Blockchain and Big Data: Example of Management of Beef Production

Sfawomir Jarka

Warsaw University of Life Sciences—SCCW

Introduction

Tire use of blockchain technology is becoming wider in Poland and in the world. New applications are introduced that use the hard rules of mathematics and cryptography, which are the foundation of blockchain. The technology is used in processes of using distributed databases. Blockchain can be defined as a decentralized and distributed operations register (lansiti & Lakhani, 2017). In the context of managing the beef production process, blockchain is a technology that allows you to create a distributed register of operations and events that took place during the rearing period (Bheemaiah, 2017)- Importantly, from the point of view of the transparency of the decreed operations, this register is available on the Internet and all authorized users have access to it.

Hie main purpose of the study was to present the possibilities of using innovative blockchain technology in improving the functioning of supply chains in the beef market.

Hie first part of this chapter presents the genesis of blockchain technology as well as its development stages and features. Hie second part discusses the reasons for using blockchain in the production of high-quality beef in Poland. Hie last part of this chapter presents the concept of using blockchain technology and discusses limiting factors in beef production in Poland.

Statement of the Problem

One of the answers to contemporary challenges related to globalization and the growing demands of consumers is the development of 4.0 industry (the fourth industrial revolution). Hie effect of this development understood as the implementation of new technologies is the use of Internet of Things or Big Data in agriculture and the food industry (Osmolski & Kolinski, 2018). European agriculture is undergoing transformations aimed at meeting a strong competitive position both on the domestic market and on the global market. High quality and food safety standards play a strategic role in the development model of European agriculture (European Commission, 2013).

An important element of these changes in the model of European agriculture is the improvement of product quality, obtained by improving the supply chain. In order to exclude faulty processes that do not meet the requirements of good agricultural practice, there is a need to identify, monitor, and manage the supply chain on the food market (Osmolski & Kolinski, 2018).

Another problem that occurs in the beef production chain is due to the attitudes of modern consumers. As indicated by the researcher of consumer trends (Vejlgaard, 2008, p. 9), the trend in consumer behavior is understood as a specific direction of change in the lifestyle of consumers, acting objectively, regardless of their will and awareness. In broad terms, it can be said that consumer trends arise as a result of influencing consumer purchasing behavior in the technological, economic, social, legal, political, demographic, and technological dimensions, and as a result affect changes in consumption patterns. Undoubtedly, such a trend that has been observed among modern consumers has become as the result of the use of technology and mobile devices (Nord, Achituv & Paliszkiewicz, 2017). As a result, consumers are increasingly showing adaptation to changes in which goods and services are delivered. The increasing access to information for modern consumers, especially their ability to better understand and transform information into awareness and a rational decision, is a reliable test of the changes and proper consumer behavior which are rational decisions on the innovative market.

Assael (2004) distinguishes four factors that have an impact on the complex purchasing decisions that people make:

■ The nature of the product—complex consumer behavior applies to high-price goods and products referring to the buyer’s ego (cosmetics, clothes)

■ No time pressure (having longer time to think when shopping)

■ The availability of sufficient information needed to assess competing brands

■ The buyer’s ability to process the information properly (innovative attitude)

On the beef market, one can observe the impact and pressure resulting from the factors presented above (Gutkowska, Czarnecki, Glqbska & Batóg, 2018). What problem results from the analysis of the behavior of food consumers who consciously make market choices and are guided by premises that can be empirically verified during their purchasing decisions? This is undoubtedly the problem of trust, and more precisely the problem of crediting factors shaping individual stages of the market chain, especially on the market of selective products, in this case, high-quality beef. Using the advantages of blockchain technology seems to be a natural, currently available solution. In case in which, even the smallest event is recorded in an inseparable chain, starting from monitoring the place of birth and body temperature of the cattle, and then ending with the signature of the transport company to the store. Solution based on blockchain gives grounds to trust that the process of food supply is transparent.

The Genesis of Blockchain Technology and Its Development Stages

Speaking of the history of blockchain technology, one should go back to 1991-It was then that the idea of blockchain technology was described when scientists Stuart Haber and W. Scott Stornetta presented a solution to the world that digitally meant documents preventing them from being altered or falsified. The presented system used a cryptographically secured blockchain to store documents bearing so-called time stamps. In 1992, the project was included (the so-called Merkle Trees), increasing its efficiency and enabling the collection of many documents in one block. However, this technology was ultimately not used and used by anyone, and the patent itself expired in 2004. That is, 4 years before Bitcoin was created.

Tire next step in the history of blockchain technology was RPoW (Reusable Proof of Work). In 2004, the world-famous IT specialist and cryptographer Hal Finney (Harold Thomas Finney II) introduced a system called RPoW. The system was based on receiving invariant and/or indestructible Hashcash, and instead created a token signed by the RSA key, which can then be transferred from person to person.

Hiis solution solved the so-called double spending by maintaining ownership of tokens on a trusted server that was designed to allow users around the world to check their validity and integrity in real time. RPoW can be considered an early prototype and a step forward in the history of cryptocurrencies—on this basis, Bitcoin was built by an unknown creator operating under the pseudonym Satoshi Nakamoto.

Basically speaking, a blockchain is created using distributed register technology contains information grouped into interrelated blocks. Each block is associated with the previous one using a hash, or a link to the previous block, and a time stamp specifying the time when the shortcut was created (Treiblmaier, 2018). In other words, blockchain is a distributed, collective database that enables data collection and communication by registering information through computers that are part of the same network. However, the innovation of blockchain technology relates to the combination of various fields: software engineering, distribution computer science, cryptographic science, and economic game theory (Kisielnicki, 2018).

Thus, blockchain technology essentially creates a digital recording book. Transaction information is stored in chronological order and made available to participating entities. Each transaction placed in this book is verified by system participants. Single block represents a set of transactions that are included within it. Once information or transition is placed to the blockchain it becomes immutable (Steiner, Baker, Wood, & Meiklejohn, 2017). This integrity and immutable system character are accomplished due to the fact that each newly created block has an abbreviation (hash) of the previous block, thus enabling them to work in an inseparable data chain—blockchain (Swan, 2015).

The process of registering and validating transactions takes place without involving both parties and third parties. In most types of blockchain, validating node blocks must find proof of work, that is, to solve the equation whose difficulty is regulated by the adopted algorithm. Thanks to these solutions, blockchain technology ensures the security of data transmission as well as reliability and correctness of data. Each transaction and its value are visible to everyone who has access to the system (lansiti & Lakhani, 2017).

Blockchain is a distributed, collective database that enables data collection and communication by registering information through computers belonging to the same network. However, the innovation of blockchain technology relates to the combination of various fields: software engineering, distribution computer science, cryptographic science, and economic game theory (Sultan, Ruhi & Lakhani, 2018).

The history of the creation of blockchain technology is inseparably connected with the history of the digital currency known as Bitcoin and its creator, the mysterious Satoshi Nakamoto. The true identity of the inventor of one of the most revolutionary technologies of our time remains unknown, despite the fact that this person (or people) hidden under a pseudonym, actively participated for over 2 years in developing the source code of Bitcoin software (Puczyfiski & Kosieradzka, 2018).

The event that is considered an announcement of the Bitcoin network was the registration of the bitcoin.org domain on August 18, 2008. However, the key moment in the history of Bitcoin, using blockchain technology, was the publication of the White Paper document by Nakamoto on October 31, 2008 titled: “Bitcoin: A Peer to Peer Electronic Cash System” (Nakamoto, 2008).

According to Crosby, at the beginning the technology was only used to distribute digital cryptocurrency—Bitcoin (first stage). It was aimed at sending, receiving, storing, and trading cryptocurrencies. Initially, the network was based on long records of code lines, but thanks to this, the authors (Crosby et al., 2015) talk about the security of stored and distributed data. However, it was very quickly noticed that this technology could also be useful for greater digitization of individual business entities, institutions, sectors, and, as a consequence, entire economies. This is the second stage in the development of the technology. Therefore, the use of blockchain technology has been developing dynamically for over a decade, causing the effect of a blockchain technology boom.

Finally, another extremely important stage for the development of blockchain technology is a solution dedicated to business and enterprises. In 2015, thanks to the Linux Foundation, Hyperledger was created, built by the largest technological entities such as IBM, Intel, SAP, or Oracle. Hyperledger enabled the introduction of private blockchain technology to sectors such as banking, insurance, and supply chain tracking. It draws attention to supervise the network and preserve privacy, even by verifying its users in the Know Your Customer (KYC) process. Unlike the blockchain used in the world of cryptocurrencies, participants of the Hyperledger Fabric network are not anonymous; therefore, the transaction validation process takes place in a different way, mainly due to the aforementioned business relations. Tire process is quite more complex and requires the involvement of many nodes, each of which has a corresponding task assigned to it. But once closed, the block is irreversible, and the information stored in it is visible only to authorized parties, and not as in the case of public blockchain for all network users.

Tire definition of food safety is set out in the National Food Safety and Nutrition Act of August 25, 2006, and it means, “The general conditions that must be fulfilled, in particular: the substances and flavours used, levels of pollutants, pesticide residues, food irradiation conditions, organoleptic characteristics and actions that must be taken at all stages of food production or marketing—to ensure human health and life” (Dz. U. [Journal of Laws} from 2015, item. 594). According to Kosior (2018), blockchain solutions and applications take into account most of the problems and needs that arise in managing the flow of agri-food products between individual parts of the chain. These chains are currently extremely developed and complex. This was due to, among others, liberalization of world trade, growing competition between agri-food sector enterprises, product and process innovations. Thus, along with the increase in the level of internationalization of enterprises, the use of blockchain technology increases. As indicated by the Blockchain in

Agriculture Market forecast (2019), the value of blockchain will reach 430 million dollars in the agricultural and food market by 2023. It will be used in supply chains, in the reorganization of decision-making processes of individual organizations, prevention of food-borne epidemics, in the process of reducing the number of frauds in the food industry, reducing the amount of waste, etc. This will be possible thanks to tracking food production processes (in the case of animals, e.g., monitoring their nutritional and health parameters) and transport (Szymczak Si Sadowski, 2019).

 
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