Blockchain and flowers are not two words that often find themselves together, but with the huge advancements that blockchain can provide to drive supply chain transparency; it is evident that the impact of blockchain on the floral industry will undoubtedly be huge. We discuss FloraChain, which tackles exactly this problem, and conduct an in-depth technical analysis.
Blockchain is redefining trust, by utilising a distributed ledger that can facilitate, record transactions, and track assets in a business network. An asset can be tangible like flowers, factories, equipment, cars or intangible (intellectual property) such as patents, branding, and copyrights. By implementing peer-to-peer technology, the blockchain network becomes both economical and efficient by eliminating duplication of effort and the need for intermediaries (middlemen in the Floral Industry). These characteristics are particularly desirable because by using consensus algorithms to validate information, the network also becomes more secure and less vulnerable to attacks.
In simple terms, a Blockchain must meet all these criteria:
- Consensus – as discussed above, for a transaction or data transfer to be valid, all participants must agree on its validity. This encourages increased collaboration between farmers/growers, shipping/logistics, wholesalers and florists. Using these consensus mechanisms, it is entirely possible to create a Blockchain of Flowers, a supply network that can track the flower supply journey from grower to consumer.
- Provenance – the participants of the network should know where the asset came from and how its ownership has changed over time. This is vital for logistics of flowers, there is no universal standard for shipping companies and certain flowers have strict temperature, humidity and time requirements.
- Immutability – none of the participants are able to tamper with a transaction after it has been recorded on the ledger. FloraChain is moving to a global-based token transaction, FLORA, transactions will be secure, cheaper and faster. Immutability will ensure the storage of Grower Certifications inside a blockchain, to provide a higher degree of transparency to the floral industry. Buyers will need to know how their flowers were grown, harvested, packaged and shipped.
- Finality – a single, shared ledger providing the proof of ownership or the completion of a transaction. This is the Blockchain of Flowers.
By uniquely leveraging blockchain technology, FloraChain is aiming to fix these current issues within the $105 billion Floral Industry:
- Propagation – There is no universal database of IDs for floral varieties developed by breeders, this leads to weak IP protection. We will discuss later how blockchain for supply chain can utilise credibility, public trust and traceability within a global network.
- Farmers/Growers – These are the source of flowers, and often they are unknown or unclear. There exists a lack of communication and data for global buyers to see product availability, price and source. It is estimated that 10-20% good crop is wasted, as buyers are not matched with sellers. Supply chain with blockchain allows growers/farmers to improve inventory management. See Walmart’s success story with using IBM Blockchain to track food products through its supply chain.
- Importer/Wholesaler – Much like Farmers/Growers, there is a lack of universal method to exchange product information for buyers and sellers, with various different marketplaces, currencies, languages, and systems proving to be a problem for sellers. FloraChain aims to verify information on blockchain, to reduce wastage and ultimately allowing growers/wholesalers to sell their flowers at a higher price.
How does FloraChain aim to drive value in the floral supply chain?
The flower ecosystem is enormous, with over 10,000 flower farms, 100,000 retailers, 400 million consumers and more than $100 billion in floral trade. FloraChain is seeking to unite these participants under one global standard, the digital floral currency; FLORA. FloraChain will explore blockchain-based smart shipping containers, which add more accountability and work with IoT manufacturers to track and transmit critical data. In turn, this will create a traceable, credible, efficient supply chain.
Primary potential benefits
- Increase traceability of material supply chain to ensure corporate standards are met.
- Lower losses from counterfeit/gray market trading.
- Improve visibility and compliance over outsourced contract manufacturing.
- Reduce paperwork and administrative costs.
Secondary potential benefits
- Strengthen and improve corporate reputation through providing transparency of materials used in products.
- Improve creditability and public trust of data shared.
- Reduce potential public relations risk from supply chain malpractice.
- Engage stakeholders.
The paper trail of a shipping container
The ocean freight industry accounts for 90% of goods in global trade, however the transport remains highly dependent on a flood of paper that is never digitized. Shipping flowers overseas: the journey from grower to retailer is complex – FloraChain aims to fix this.
- Global flower trade is near USD 105 billion.
- 700,000 metric tons of cut flowers are shipped each year.
- Shipping information must pass through many hands, increasing potential for delays in transport.
- One shipment can require sign-off from 30 unique organisations and up to 200 communications.
- One lost form or late approval could leave the container stuck in port
- The entire process can take more than one month, causing unnecessary expense and loss of flowers.
However, this process will soon be digitised, thanks to smart containers and FloraChain technology. Delays will be reduced, resulting in significant cost savings for all parties.
FloraChain have also mentioned in their whitepaper that they will work with primary IoT manufacturers and even develop their own proprietary telemetry data trackers in the future. This may have the following positive implications for the Floral ecosystem:
- Greater transparency of shipment progress improves efficiency.
- Trust grows, as all transactions are indelibly recorded.
- Accuracy is improved and costs are cut through IoT participation.
- Participants gain the ability to optimize and automate business processes through IoT.
- Future vision allows for “freight autonomy.”
Tokenomics and ICO
There is no doubt that by utilising the FLORA token – based on the Ethereum ERC20 Standard, all parties will be able to cut their costs and save efficiency by establishing a global currency. Quick facts regarding the ICO:
- Token name – FLORA
- Pre-sale – May 2018
- Public Sale (if needed) – Late June 2018
- Soft cap – $10 million
- Hard cap – $30 million
Refer to www.FloraChain.io for latest and up to date information. The token will be allocated as follows:
- Public Sale – 40%
- Reserve – 15%
- Founders – 15%
- Advisors and Partners – 10%
- Flora Laguna – 7% (This functions as a liquidity pool to account for volatility for the FLORA token)
- Bounty & Rewards – 5%
- Early Investors – 8%
This is the projected End of Year One data regarding the token:
In the whitepaper, FloraChain reference Fred Krueger’s article on Tokenomics to base their theories, the value is important because it reveals how many transactions are occurring for any given token in relation to how many tokens a company has circulating in the market. As a frame of reference, Ethereum’s R value is at about 0.1. This is outlined brilliantly here.
FloraChain takes excellent precautionary steps to ensure token stability in a highly volatile cryptocurrency market, through the use of staking. According to the whitepaper, it goes as follows:
FloraChain is the first of its kind and with that comes extra challenges and risks, but also enormous potential. FloraChain is seeking to revolutionise a unique industry, and they have come to the table with a solid plan to take supply chain one step further. It is no doubt that blockchain is a game changer and there is clear value in the problem FloraChain aims to solve, whether they will succeed is not a certainty, but it is one you should definitely watch out for.
In future reports and articles, we will discuss in-depth the impact that FloraChain has on specific stakeholders in the ecosystem, and why that matter to you. Stay tuned.
Further reading and references: