- According to an OIV study, blockchain has the biggest potential of all digital technologies in the wine industry.
- Data is an underused resource in the wine business.
- Best practices can help: learnings from the coffee industry.
The International Organization of Vine and Wine (OIV) states in its 2021 study "Digital Trends in the Vine & Wine Sector" that blockchain has the biggest potential of all digital technologies in the wine industry. This prediction has been confirmed so far: Blockchain is not only the basis for digital currencies, but also a technology that can be utilized for forgery-proof documentation of ownerships, processes, and transactions as well as for certification.
These possibilities in addition to new blockchain applications and scientific research results were presented on July 15, 2022 at the “Forum Blockchain in the Wine Industry” in Geisenheim. This industry gathering was organized by the Association of German Oenologists (BDO) and Hochschule Geisenheim University.
Depending on the particular use of a non-fungible token (NFT), several legal and regulatory aspects need to be resolved to promote its implementation and adoption:
- Given that the NFT represents in many use cases a legal agreement between two parties and is in itself only a digital representation of a legal obligation, it comes with an underlying contractual risk of fulfilment.
- Furthermore, intellectual property issues must be solved.
- The adoption as an investment security is highly impacted by regulatory concerns. Regarding the technological elements such as NFT maintenance, marketplace risk, and the coding of the underlying smart contracts, the aspect of cybersecurity and fraudulent activity also needs to be considered.
The European Union is currently preparing a crypto law aiming towards a comprehensive reporting obligation concerning the transactions performed with unhosted wallets. At the same time the German government has just recently warned of crypto overregulation.
The Importance of Data
Prof. Dr. Hanf emphasized the importance of data as an elementary resource in the wine industry, which creates and shapes competitive advantages. As Blockchain is not only the basis for digital currencies, but also a technology for the tamper-proof documentation of processes and transactions in the supply networks of the wine industry, it has the potential to significantly change society, governance, and the economy by creating new use cases, and eventually innovative digital business models.
Originally, blockchain was also created to prevent the double spending problem on the Internet, which would circumvent the need for a trusted central authority. Double spending refers here to a digital asset being copied and used multiple times, for example, the same cryptocurrency token being used twice in different transactions. Since then, many solutions have evolved. In its current state of development, it seems that the technology is looking for business problems to be solved rather than the other way around. It is therefore characterized as a disruptive innovation which replaces an existing solution by tackling a business problem more efficiently.
Energy Use – Can Blockchain Technology Be Sustainable?
In a keynote, Felix Hosse from the Blockchain Founders Group showed perspectives regarding the energy use of blockchain technology. Cryptocurrencies are currently at the center of attention due to their reputation for an inefficient use of energy. This is particularly true for Bitcoin, which uses the high energy consuming consensus mechanism POW (Proof of Work). Although POW is making it the most secure application of blockchain, other consensus mechanisms are much more energy efficient.
Traveling from Mendoza Argentina, Mike Tango Bravo, founder and owner of Costaflores Organic Winery and OpenVino presented the benefits of a transparent ecosystem in the wine industry that can rearrange the relationship between winery and consumer by changing the ways in which wine is sold, how wine is certified, and how wine is being valued, both in price and quality. For more information click HERE.
Learnings from the Coffee Industry
Quite often, best practices can be found in other industries, e.g. in the coffee industry. Well positioned is FarmerConnect. Their connecthub, an application that provides transparency across the entire supply chain, might also help create a seamless overview of the transactions in the supply chain.
The forum brought together companies and stakeholders from the wine industry, as well as innovators and academia, and served as a networking event where ideas, concepts and applications were exchanged. Due to the positive feedback the organizers have already started with preparations to host another forum soon.