(Yicai Global) June 1 -- Nadia Hewett, Blockchain and Digital Currency Project Lead, World Economic Forum, recently said in an interview with Yicai Global that to improve regulators’ “sensitivity,” the WEF had released a toolkit that compiles the experience of 80 companies and 20 governments with 40 case studies on how to apply blockchain technology to the supply chain.

It also summarizes the problems encountered in various applications of blockchain, such as tax considerations, data protection and issues of compliance with the EU’s General Data Protection Regulation.

The economic crises caused by Covid-19 not only significantly weakened global consumer demand, but also laid bare the fatal flaws in the existing supply chain. In response, the Switzerland-based WEF, which bills itself as “an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas,” recently released its toolkit titled ‘Redesigning Trust: Blockchain Deployment Toolkit,’ which explains how to use it on distributed ledgers to create a stronger supply chain. Hewett is also one of its lead authors.

The 244-page guide consists of 14 modules, including table of contents, main issues, explanations, and risk assessments for tax issues and data privacy, alliance ecosystems and governance, public and private chains, network security, interoperability and digital identity.

The modules and problems of the WEF blockchain are extensive, comprehensive and strict. Almost all blockchain projects encounter the problems and challenges this toolkit addresses. It is thus of strong guiding significance in improving digital ledger undertakings.

Covid-19 Speeds Blockchain Practice

Covid-19 has changed global trade in many ways, and its long-term impact will not fully emerge for several months or even longer. WEF believes that blockchain can solve not only the stagnation of the supply chain stemming from the shutdown of various economies, but also the overall ability of the supply chain to resist risks.

Blockchain cannot solve all problems, but definitely helps solve typical ones Covid-19 causes, Hewett said. For example, it can aid in solving issues with traceability of medical equipment and track small-scale orders. It even helped a medical center solve the problem of fake masks. Such issues can be solved by blockchain’s point-to-point non-tampering feature.

As the Covid-19 broke out, companies were likely to cooperate with new suppliers, e.g. when firms turn to making masks or ventilators, they need to cooperate with new suppliers. In such case, how to ensure that a supplier is credible becomes a key issue, Hewitt said.

To ensure the toolkit is able to provide the most useful suggestions, WEF has collaborated with private companies and government entities. Its toolkit encompasses many topics technical personnel or business leaders easily overlook, drawing on the lessons of others. Startups thus usually do not realize the tax issues of blockchain deployment until the later stages, and so this toolkit has a complete section that outlines tax considerations.

The target group of the toolkit, which spans the entire spectrum of the private sector, government organizations, academic institutions and others, guides them in designing their own blockchain diagrams.

This public document that brings together valuable lessons from previous generations in the deployment of blockchain, helps small and medium-sized enterprises rid themselves of outdated marketing stories, Hewitt said. It also truly masters the specific methods of blockchain implementation. At the same time, WEF also hopes to give this toolkit to countries and regions with insufficient information to help them solve their current supply chain crises, and the group desires to enable small and medium enterprises to regain their vitality.

Ensuring Data Security

In the process of adopting blockchain technology, the risk of losing control of data is a major obstacle facing many supply chain organizations. How to achieve confidentiality against other nodes on the chain while sharing data information with the licensed and trusted nodes, and how to achieve the integrity of the data on the chain are issues worthy of discussion.

Not all data can be shared, even in the blockchain ecosystem, and so protection is necessary, Ziyang Fan, Project Head Digital Trade, World Economic Forum, told Yicai Global.

First, confidentiality is paramount. Supply chain transactions are not transparent to all participants in a blockchain network, and some information still needs to be kept under wraps. In other words, transaction information between parties involved in the supply chain may need to be recorded on the blockchain, but other information also needs to be kept secret from such counterparts.

Second, business is also an issue to consider. For example, some organizations hope to use supply chain data in forecasting and planning. However, the participants in the supply chain may decline to provide the raw data required for many reasons, such as companies worrying about competitors getting hold of it. Blockchain solutions can use encryption to allow suppliers and buyers to take a more collaborative approach and report data more authentically, without completely yielding control or compromising a competitive advantage.

Building a GDPR-Compliant Ledger

Another key issue is the compliance of the blockchain with the GDPR and how to use the blockchain for GDPR data privacy protection. The GDPR is an EU law that came into effect in May 2018that aims to give individuals more control over their personal data. Personal data refers to information related to identified or identifiable natural persons. This also raises questions about the new compliance obligations of blockchain networks, both within and outside of the EU.

When applying blockchain technology to the supply chain, compliance requirements for personal data protection are likely to cause parties to retreat, because the cost of non-compliance is too high. In addition, regulatory requirements such as the GDPR seldom factor in blockchain, so they do not take account of the specific circumstances related to it. To address this issue, a module in the toolkit focuses on data protection and privacy obligations under the EU rules.

Editor: Ben Armour