Blockchain technology (blockchain) has become the leading technology of the 4.0 era, possessing many preeminent features and proved to be outstanding in applications for many socio-economic fields.
In particular, blockchain application in agricultural product traceability promises to bring many significant benefits, creating a revolution in global supply chain management. The article comprehensively researches on blockchain application in traceability of agricultural products for vegetables, tubers and fruits in Vietnam, emphasizing on system framework design, technical requirements, advantages as well as challenges, creating premise for in-depth technical studies in the future.
With a history of more than 10 years of development, applied in many fields, blockchain has become the most breakthrough technology of the era of Industrial Revolution 4.0. Blockchain is a database of records or public ledger of all digital transactions that have been made and shared between the parties. Each transaction in the public ledger is verified by the consensus mechanism in the system (Crosby et al., 2015). By facilitating migration from a centralized point to a distributed system, blockchain effectively frees up data that was previously kept in secure data stores (Chung et al., 2018)…
In general, blockchain is a decentralized database of information storage, or a distributed ledger system, operated by a network of computers in a peer-to-peer network connected to each other. With advanced technology and outstanding advantages, blockchain has been researched and applied in many socio-economic fields. In the field of agriculture, blockchain technology is a tool to realize “farm to fork” agriculture, creating a revolution that brings agriculture to a new level of development.
Blockchain technology application in agricultural product traceability
Food chains need to become more sustainable to enhance consumer trust and loyalty, and the key to enhancing trust is effective traceability. Tracking and validating information throughout the food supply chain is key to contributing to the sustainable governance of agri-food chains (Galvez et al., 2018; Olsen and Borit, 2018; Zhao et al., 2017) . For the Vietnamese market, traceability of agricultural products aims to meet consumption standards in high-quality channels.
A traceability system based on traditional internet of things (IoT) technology can track and store specific information in all stages of production, processing, distribution, and consumption through various technologies. technologies such as: Radio Frequency Identification (RFID), Wireless Sensor Network (WSN), Quick Response Code (QR Code), Near Field Communication (NFC)…
However, this system is not really effective, mainly due to the trust mechanism between participants in the traceability chain, information management, safe and effective input data throughout. production life cycle of agricultural products. Many studies show that blockchain technology can be applied to build a transparent and secure mechanism for information in the traceability management process.
Blockchain has an important role to play in agricultural supply chains, including transparency and accountability (Tama et al., 2017; Kshetri, 2018), traceability and fraud prevention (Jin et al., 2018). partner, 2017), security and security authentication… (Galvez et al., 2018; Banerjee et al., 2018).
Around the world, several food empires and technology empires have joined hands, developing blockchain platforms or solutions combined with different IoT technologies for the food industry. These systems have been or are planned to be used at pilot scale to bring transparency in supply chain networks and improve consumer trust.
Architectural design of a food traceability system using blockchain technology
An IoT-based quality traceability system uses a centralized database that stores all product information related to quality characteristics from farming to production. However, due to the use of a centralized database system, IoT exposes the disadvantages of asymmetric information between the horizontal links and the vertical layers of the supply chain, so data is easy to access. manipulated and become less transparent.
Compared with applications that only use IoT platforms, blockchain platforms provide a more effective solution for anti-counterfeiting and quality traceability of agricultural products (Zhao et al., 2019; Helo et al., 2019). Hao, 2019). Based on recent studies, the author proposes a supply chain management architecture with emphasis on quality traceability based on blockchain to improve transparency and security of transaction information throughout. traceability process (Figure 2).
– Business floor: Covers a business cycle of the entire agricultural supply chain. There are two common types of agricultural supply: fresh agricultural products and processed agricultural products. A supply chain of fresh agricultural products includes stages: Purchase of input materials (seeds), cultivation, harvesting, transportation, storage, distribution and finally to the consumer. The supply chain of processed agricultural products is similar, only adding the processing process after purchasing and before distribution. Each link participating in the supply chain can control and manage traceability information for agricultural products and food. Agricultural products after being purchased or processed are packaged and labeled with identification such as barcodes, QR codes, RFID card readers, NFC-connected devices, etc., and entered into the system as new products. From now,
In order to have a unified common standard on data as the basis for traceability as well as quality control, it is recommended to combine closely with the most popular and reputable sets of agricultural practice standards today such as: GlobalGAP , VietGAP, Hazard Analysis and Critical Control Points (HACCP) or the corresponding Vietnamese standards are TCVN 5603:2008, ISO standards. Among the above rules, the VietGAP standard is applied by many businesses due to its suitability to the domestic production and consumption environment, while helping businesses balance costs and profits to expand export markets. export.
– IoT Traceability Layer: Information of each supply chain process can be traced, including quality information, logistics information, and transaction data. After receiving agricultural products, processing/consuming agents can read and enter new data into the product’s records through identification technologies (barcode, QR code, RFID, WSN, etc.) and automatically and continuously transmit ambient information about weather, humidity, oxygen, CO 2 etc. After processing, new tags/stickers continue to be attached to the processed products. /Processing. These connected devices can communicate with the ledger in the blockchain (Imeri and Khadraoui, 2018).
In the next process, fresh/processed agricultural products will be preserved at the storage facility. Through the installation of IoT devices in the warehouse, the data of the received agricultural products can be automatically extracted, for example, with wireless sensors and monitoring devices, agricultural information will be Real-time storage, including quantity, category, temperature, humidity and storage time, can be checked and updated in both the digitized database and on the product’s label/code Products.
Inventory information can also be queried directly in the system or by means of an RFID reader, this system can also meet enterprise requirements for dynamic storage management. Next, in the step of distributing goods, the 3T factor (Time, Temperature, Error) determines the hygiene, safety and quality of agricultural products. Therefore, it is possible to design and install a sensor system that monitors the quality of agricultural products on a transport vehicle at different locations on the vehicle to collect real-time data on humidity, temperature, storage environment of agricultural products and update into digitized database or code/label of goods.
– Blockchain layer: Smart contracts can support real-time monitoring and quality control in blocks. With logistics data, smart contracts can even automate logistics planning (Kshetri, 2018; Saberi et al., 2018). When the blockchain layer combines with the Internet of Things layer, smart contracts will get even smarter. The application of blockchain can be further exploited in the IoT era – automating payments between systems (like two interconnected systems, negotiating prices and applying prices based on operational efficiency) logistics).
A distributed ledger system will assist retailers and consumers to store transaction information and increase transparency of information throughout the product’s flow from the production facility to the processing facility. distributors, to supermarkets/markets/retail shops… and finally to consumers.
– Application layer: Interaction between actors in the traceability chain of agricultural products with the blockchain system. The actors participating in the chain can review the entire flow of goods, information flows and financial flows through the distributed ledger system. Data related to quality management, price management, financial management, sales management can all be continuously updated into the blockchain chain.
Requirements to build a supply chain management system and traceability of agricultural products on blockchain application
To fully exploit the advantages of blockchain, it is necessary to first overcome barriers in the process of setting up and operating a relatively complete blockchain system. These challenges mainly include technical requirements, operational requirements and institutional/legal requirements.
Before building a traceability system applying blockchain technology, it is first necessary to automate processes and build a data digitization eco-environment. This is the initial basis for businesses to start applying smart contracts, creating a foundation for blockchain technology application in supply chain management in general and traceability in particular.
The technical structure of a blockchain system applied in agricultural product traceability needs to ensure the following basic technical factors:
– A blockchain network is a shared, distributed, and unspoofable digital ledger consisting of immutable digital record data in a package called a block (Kakavand et al., 2017).
– Decentralized and trusted network: Blockchain consists of many nodes to form a peer-to-peer network and has no centralized equipment and management mechanism. The destruction or loss of any node will not affect the operation of the entire system, because the system has great durability. Data is shared among chain participants (Bahga and Madisetti, 2016; Bosona and Gebresenbet, 2013).
Smart Contracts: Transactions in the blockchain can be automated through smart contracts. Smart contracts are certain business rules that are implemented on the blockchain, allowing participants to monitor business processes and validate related rules (Andoni et al., 2019; Sikorski et al. , 2017).
Basically, the components of a smart contract include: contract subject, electronic signature, contract terms, decentralized platform. Smart contracts allow for trusted transactions without the need for a third party, which are traceable and irreversible. Smart contracts also contribute to data sharing and continuous process improvement among support chain participants. In addition, smart contracts can ensure that parties are prevented from creating error logs, especially when combined with IoT devices such as barcodes, wireless technology, etc. product traceability application on the blockchain system.
– Consensus Algorithms: Consensus algorithms or consensus mechanisms are the way in which the majority of blockchain participants reach consensus and determine the validity of a new record/block. This is done by a computer system using cryptographic proofs (Tian, 2017). The consensus mechanism helps prevent data tampering during traceability. Common consensus mechanisms in blockchain include: Proof of work; Proof of stake; Authorization of proof of shares; Evidence of authorization; Proof of volume; Byzantine Fraud Consensus.
– Building a culture of cooperation: To have a blockchain system with the association of many participants, one of the decisive factors is to build a culture of cooperation. Before scaling the system on a larger scale, the cooperation of the entire ecosystem is the key to fully exploiting the blockchain, and the participants must always be willing to cooperate.
– Improve knowledge and capacity to apply blockchain: Competence and knowledge allow businesses to identify a suitable new operating model as well as identify the values it brings. Therefore, it is necessary to invest worthy time and resources so that employees and partners can contribute to the overall success of the project. In the blockchain ecosystem, users as well as technology and implementation partners need to be active and have good consensus communication.
About the institution
While many countries around the world have been implementing many models of application of IoT, artificial intelligence, and blockchain technology platforms to develop a digital economy, Vietnam is still a new field. batch. Therefore, it is necessary to soon issue regulations on building a multidisciplinary digital database, sharing data; at the same time must also pay attention to the issue of: information security; protect personal data and ensure the privacy of individuals; electronic authentication; reporting regime and decentralization among state management agencies.
Challenges when applying blockchain technology and proposing solutions
Blockchain technology in Vietnam is in the experimental stage, so the implementation of blockchain application in agricultural supply chain management still has many challenges. Research on blockchain application in agricultural supply chains shows that there are three main groups of challenges for the application of blockchain technology: Technical, operational, and institutional. Specifically:
– Storage capacity and scalability: These are the two most concerned issues in blockchain. Koteska et al. (2017) argue that one of the main challenges facing blockchain implementation is the scalability of the system. A large number of full nodes (one that can fully validate transactions and blocks) in the blockchain implementation are needed to ensure the security of the system.
Nodes in the blockchain network are expected to validate each transaction of each block (Reyna et al., 2018). Otherwise, the adoption of blockchain in agro-food value chain management could lead to a less decentralized system. Koteska et al (2017) suggest that scalability negatively affects the three dimensions of blockchain, the size of data on the blockchain, the speed of transaction processing, and the speed of data transfer on the blockchain.
– Throughput and processing speed: For agricultural value chains, due to the initial restriction on block size and time to create a new block, the current processing capacity of the blockchain cannot meet the requirements. processing millions of transactions in real time. Aste et al. (2017) argue that, “a system that can handle large volumes of transactions will require large blocks or a mechanism in which many blocks are confirmed simultaneously”.
The above fact will cause major problems for customers when running a blockchain-based system. After studying a traceability system, Tian (2016) concluded that, there are two obstacles to the adoption of blockchain technology: (1) The processing capacity of blockchain is limited to seven transactions/ seconds due to block size restrictions; (2) Store and synchronize with the increasing scale of blockchain.
– Data security/privacy: In blockchain, each transaction can be traced, audited; every user can be identified by their public key or the block’s code. As a result, blockchain technology improves the transparency of agricultural supply chains and helps build consumer trust. However, it also negatively impacts the protection of user privacy (Reyna et al., 2018).
Therefore, many efforts to protect privacy in blockchain have been made such as obfuscating transaction relationships to prevent tracking or tracking analysis, hiding the identity of senders and receivers of information. through complex cryptographic schemes and obfuscate transaction content while preserving verifiability and computation (Feng et al., 2019). To ensure transactions are not easily tracked to any certain person or computer, methods such as: Hidden Address, Pedersen Commit, Ring Signature, Homomorphic Encryption are applied…( Hamida et al., 2017).
Kosba et al (2016) addressed these privacy issues differently through the use of encrypted transactions. Hawk – a decentralized smart contract responsible for translating common code written by programmers into cryptographic originals as zero-knowledge proofs to maintain transaction privacy.
– High cost, consuming energy: Lin and Liao (2017) suggest that participants in the agri-food value chain will need a lot of money and time to apply blockchain technology to the traceability system. the origin of the current agro-food value chain. Yli-Huumo et al. (2016) note that as the blockchain becomes more complex, more computing power will be required to confirm more blocks, and at the same time, energy consumption should also be considered. To overcome these problems, the researchers propose a number of solutions such as: Using the Proof of Stake algorithm; Using the proof-of-stake algorithm (Zheng et al., 2017).
– Building a culture of cooperation: For a blockchain system to have the association of many parties, especially government organizations, businesses, coordinating agencies, partners, one of the decisive factors The goal is to build a culture of cooperation and build a blockchain ecosystem. Before scaling the blockchain system on a larger scale, the cooperation of the entire ecosystem is the key to fully exploiting the blockchain and the participants must always be willing to cooperate.
In addition, with the rapid digitization of businesses, many blockchain systems will be able to appear simultaneously among the participants in the supply chain, especially the export supply chain, creating challenges. on unifying information and creating a consensus mechanism between the parties. Therefore, it is necessary to build a “unified blockchain ecosystem”, in which two factors are satisfied: there is an equal interaction between the horizontal links of the chain and between the vertical links of the chain. When starting to design and build the system, it is necessary to determine whether it meets international standards for information sharing in the blockchain; need professional right from the first stages such as design, research, training to use …
– Capability to apply: Blockchain is a new technology, only a few people with in-depth knowledge and skills can use it in value chain management of agricultural and food products. Therefore, Iansiti and Lakhani (2017) suggest, applying blockchain technology in the agri-food value chain can be a long process. At the same time, a widespread lack of understanding of how blockchain works in other areas also exists (Banafa, 2017).
Blockchain is a new technology that involves many different people from different countries but currently there is not any common law or regulation. In addition, the absence of central authority and censorship in the current blockchain system has created a lot of instability (Reyna et al., 2018). This is a serious problem for both agricultural producers and service providers. Therefore, it is necessary to introduce new compliance laws or regulations to monitor and regulate blockchain applications in the real agricultural sector.
In Vietnam, the major issues facing blockchain technology today are legal and regulatory. According to Report No. 70/BC-BTP dated March 23, 2020 of the Ministry of Justice submitted to the Prime Minister on reviewing the legal framework related to the application and development of services and products on the blockchain platform, In the field of blockchain application of agricultural product traceability alone, many businesses basically do not have problems in trading their products and services, but the main problem is “building an eco-friendly environment.” with the application of blockchain technology to increase publicity, transparency and anti-fraud”.
To create a favorable policy framework and institutional environment for blockchain development, it is first necessary to define this as a long-term goal, requiring serious long-term investment by the state. The legal corridor regulates the automation and digitization of processes and procedures related to business operations, followed by the development of policies to support businesses in terms of operations, processes as well as finance. (tax cut policy, loan support)… for a group of pioneering enterprises, thereby creating a competitive environment for other businesses as well as other actors of the economy to take advantage of the momentum. accelerate development.
In addition, state agencies and enterprises need to pioneer in the application of scientific and technological achievements, including blockchain technology to improve the efficiency of governance, administration, public service provision, and leadership. in building blockchain ecological environment. After creating the environment of a “blockchain ecosystem”, it will be easier and more convenient to connect stakeholders as well as develop into a complete ecosystem.
At the same time, it is necessary to maintain an exchange and coordination mechanism between state management agencies and the business community, and the technology service-providing community both domestically and internationally to detect and handle the problem. timely problems and difficulties in the process of system implementation. At the same time, improve the capacity to use the system by means of communication, dissemination, training and retraining activities to raise the knowledge and awareness of people, businesses and state agencies about the application of public services. blockchain technology.
The study proposed a technical framework of the blockchain application model in the traceability of agricultural products in Vietnam, as well as the technical, operational, and legal requirements to build a suitable blockchain model. suitable for traceability of agricultural products. Currently, there are still relatively few studies on the specific features and functions of the system to manage the traceability of agricultural products in accordance with the current situation of agricultural product development in Vietnam.
These studies have only proposed for the management of the entire supply chain, not focusing on a deep aspect of the supply chain such as traceability, information security, or export financing… Besides, The research only stops at building the operational framework, not going into the technical parameters to build a really viable blockchain application traceability system.
Therefore, future studies can aim to adjust and evaluate the feasibility of the blockchain application traceability system, architectural design, technical system from many pilot application perspectives. Further studies should also consider blockchain technology applications to enhance the sustainability of various agricultural product supply chains.
* The research paper is under the topic “Research and development of the supply chain of clean agricultural products in Ha Giang province” under contract No. 207/HD-SKHCN.