported by CoinDesk and other sites, were tied to the issuance of letters of credit and securities. The CBA said it will look to include smaller and mid-sized banks on the platform, with eventual additions of tax agencies and customs activities to the platform. The latest Chinese efforts come after the Hong Kong Monetary Authority (HKMA) brought its own trade finance platform live at the end of last year.

Separately, the South Korean government has been eyeing tax breaks for blockchain in a move that looks to bring innovation to the region. The country’s finance ministry said blockchain efforts will be included in tax law amendments, as reported by The News Asia. Under those amendments, some taxes related to research and development (R&D) spending will be deductible. Smaller firms will be able to deduct 30 percent to 40 percent of taxes, with 20 percent to 30 percent of expenses able to be deducted for larger firms.

Beyond large-scale efforts in Asia, ShareRing, a blockchain-powered firm, said users can reserve and get a rental vehicle through a partnership with Keaz, the car-sharing platform, within 30 seconds.

As reported by Venture Beat, Keaz works with Toyota, Envoy and others to facilitate 700,000 rental bookings monthly. As the service traditionally takes a few days to complete transactions, the new initiative lets ShareRing verify users and complete bookings almost immediately. The service will debut at the end of March.

ShareRing Co-founder and CEO Tim Bos told the site that the blockchain is powered by utility tokens and ShareCoins, and offers some flexibility when it comes to identity management.

“We offer a function where you can choose to only do business with providers that don’t hold onto your ID,” he said. “This is a system where identity documents are captured in the app by the user (license or passport, depending on the category of use), and verified by a third-party Know Your Customer [KYC] provider. Once authenticated, these documents are hashed and uploaded to [the ShareRing chain]. This hash is an unchangeable ID validator that is used by the business service provider to ensure that it’s valid and the renter is who they claim to be.”

IoT Gains Traction With Blockchain

Gemalto, the digital security firm, said blockchain use to secure data and services across the Internet of Things (IoT) has doubled through the past year — blockchain adoption has grown in the sector from 9 percent to 19 percent, as surveyed across 850 professionals. As much as 23 percent of respondents said that blockchain technology represents an “ideal” solution in the IoT realm. The survey found that 91 percent of companies would consider using blockchain in the future.

“Businesses are clearly feeling the pressure of protecting the growing amount of data they collect and store. But while it’s positive they are attempting to address that by investing in more security, such as blockchain, they need direct guidance to ensure they’re not leaving themselves exposed. In order to get this, businesses need to be putting more pressure on the government to act, as it is them that will be hit if they suffer a breach,” said Jason Hart, CTO of data protection at Gemalto, in a statement.



Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the latest PYMNTS Digital Drive Report 

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How To Combine Physiological Biometrics And Blockchain For Heightened Security

“It takes two flints to a make a fire.”

This quote describes how I envision physiologic biometrics enabling blockchain success. Blockchain restores trust by putting it in the hands of many instead of relying on a centralized entity, which gives it the potential to become one of the most important breakthroughs of our time. This trust can then be used to share and store legal, medical, financial or personal information.

However, every innovation has its vulnerabilities. Artificial intelligence (AI) has the potential to threaten the success of blockchain, a problem for which my company and others are turning to physiologic biometrics for answers. At my company, we use neuro-muscular security keys, but there are many others — like heartbeat and voice — that I believe other companies could use to create more secure internet of things (IoT) solutions. I hope to share these ideas with a plurality of others, as there exist companies using voice recognition (like OneLogin) or heartbeat signatures (as explained by Smithsonian Magazine) but as far as I know they don’t leverage the fact that those are living signals, as these organizations are comparing static files.

Physiology can help other security firms take advantage of the fact that we are living beings. We possess very useful signals that we can tap, like the heartbeat, respiration and voice. Those signatures could be trained faster than the biometrics based on motions, as they are non-context-dependent and, in my experience, contain more information per unit time. I’ve found they’re also very hard to hack or imitate. 

What Part Does AI Play In This?

The use and prevalence of AI is making it more difficult to protect data. What’s worse is that the AI bots have reportedly become adept at imitating human behavior and providing human-like responses, so there is nothing I see that will prevent them from performing a smart contract or bitcoin trade.

For ages, we have used human behavioral data to train AI for the sake of efficacy and better user experiences. Because of this, programs like CAPTCHA were developed to determine whether the user was a human or bot. Now bots can override this mechanism. Bot-generated messages used to be distinguishable from a human-written message. Not anymore, given the progress of natural language processing by AI from companies like Rev.ai. And now, human emotional responses can reportedly be coded into AI bots, which could make them better at interfacing and communicating with us and is blurring the line between humans and bots in a way I never imagined.

In this context, when all of our human data and biometrics are stored in the cloud, there are serious concerns about AI impersonating us to gain entry into our homes, devices or personal data. The reality of this could be a lot closer than we think — which makes the need to secure blockchain critical to its success as a security solution.

I believe blockchain’s current identification and authentication model lacks at both ends: at the initiation of a process and at its conclusion.

• Initiation: Bots can potentially steal cryptocurrency and generate false smart contracts because blockchain cannot detect the initiating human.

• Conclusion: The vital question will be to ensure that the final beneficiary of transactions is the legitimate individual, not a bot or a hacker.

Blockchain lacks assurances at both ends of the chain, which I believe prevents it from being fully trustable. What we see today is an alarming number of fraudulent crypto-related schemes raising concerns around the legitimacy of the blockchain industry. For example, a Finnish investor reportedly lost $35 million worth of bitcoin to scammers. A Deloitte leader recently said that their clients have expressed concerns about initial coin offerings (ICOs).

How To Use Physiological Biometrics

No matter how smart and no matter how well-coded a know-it-all future AI bot may be, it will never be alive. It will never have a heartbeat. Physiology may be the only measurable frontier between bots and humans. The brain, heart and voice could be both authenticators and encryptors — we could be uniquely recognized and yet not reveal our true identity.

Linking pseudonymous biometrics with physiology could close the loop by providing the missing half of the Web 3.0.

From my perspective in the space and my understanding of physiology, many possibilities exist for fellow innovators to capitalize on this opportunity. For example, a voice signal combined with respiration could provide a lot of information about our vocal cords, body shapes and speaking volumes; it could have the density to be used as an encryption key at the same time. Heartbeat — a slower measure — could provide information about the electronics of the heart muscle. This information, which I see as different from what the EKG measures, could potentially reflect the neuro-anatomy of the heart muscle. Likewise, any muscle and its activity is connected with the nerve system, which could provide further opportunities for new biometric security solutions. Physiological methods of identification like these could generate all the key pairs needed to navigate the future of IoT and blockchain. The IoT — by its sheer scale — will likely need many more keys for all those interactions, and I believe the human body possesses the needed entropy for this task. Innovators can find ways to use this physiology for security and enable a user-centric instead of a machine-centric IoT.

By combining biometrics and the blockchain, tech leaders can create solutions to keep a user’s identity inside a secure distributed ledger system, achieving complete human control. For example, biometrics like heartbeat and voice signals could prevent people from stealing someone’s identity in the financial sector. It could be quite easy to condition entry to the blockchain to the fail/pass test of being a human without the need for revealing one’s identity in what is called a pseudonymous manner. In other words, inventors can simply create a condition test to validate users through physiology.

As an impossible-to-alter trust protocol, blockchain will radically change how we will interact with the internet, yet physiological biometrics in this way could make blockchain complete.

It is truly a needed match.

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The 4 Weakest Links in a Blockchain

In late 2018, the CDC issued a warning about  E. coli outbreaks from romaine lettuce resulting in a massive recall. Blockchain made its way into the headlines, with several experts touting it as a silver bullet for the capability to trace and link an item at the retail shelf all the way to the source of supply. These experts felt that blockchain could have prevented the mass recalls associated with such outbreaks by helping identify source-to-shelf linkages quickly.

At the heart of the argument is one of the core virtues of blockchain – a distributed ledger system where each transaction is logged into the blockchain. Validated by a number of participating distributed nodes, this makes the records hacker-proof and trustworthy. The “journey of the romaine lettuce” can be traced back all the way to the specific farms where the lettuce is produced, making recalls surgical and targeted and offers a valid argument that makes perfect sense on the surface level.

A case for blockchain as a trust-based system for “store of value” has already been proven in case of its killer app – the bitcoin. Each bitcoin transaction is validated by several nodes in the blockchain system. As an incentive for participating and ensuring each transaction is authentic, those who operate the authenticating nodes have an opportunity to receive bitcoins as an incentive. One would assume that the use-case could be extended to a physical supply chain to record and authenticate change of custody. This method would create a farm-to-fork chain of transactions that could be logged and retained to track inventory transfers.

But there are a few weak links in the blockchain argument that can limit widespread adoption in physical supply chains:

Organizations’ Desire for Control

Blockchain’s origins were based on principles triggered by lack of trust in the financial institutions backed by the big government. These views were shared in a whitepaper written by the bitcoin’s mysterious inventor Satoshi Nakamoto, who advocated for a peer-to-peer electronic cash system where the big financial institutions exerting control over fiat currencies are disintermediated. However, most organizations that participate in a supply chain operate based on having controls in place. ERP’s big value proposition focuses on standardization of the enterprise data giving control to organizations over their data assets. Many organizations have spent tens to hundreds of millions of dollars implementing these systems so that they can control their data. This thinking is antithetical to the philosophy of the founding fathers of cryptocurrencies and the irony is that now, blockchain is viewed as the means for organizations to gain visibility and control over data that is beyond the four walls of their enterprise.

However, security concerns and questions about who gets access to the data in the blockchain becomes a paramount concern, further reinforcing the desire for control. This gave rise to the notion of a private blockchain, which grants access by invitation only to select parties. This raises the question of who will operate such private blockchain and if the power and control over blockchain will be truly distributed evenly across the nodes in the network.

There are also questions around who will enable these nodes and what the incentive might be for them to authenticate the transactions. For example, if the value chain partners, such as the suppliers and customers of any company, get invited to the blockchain, then the major anchor player, such as a manufacturer or retailer, will want to set the standards and have control over the operational standards for the blockchain. Any time one organization’s desire for control takes over, collaboration efforts will face higher barriers to succeed and face bigger resistance while the anticipated benefits may, at least in perception, be lopsided.

Lack of Interoperability Standards

Given that the “private blockchain” initiatives will be dominant in supply chain, this brings forth the idea that these blockchains will need to operate cohesively in an automated manner.However, supply chains do not consist of one linear chain. Instead, they are a complex web of many supply chains interlinked. Barring the case of a few highly vertically integrated organizations, most companies cannot dictate all of the value chain partners to participate in their private blockchain.

Therefore, multiple private blockchains will need to be integrated to enable a true end-to-end visibility, especially when it comes to highly global and complex supply chains. However, there are no interoperability standards currently in place given the nascency of blockchain in supply chain. At the same time, several of the smaller players in the value chain may be forced to take part in multiple private blockchains, raising concerns about the effort involved and costs to participate with questionable benefits to such parties.

Supply Chains Have Physical Goods Traversing Through Them

Cryptocurrencies involve fully digitized transactions. This lends itself better to a fully digital, distributed authentication mechanism. However, supply chains consist of the movement of physical goods. How will the nodes distributed in the cloud witness and comprehend the physical change of custody? Blockchain cannot do this in isolation and will need to work in tandem with technologies such as the Internet of Things (IoT) to track the movements of goods and possibly computer vision to witness the change of custody as it happens.

Companies also need to consider who will authenticate that the goods are from the sources that the blockchain claims. Tamper-proof packing can help to some extent but cannot control every situation. For example, what if the farmer at the originating point of the supply chain combines lettuce from his own farm with lettuce from other farms prior to packing them? Blockchain cannot account for this. The interplay between the physical supply chain and information chain is far more complex than a fully digital information chain (such as the case for cryptocurrencies) for blockchain enablement.

Humans are the Weakest Link in the Blockchain

If a human employee needs to authenticate any transaction or change of custody and enter it into a system, that link is prone to errors or potential fraud. For example, humans with good intentions can simply forget to log a transaction or change of custody. On the other hand, humans with ill intentions can tamper with the packaging and contents, physically altering the product in transit beyond the eyes of the blockchain. The less involved humans are from the routine change of custody transactions the more reliable these processes become. Over time and with less human interference, the blockchain can become less vulnerable to the human weak links.

Though there are some benefits to using blockchain, supply chain professionals should remain skeptical surrounding the short-term potential. The technology is still in the early stages of the hype cycle and the business value proposition needs further clarity.

The most pragmatic way for organizations interested in blockchain is to test the concept through pilot programs. Pilots should be focused on the areas that offer organizations the most control and companies should take the aforementioned weak links into consideration. Such pilots will mean dedicating internal resources and engaging external consultants to enable a private blockchain and could be costly to test, with questionable payoff. For most organizations, it may make sense to take a “wait and see approach” to understand how other companies use or are impacted by blockchain. Logistics, food, pharma and high-value merchandise industries are leading the way by engaging in pilots. While the blockchain technology in principle offers promise to the world’s supply chains, time will tell when it will reach large scale adoption and addressing the aforementioned challenges will be pivotal to any broader adoption.

Dr. Madhav Durbha is Vice President of Industry Strategy at Llamasoft.


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