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  • Hrishi Poola
Written by
  • Hrishi Poola
8 Feb 2018

8 February As part of our Throwback Thursday series, we are republishing this stimulating article from the winner of our wine writing competition. It has particularly struck a chord with Walter, who reports that where he lives, Padova, seems to have become a hub of blockchain activity. 

5 February Like many, I'm of two minds, unconvinced by the long-term staying power of Bitcoin, Ether, Ripple and the 1,000-plus other cryptocurrencies out there, but convinced by the potentially transformative power of blockchain. Bitcoin is a red herring to the legitimately revolutionary platform that is blockchain

That's why you'll almost always hear people introduce Bitcoin as 'Bitcoin and its underlying technology the blockchain', clearly emphasising the separateness of the two – the former a volatile, highly speculated-on digital currency and the latter a game-changing, decentralised, encrypted, permanent, transparent and distributed ledger enabling secure transactions peer-to-peer without a third party or middleman such as a bank, credit card or online retailer. For example, Goldman Sachs has sounded the alarm on the crypto bubble, comparing it to tulip mania in the 1600s, while also patenting its own SETLcoin crypto-settlement system to trade real assets such as property deeds and stocks (unlike others, however, it will be verified by the US Securities and Exchange Commission). A great way to conceptualise blockchain is as an 'Internet of value'.

Time will tell which cryptocurrencies will endure. What will be likely to endure are Ethereum-based open-protocol applications such as Storj (decentralised storage) and IPFS (an alternative to HTTP), among scores of others in pre-alpha stage that comprise a whole new base-layer for the Internet. They have the potential to shake up industries weighed down by legacy systems. Leaders in banking, insurance, supply chains, retail, transportation, energy, voting, real estate, crowdfunding and charity are taking notice. Even the idea of the corporation itself may evolve with the rise of distributed autonomous organisations (DAOs).

Wine is no exception. It's ripe for potential blockchain shake-up from grape to glass. Current blockchain platforms seek to tackle supply chain inefficiencies, quality and certification issues, and counterfeiting. Producers could track wine shipments across every step through brokers/négociants, importers, wholesalers, distributors, retailers and auction houses via a transparent, decentralised and permanent record to verify authenticity and reduce time, costs, labour and waste across the supply chain. Each transaction can be trusted as a smart contract without the oversight of a middleman. Bulk wine producers and shippers, for example, could trust the contents of their containers and use sensors to track alcohol, pH, sulphur, temperature and location in real-time public records.

Blockchain companies in this space include Hijro, Provenance and SkuChain. Heavyweights IBM and Maersk recently joined forces to develop and launch a blockchain global supply chain platform. Consumers can also benefit. Shoppers could ensure that producers are exactly who they say they are when it comes to biodynamic practices, sustainable farming and sulphur use. They could also pinpoint the exact vineyard plot from which the wine in their hands originated. Collectors could verify that the bottles in their cellar aren't counterfeit.

A wine blockchain platform up and running was launched by Italian Padua-based startup EZLab in partnership with EY. Their Ethereum-based blockchain tracks and offers consumer information for Italian wine. Case in point, Cantina Volpone's Falanghina IGP wine is the world's first blockchain-certified wine. Importers, wholesalers, distributors and consumers, by scanning a QR code on the bottle with their smartphone, can track harvest date, fermentation tank, lot production, bottling date, and water consumption as well as all vineyard interventions and winemaking processes. With blockchain, this is all recorded automatically, securely and out in the open without the sign-off of any middleman from the moment the grape is picked. More wines like this are expected to hit the market in the coming years. In China, Shanghai's Waigaoqiao Direct Imported Goods (DIG) partnered with Price Waterhouse Cooper (PwC) and BitSE to deploy an Ethereum-based platform called VeChain for imported wine distribution in China, where wine fraud, quality and safety concerns loom large. [See our 2010 Chinese fakery series – JR]

Perhaps the most prominent blockchain application is Everledger's Chai Wine Vault to optimise provenance authentication and help fight wine forgery (à la Rudy Kurniawan). Everledger partnered with Maureen Downey, global wine-fraud expert and founder of Chai Consulting, to develop Chai Wine Vault, a Linux-based system that permanently records fine-wine information, including ownership records, high-resolution photographs, and Downey's 90-point authentication system, The Chai Method (TCM©). For example, in late 2016, a bottle of 2001 Château Margaux was authenticated as a block by Downey, meaning that any time the bottle changes hands from that moment on, it's permanently and automatically updated on the blockchain. Everledger has had similar success with diamonds.

Time will tell how the wine industry will embrace blockchain. Producers, consumers and everyone along the way stand to gain, although centuries-old systems of middlemen will be tough to nudge. The supply chain for bulk and bottled wine from grape grower, winemaker and bottler all the way to the drinker's lips is complex and the pay-off in squeezing out supply-chain inefficiencies and improving quality and provenance is high. This is just the opening chapter. The story of blockchain wine is about to unfold.