The State of California Explores Blockchain Applications

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The State of California has just published its Roadmap to Blockchain. The diverse working group had one year to explore different use cases from public vital records and personal health records to supply chain and educational credentials.

After a year of thorough research and analysis, the Working Group has identified three pilots for further consideration:

Department of Motor Vehicles

The Department of Motor Vehicles (DMV) pinpointed three stakeholders for pilots where blockchain technology could improve its current processes. These included creating a virtual wallet for individual identification, building a blockchain platform for tracking vehicles’ lifecycle, and creating a comprehensive security architecture for sharing driver records. Unfortunately, as of today the DMV has put this project on hold to focus on the State’s response to the COVID-19 pandemic.

Expected benefits

– Updated and consistent vehicle information

– Lower cost and reduced time for vehicle transfers

– Faster and more efficient DMV service

– Complete vehicle custody history

– Synchronized records for all interested parties

– Internet of Things (IoT) vehicle linkage

The Department of Food and Agriculture

The California Department of Food and Agriculture will explore the use of blockchain to track and trace the source of food-borne contamination. The Agency will cooperate with transporters, wholesalers and retailers to locate products in the distribution network to expedite the withdrawal of such products. The CDFA have already expressed interest in developing a pilot, working with the agricultural industry in order to increase transparency in the food supply using blockchain.

Opportunities for Blockchain Application:

Product traceability

Food-borne illnesses affect one in six Americans, leading to hundreds of thousands of hospitalizations, and more than 3,000 deaths yearly. That issue costs the U.S. economy more than $93 billion annually. And blockchain-based supply chains can provide accurate and immutable records of all transactions across the chain.

Authenticity and product provenance

Modern centralized systems, such as EPCglobal, use barcodes, unique electronic product codes (EPC), and radio frequency identification (RFID) technology to track items. However, those systems rely on centralized authorities and databases to issue a certificate. Nevertheless, such systems are basically insecure, because they have single points of failure and that makes them susceptible to cyber attacks and frauds.

Process transparency

A very important aspect of supply chains concerns process transparency. Stakeholders should be aware of what happens at each point in the chain. If a retailer or a distributor receives spoiled goods, it may be impossible to find out at which point of the chain the damage occurred. As a result, the supplier of the damaged goods or a member of the chain who damaged the goods will have no incentive to improve their practices.

The Secretary of State’s State Archives Division

The California Legislature could work with the Secretary of State to find an intelligent solution to move State Archives online. A blockchain platform will improve accessibility and storage capacity for the hundreds of documents that State agencies generate each year.

Next, the Working Group established a definition of blockchain:
“Blockchain is a domain of technology used to build decentralized systems that increase the verifiability of data shared among a group of participants that may not have a pre-existing trust relationship.”

According to the report, such systems must include one or more “distributed ledgers,” specialized datastores that provide a verifiable ordering of the transactions recorded on the ledger. The systems may also include “smart contracts,” that allow stakeholders to automate predefined business processes.

The Role of State Government

The Working Group considers establishing a Blockchain Innovation Zone to incentivize blockchain companies working to solve California’s most critical issues. To promote best business practices, the Group will also support an advisory group that would include governmental agencies, consumer advocacy groups and other industry experts. A special unit within the California Department of Technology will monitor developments in the blockchain industry. Some of the responsibilities of this unit will include:

– Overseeing and managing consumer protection issues

– Train the IT workforce within government agencies

– Working with the state legislature and local governments to create flexible and adaptive regulations

– Organizing conferences to encourage blockchain business development in California

– Hosting educational programs to teach the broad public about consumer protective measures related to blockchain and guarantee that laws are robust.

Related: Governments Pave the Way for Blockchain Technology

Pilots and Related Case Studies

IBM Food Trust provides tracking for food products in supply chains. The platform’s primary focus is to cut the  the chaotic food alerts by speedily identifying the origin of contaminated products. Members of the consortium can trace food back to its source in seconds, versus 6-7 days with standard procedures. Key members include Walmart, The Kroger Co., Carrefour, Albertsons, Nestlé, Dole, and Driscoll’s.

MediLedger is focused on drug compliance based on the Drug Supply Chain Security Act (DSCSA). The pilot started in 2017 and it includes 25 members from many major pharmaceutical companies, retail pharmacies, and medical distributors.

RealT provide tokenization of residential properties by issuing digital securities on the Ethereum blockchain to designate fractionalized ownership. The pilot is actively operating in the Detroit metro and only works with Accredited Investors.

Ownum’s CHAMPtitles is a blockchain portal for processing vehicle titles. They facilitates the process that typically includes a consumer, a car dealer, a manufacturer, a bank, an insurance company, a state DMV, and a title-issuing authority such as a county recorder.