Blockchain and RFID are two technologies that can revolutionize trade and commerce by enabling smart contracts and automated payments. In this article, you will learn what these technologies are, how they work together, and what benefits they can offer to various industries and sectors.
Blockchain is a distributed ledger system that records transactions and data in a secure and transparent way. Each transaction is verified by a network of nodes and stored in a block that is linked to the previous block, forming a chain. Blockchain can eliminate the need for intermediaries, such as banks, brokers, or regulators, and reduce the costs and risks of fraud, corruption, or human error.
Another way to think of a "blockchain" is as a subscription to a service that provides real-time information that you can contribute to as well as access, with different levels of access to the information based on your subscription role. Blockchain is how the service operates and how it is architected; the important business aspect is how you interact with it and the level of security and trust provided to you and for you by your subscription as a contributor.
RFID stands for Radio-Frequency Identification, a technology that uses radio waves to identify and track objects. An RFID system consists of a tag, a reader, and a database. The tag is a small device that contains a chip and an antenna, and can store information about the object it is attached to. The reader is a device that emits radio signals and reads the information from the tag. The database is a system that stores and processes the data collected by the reader.
A simple example of the working RFID system is - SmartTag on your car and when the car passes through a toll point on a highway/motorway the reader reads your Tag Id, reads the money balance from the Database and deducts the Toll and updates the remaining balance in the central Database. The vehicle can pass the toll without any human intervention required.
RFID tags can be passive or active. Passive tags are powered by the radio signal from the reader whereas active tags tend to be battery powered. Some active tags can also talk to each other. RFID sensor tags are able to detect characteristics of the environment, such as moisture, shock, temperature, etc.
Blockchain and RFID can work together to create a traceable and trustworthy system for tracking and managing goods and assets. For example, an RFID tag can store information about the origin, quality, and condition of a product, and transmit it to a blockchain network. The blockchain network can verify and record the information in a tamper-proof way, and create a digital identity for the product. This way, anyone who has access to the blockchain network can trace the product's history and location, and verify its authenticity and quality.
A little comment on the "transmit it to a blockchain network" concept: RFID Tags require an interlocutor to handle the sharing. RFID tags store information and can be interrogated to release the information by someone who participates in the blockchain who would then have the responsibility to transmit that info to the blockchain. A network of blockchain-enabled gateways could be created to capture the data from the RFID tags and transmit it to the Blockchain.
Blockchain and RFID technology can provide many advantages across a range of industries and sectors. For example, in supply chain management, these technologies can improve efficiency and transparency by enabling real-time tracking and monitoring of goods, reducing errors and delays, and ensuring compliance with standards and regulations. In the world of trade and commerce, they can enable smart contracts and automated payments, using data from the RFID tags as triggers for executing predefined rules and transactions. Healthcare is also positively impacted, as these technologies ensure the traceability and integrity of drugs, devices, and records. Lastly, in agriculture they can improve sustainability and profitability by verifying and certifying organic, fair-trade, or local products, as well as facilitating access to markets and financing.
Blockchain and RFID have several challenges, such as cost and scalability. Significant investments in infrastructure, equipment, and maintenance are required, which can be costly for some businesses or regions. Additionally, scalability issues arise as the number of transactions and data increases, which can affect the speed and performance of the system. In addition, blockchain and RFID pose potential risks to privacy and security, necessitating proper encryption, authentication, and authorization mechanisms to protect the data and the users. Moreover, blockchain and RFID lack a clear and consistent legal and regulatory framework, creating uncertainty for users and authorities. Furthermore, blockchain and RFID need to adopt common standards and protocols to ensure interoperability among different systems and platforms.
GS1 Standards and EPCIS provides such standards and protocols for interoperability, and have been adopted by many of the blockchain consortiums that are in use today. RFID tags are built as designed to support GS1 Standards. These industry standards are currently in use for track and trace in many verticals, most commonly for Consumer Packaged Goods and Bio-Pharma applications, so the applicability is readily transferrable to Blockchain.