Applying Blockchain: The Impact of Cutting-Edge Tech on One of Alaska’s Oldest Industries
How more—and better—data benefits Alaska’s fishing industry
Blockchain, an innovative virtual distributed ledger system, is one of today’s most cutting-edge technologies. The technology’s key ingredient is its element of traceability—and it is changing the way the world does business.
Many people are aware of blockchain as the technology that enables the existence of cryptocurrency, a form of digital asset which is secured by encryption, rendering it immune to counterfeiting. But blockchain can be applied to numerous applications including supply chain logistics, seafood, financial, healthcare, insurance, trucking, and oil and gas. So far in Alaska, the seafood industry is delving into the use of blockchain technology in a variety of ways.
So, what exactly is blockchain? At its most basic level, it is digital information (the block) stored in a public database (the chain). Blockchain is an immutable ledger for recording transactions and tracking assets, and the technology exists as a shared database filled with entries that must be confirmed by peer-to-peer networks and encrypted. Because of this, it can create an indisputable, tamper-proof log of sensitive activities. This makes blockchain more than a technology. As IBM describes it, blockchain is a “movement” that can help many industries redefine their most important relationships through trust, transparency, and collaboration.
Blockchain has the potential to vastly improve the current global supply chain, and Alaska will ride this wave and benefit, along with everyone else, according to Glen Kratochvil, a blockchain aficionado and owner of Alaska Computer Guy. His Anchorage IT support and computer services firm is among the few Alaska businesses that accept cryptocurrency as a form of payment.
Characterizing the importance of blockchain, Kratochvil says: “Thousands of years ago when human civilizations began trading with each other, all commerce was local, and trust was not an issue because the different participants knew each other. Today’s global supply chain has dozens or hundreds of steps between producer and consumer, with raw materials being sourced from different companies and suppliers around the world.
What exactly is blockchain? At its most basic level, it is digital information (the block) stored in a public database (the chain). Blockchain is an immutable ledger for recording transactions and tracking assets, and the technology exists as a shared database filled with entries that must be confirmed by peer-to-peer networks and encrypted. Because of this, it can create an indisputable, tamper-proof log of sensitive activities.
“Tracking each step as a product is transformed from raw material to finished good is a difficult and expensive process, rife with opportunities for fraud or manipulation of the data,” Kratochvil says. “It is currently tracked in many cases with legacy tracking systems, which make the data difficult to obtain, hard to monitor, and often impossible to verify. Improvements to this broken supply chain would benefit everyone by saving time, increasing trust, reducing cost, and lowering risk.”
According to Kratochvil, Alaska businesses are likely using blockchain without even knowing it because of changes and improvements that are quietly occurring behind-the-scenes in many different industries. For instance, Wells Fargo is partnering with others to develop a blockchain solution to more easily track and record mortgage payments. Walmart uses blockchain in parts of its supply chain tracking for food and produce. Popular money transmission service MoneyGram is using Ripple’s blockchain to expedite payments and to reduce fees for national payments. And Microsoft, American Express, Walt Disney, Google, Bank of America, and several large insurance companies are also either researching or actively developing blockchain projects of their own.
“These products and services will continue to trickle down and impact businesses at the local level as they are brought to market or incorporated into everyday activities such as buying a vehicle or being prescribed medication,” he says.
Certified Quality Foods Explores Blockchain
Juneau-based Certified Quality Foods is an example of how blockchain has positive implications for one of Alaska’s key industries. The company’s subsidiary, Seafood Analytics, has developed a Certified Quality Reader (CQR) that collects data that can be used in a blockchain to quantify the cellular health and freshness of fish and other protein foods. The handheld device employs bioelectrical impedance analysis to enable users to measure body composition, degradation, and other aspects of fish.
Seafood Analytics’ CQR allows participants in seafood supply chains to obtain more data about the freshness-related attributes of the seafood they are selling, handling, or buying. The CQR data can also provide key objective quality metrics for both chilled and previously frozen seafood at each point along the chain of custody. The sensor promotes the use of the highest standards, which can result in retailers and end customers receiving a longer-lasting, more nutritional seafood product.
The CQR unit can be a tremendous game-changer, according to Keith Cox, co-founder and chief science officer of Seafood Analytics. Trying to complete an organic electronic valuation on fish can be difficult, and measurements between different inspectors will vary. “Our device is an electronic measure, so if fifty inspectors have fifty units, they are all going to get the same number,” he says. “It provides consistency in speed, and the data is stored as an objective measurement—and it is stored forever.”
Chuck Anderson, vice president of Seafood Analytics, also has a strong appreciation for the real-world application of the CQR data. As a former buyer and director for a supermarket chain for twenty years, he would purchase a variety of seafood from multiple suppliers in different locations. But it was difficult to judge product quality from all the disparate sources. “It was always very subjective,” he says.
Seafood Analytics’ certified quality reader.
However, Seafood Analytics’ CQR provides reliable measurements of the important attributes of fish—including the fat content, which is especially relevant with salmon and tuna. “I would have loved to have had this kind of data to tell me what my product looked like coming from different sources,” Anderson says.
Seafood Analytics has two types of CQR units: a standard device and a more durable, waterproof version designed especially for Alaska fishermen. The technology, which was developed in 2018, is now being adapted for real-life situations in Alaska. “This year, we had eleven units being used in the Bristol Bay sockeye salmon season,” Anderson says. “This was their first year using it.”
In Alaska, Cox says, people are using the CQR to collect data at the tender and processor level. Users range from Alaska’s Own Seafood, a small community-supported fishery program, to larger companies like Trident Seafoods. In the future, fishermen who are producing the highest quality fish could leverage the CQR data and blockchain to maximize the financial compensation from their catch.
Its becoming increasingly evident that blockchain is a way to assign value to data. The data is inherently valuable to the person buying the fish, so they can correct the handling process and receive a better product, Cox says. The more value one can put on the data, the more valuable it becomes.
Blockchain can have a broad impact on Alaska’s fishing industry in a number of ways. “We want fishermen to have more money,” Cox says. “We want to better sustain our resources and wild caught fish, and we want to improve the quality. Blockchain can do all those things. Not only are the fish valuable, but the data from the fish is valuable, too. The data could be another source of revenue.”
Anderson also sees how the CQR data and blockchain can be instrumental in optimizing the wild fishery output. Alaska has been catching 90 million tonnes of wild fish per year, and that number is not going to increase substantially, he says. “In order to grow people’s livelihood, we have to help them make more from their pounds of fish,” he says. “Every year, we can share data with different researchers, and maybe they could learn things to manage the fisheries better.”
Blockchain is already having an impact on the business practices of the seafood industry in general, according to Anderson. He feels people have more acceptance and understanding that there needs to be sustainable and fully traceable seafood. He explains: “It starts with the chefs and retailers that are pushing this forward. They are demanding more transparency in the supply chain, and the blockchain is the ultimate tool for doing this with confidence. A lot of them want to do the right thing.”
Many retailers and restaurants are committed to sourcing sustainable options. For some companies, pressure comes from the corporate level from shareholders who want to know sourcing is being done sustainably, as well as from eco-conscious consumers. “The certified quality reader is a step above; it allows them to not only trace it back to a boat but to the quality,” Anderson says. “The fact that we’re using blockchain and the traceability, it gives people more confidence.”
Fishcoin and Other Blockchain Application
As blockchain technologies develop, so does the data that is going into them, Cox says. He relishes the idea of entities collaborating and collecting data for stakeholders’ mutual benefit. That’s why Certified Quality Foods is working in consultation with Eachmile Technologies, the Singapore-based company behind the Fishcoin project. Fishcoin is a blockchain-based seafood traceability and data ecosystem designed specifically for the global seafood industry.
Certified Quality Foods wants to see how the CQR scores from a batch of seafood could accompany key data elements (KDEs) for traceability from that batch as it moves through the value chain, according to Alistair Douglas, founding partner of Eachmile Technologies. KDEs can include data such as the name and country of a fishing vessel’s registration, evidence of authorization to fish or farm (license or permit), type of fishing gear being used, species name, and landing date. “This enhances the overall value of the data set to the buyers of the seafood,” says Douglas, who has been involved in the seafood industry as a researcher, trader, and auditor for almost twenty years.
Fishcoin transmits data based on blockchain technology, which also enables greater efficiency in the supply chain management of fisheries. Eachmile Technologies developed Fishcoin to solve traceability challenges in the “first mile” for sustainable seafood production, and it believes the initiative can increase the stability and security of the seafood industry.
According to Eachmile Technologies, Fishcoin represents a stabilized “token” that incentivizes supply chain stakeholders to share data from the point of harvest to the point of consumption. The flow of tokens moves from buyers to sellers in supply chains, rewarding those who make the extra effort to capture and communicate data. This shifts the economic burden to downstream actors like hotels, restaurants, and retailers who benefit most from traceability. Unlike many blockchain initiatives, Fishcoin is not based on a central company or entity. Instead, it is designed to be decentralized and incentivizes data capture so that an ecosystem of companies and third-party developers can benefit by adding value to the network.
Participation in Fishcoin is steadily expanding. Currently, Fishcoin’s website lists more than two dozen partners, including Bristol Bay salmon processor Northline Seafoods.
Douglas expects the use of Fishcoin to continue to grow in Alaska and elsewhere, given its potential benefits. A key factor is that blockchain builds trust in the value chain in that the data, once entered, cannot be edited or manipulated. “It is like a testimony to your truth,” he says.
“Alaska has an advantage at the most difficult point in the value chain: the first mile. How it capitalizes on that with technologies like blockchain will be critical in order for its fishers to be identified, the qualities of seafood verified, and for the hard-working men and women of the industry be rewarded by the market.”
Another important factor is that the blockchain is time stamped. Douglas explains: “When combined with temperature data through the cold chain, the buyers can shift to evidenced-based, best before dates rather than risk-based use by dates, which forces the disposal of what could be perfectly good seafood. Indeed, 40 to 60 percent of our seafood is discarded, lost, or wasted through seafood supply chains according to the UN’s FAO [Food and Agriculture Organization]. Less waste will enhance the businesses of the whole value chain and may benefit the consumers through lower prices.”
According to Douglas, traceability is one of the best use cases of blockchain technologies. The more it is used and the data is shared, the easier, faster, and cheaper the verification process should become. In addition, with data marketplaces incentivizing the placement of sensors in and around seafood value chains, additional data may not only lead to a more efficient industry but also to additional revenue streams for those stakeholders.
While some companies in Alaska are experimenting with using blockchain, there are potential obstacles, Douglas says. “The challenges for traceability systems is the lack of interoperability [both syntactic and semantic] and the business model—be it on a blockchain or not,” he says. “Data may be in different formats, a fisherman may be unwilling to pay for a digital system, the processor may not agree to transparency for fear of circumvention, et cetera. All these factors and more must be considered when applying a traceability system to a value chain.”
However, Douglas says, building trust in seafood supply chains is paramount, given that nearly one-third of the world’s seafood catch is considered illegal, unreported, and unregulated. “But Alaska has an advantage at the most difficult point in the value chain: the first mile,” he says. “How it capitalizes on that with technologies like blockchain will be critical in order for its fishers to be identified, the qualities of seafood verified, and for the hard-working men and women of the industry be rewarded by the market,” he says.
In addition to being a Fishcoin partner, Northline Seafoods has used a blockchain-based solution called Wholechain. Last year, the company used the technology to trace 1 million pounds of Alaska sockeye salmon, according to Wholechain. The platform helped Northline Seafoods differentiate the unique quality attributes of its products in the marketplace.
Wholechain aims to benefit everyone in the supply chain, including producers, processors and distributors, brands, retailers, and other stakeholders. It provides an unchanging record of transactions along the supply chain from producer to seller. By using and sharing traceability data, the participants can enhance their own product insights and become vital links for traceable goods. And despite the complexities of Wholechain’s technical components, it offers companies like Northline Seafoods a user-friendly interface for tracing products from their source to their destination.
Enhancing Blockchain Adoption
Although different industries are increasingly interested in adapting to blockchain technology, there are obstacles that make the process difficult. The technical intricacies and operational overhead involved in creating, configuring, and operating a blockchain, along with maintaining its infrastructure, can act as a barrier. However, some major tech companies are offering a solution: blockchain-as-a-service (BaaS). Amazon Managed Blockchain, for instance, enables users to easily create and manage scalable blockchain networks using open source frameworks. Microsoft makes BaaS available through Azure, and IBM offers it through the Bluemix cloud platform.
With BaaS, the external service provider sets up all the necessary blockchain technology and infrastructure for a fee. Once the technology has been created, the provider continues to handle the complicated back-end operations. BaaS allows organizations to capitalize on cloud-based solutions to build, host, and operate their own blockchain apps and related functions on the blockchain while the cloud-based service provider keeps everything properly running.
At this stage of blockchain’s evolution, Kratochvil says he is excited to see the big names investing in advancing this technology and developing new and innovative uses for blockchain. “This is all still very new, and demand for knowledgeable blockchain developers is intense,” he says. “Large academic institutions and universities are pretty much all offering comprehensive blockchain education programs, and many of the transformational advances in blockchain will come as soon as some of the existing pilot projects are seen to be effective.”
Continuing, he says: “I look forward to the time, which I don’t believe to be too far off, when blockchain will be improving people’s health and increasing their safety. Saving consumers money, increasing people’s quality of life, and providing transparency into the supply chain are also going to be some of the greatest benefits of blockchain adoption, in my opinion.”
This year the Alaska Railroad is celebrating 100 years of transportation people and cargo around Alaska. While the railroad is one of the states oldest transporters, it certainly isn’t the only one, and in this issue of Alaska Business we also check in on the Marine Highway, Span Alaska, and the White Pass & Yukon Route. For those interested in Southeast, our focus on that region provides updates on Kensington Mine, Tongass FCU, the troll fishery, and Juneau’s growing landfill.