Chronicled, a startup based in San Francisco, wrapped up a technical trial demonstrating a new way to transfer information about goods through cryptographic means without exposing parties to each othe
Chronicled, a startup based in San Francisco, wrapped up a technical trial demonstrating a new way to transfer information about goods through cryptographic means without exposing parties to each other. The system lets multiple participants confirm an item's identity and history through something called a Serialized Global Trade Item Number, or SGTIN, while staying anonymous.
An SGTIN gives every physical object a single unique identity that works everywhere and lasts forever. As goods travel through supply chains involving different owners and locations, the SGTIN tracks them. Chronicled applied a cryptographic model called Zero Knowledge Succinct Non-Interactive Argument of Knowledge, or zk-SNARK, developed by researchers at UC Berkeley and MIT. This model lets people transfer possession or ownership of an SGTIN within a supply chain where multiple parties participate, all while staying secure and hidden.
The system enforces a rule: only one partner can hold an SGTIN at any moment. If the network detects the same SGTIN in two places, it flags a counterfeit. Smart contracts built into the system allow regulators to trace an asset's full history later without knowing anything beforehand or needing to trust the organizations moving goods through the chain.
Chronicled is starting with pharmaceutical supply chains. A deal with The LinkLab, a supply chain consulting firm, will build a blockchain system that follows the Drug Supply Chain Security Act. That law requires pharmaceutical companies to track every product from beginning to end by 2023 on a system everyone can access together. It also aims to stop data leaks and protect privacy in an industry plagued by both.
"We've put real work into solving this privacy problem," Ryan Orr, Chronicled's CEO, said. "Chronicled is now the first company to show this secure, cryptographic way to move physical assets without revealing who they are. Next, we'll work with industry partners to take the workflows they use today and run them on our technology, while making sure it handles volume, bundling, returns, recalls, and performance."
Chronicled described this pilot as a starting point for shutting counterfeits and fake components out of supply chains. Fake goods represent a major expense for American companies, costing more than $200 billion each year. Counterfeits show up everywhere: designer bags, perfume, machine parts, chemicals. Some fakes endanger people. Auto parts break down. Fake drugs sicken patients. Knock-off toys injure children. Diluted baby formula starves infants. Medical devices give wrong readings.
The OECD and the EU's Intellectual Property Office track counterfeit imports at close to half a trillion dollars per year. That's roughly 2.5 percent of all global imports. The World Health Organization puts the problem even sharper in some regions. In parts of Asia, Africa, and Latin America, perhaps 30 percent of medicines for sale are fake. Even across the world, roughly one in ten medicines is counterfeit.
"This pilot kicks off work toward rebuilding how assets flow through supply chains," Maurizio Greco, Chronicled's CTO, said. "We use blockchain to create a permanent, unchangeable record of where every object has been, which keeps goods traceable and stops counterfeiting and related crimes."
Chronicled plans to expand the approach into other areas. One possibility: using internet-connected devices to verify someone physically has a shipment before the next trading partner can take ownership of its SGTIN. Another: ensuring contracts execute on their own, with funds transferring the moment a shipment arrives.
Other startups are plugging blockchain into supply chain problems. Everledger, based in London, created a permanent blockchain record for diamonds, logging certification and all related sales. A different London company, Provenance, lets physical objects have a "digital passport" that proves they're real and shows where they came from.
