Bitcoin started a genuine revolution, both in the financial world and in industry. While cryptocurrency trading and investing have become one of the most profitable ventures for mankind, the benefits of blockchain do not stop there.
It’s true that when looking at cryptocurrencies, most people think of their trading opportunities and financial products like options trading on Bitlevex. However, Ethereum has enabled blockchain technology to be much more than just a vessel for transacting value over the internet.
With the introduction of smart contracts, blockchain gained hundreds of new use cases, most notably in the supply chain industry. This is mainly due to NFTs and the tracking capabilities they provide.
In this article, we take a look at the main benefits of blockchain-enabled product tracking, the basics of NFTs, and how they can be used for product authentication. Let’s get started.
Blockchain main benefits for supply chain
Blockchain technology offers a wide array of improvements and solutions to the supply chain industry, including:
- Improved end-to-end visibility – when using traditional systems, lack of visibility can cause issues in the supply chain.
- Data integrity – blockchain provides transparent and immutable data, that is accessible to anyone, any time.
- Fraud resistance – in a world where counterfeit products are becoming commonplace, blockchain data can serve as proof of quality and origin.
- Flexible supply chain system – because of their permissionless nature, blockchains allow companies to add new suppliers or vendors in the supply chain in a seamless manner, reducing friction and increasing interoperability between actors.
What are NFTs
NFT (short for non-fungible tokens) are crypto assets that can be created with the power of smart contracts. Each NFT can be rendered unique through the properties embedded in its metadata.
This means that NFTs cannot be interchanged for one another as cryptocurrencies can. However, this uniqueness allows them to provide additional benefits to the blockchain ecosystem, and the supply chain is no exception.
For instance, NFTs allow us to tokenize anything of value. This includes already popular solutions such as digital art and gaming items. But the possibilities are almost endless, as real estate, insurance policies, fashion items, among others. All can be tokenized and minted as NFTs to provide better traceability and proof of ownership using blockchain technology.
NFTs and RFID
One of the most obvious applications of NFTs by pairing this uniqueness with RFID chips on luxury items in the clothing industry. This could be done to protect both the consumer and producer, ensuring the item’s origin and ownership.
Blockchain paired with RFID allows us to automatically track and update the public ledger that records the chain of supply. At all times, suppliers can track their products and verify their location and status.
Additionally, they can keep track of every element used in the production of that piece of clothing. This can be used for a variety of goals, from finding faulty pieces to being able to change a supplier in case of a production issue.
Furthermore, an added benefit is that the environmentally-conscious customers can retrace the path of the clothing piece back to its origin. The final ownership of this piece of clothing can also be updated on the blockchain, ensuring good resale value in the case of luxury goods.
Blockchain and NFTs still have a few challenges ahead to become a real game-changer within the industry. Their capacity to provide authenticity to every product in the supply chain is an incredible benefit for everyone involved in the process.
Once the growing pains of the technology are overcome (slow transactions, high energy requirements), we can expect NFTs to become prevalent in sectors where authenticity and proof of ownership are vital to the value of the product itself.