Conflict Minerals Are A Huge Problem. Ethical Supply Chains Are The Answer — Here’s Why

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Remember the movie Blood Diamond? It was one of the biggest movies of 2006, and sparked a global conversation about conflict minerals, and the exorbitant price consumers are willing to pay for these rare commodities.

That social issue proves to be as much of a problem today as it was a decade ago.

However, steps are being taken to combat these unjust practices. In May of 2017, a new EU law was passed to “stop conflict minerals and metals from being exported to the EU, prohibiting smelters and refiners from both using conflict minerals and mine workers from being abused.” By 2021, EU companies will be required to prove that the minerals and metals they import are from responsible sources.

The challenge, however, is how to do this.

Blockchain technology and data-driven supply chains have the ability to solve this global issue.

One of the projects we’ve recently embarked on here at Chronicled is co-developing a platform for securing the identity and provenance of gold products on a blockchain data network. But gold is really just the beginning. These same processes will soon be applied to tracking everything from conflict diamonds, apparel produced in child-staffed sweatshops, and other commodity products that pass through conflict zones.

Conflict minerals have funded wars for centuries, and unfortunately, those wars stem from business interests.

I have a huge personal desire for this kind of work because of the impact it can have on a humanitarian level. Conflict minerals have funded wars for centuries, and unfortunately, those wars stem from business interests. So, while it’s certainly a fascinating project from a technology standpoint, supply chain transparency and ethical supply chain practices can shed light on several billion-dollar industries thriving behind closed doors — and move them out into the open.

The way we are aiming to solve these issues is with what’s called a destructible NFC tag, which is a crypto seal we invented to provide a unique, unforgeable identity linked to a blockchain backend, tracking the complete identity of a gold brick. Everything from proof to identity and custody, to all the different checkpoints and hands it touches along the way, is measured and recorded, ensuring the gold brick is coming from a conflict-free zone and adheres to all socially responsible practices.

Here’s how it works (and you can imagine its other potential applications):

In order to uphold these Responsible Gold standards, we are developing up to 5 types of tamperproof, cryptographic identity tags for the gold industry.

For example, these tags would seal the pails coming out of the mines, secure the palettes when gold is shipped in intermediate stages of the supply chain, and be applied to the bullion itself.

Software tools would then register, verify, and transfer the digital identity corresponding to a physical unit of gold to the blockchain platform, proving custody of a physical unit of gold and then logging the proof of custody event to the blockchain.

Software then registers the cryptographic identity associated with a physical gold unit, and verifies its physical identity against its digital identity. This enables the transfer of physical custody of gold from one owner to the next in the supply chain without the possibility of a double spend, including support for aggregation of individual gold units into larger palettes or handling units.

The software then proves that owner is within physical proximity to a specific unit of gold and ledgers this proof to the blockchain platform as an immutable record.

Or, to put it simply: every single interaction a gold bar has is recorded on a public ledger.

What we’re really doing here is more than just improving a supply chain process. The idea is to tackle a very complicated social issue by enforcing transparency, which requires ethical practices to be upheld.

The exciting part about blockchain’s role in these types of supply chains, however, is their applicable value in solving other real-world problems. These same processes can be applied to other commodities and goods, like clothes and pieces of technology that are sourced from third-world countries through the use of child labor or unlawful employment practices.

As we’re learning, legislation and even education is an important piece of the puzzle here, but it’s not enough. These social issues are widespread, and while blockchain technology might not be the end-all solution, it is certainly a step in the right direction toward a more ethical supply chain process.