Could blockchain solve China’s food and drug safety problems?

A scandal involving a Chinese pharmaceutical firm that forged documents relating to a rabies vaccine for babies has sparked a debate about whether blockchain, the technology best known for underpinning bitcoin, could be a solution to the nation’s food and drug safety problems.

Shenzhen-listed Changsheng Biotechnology was found to have fabricated production documents and product inspection records, and modified process parameters and equipment, according to the China Food and Drug Administration. The company and members of its management are currently under investigation by the police.

Chinese President Xi Jinping orders crackdown over ‘appalling’ vaccine scandal

Amid growing discussion online, many are advocating the use of blockchain in the pharmaceutical industry to restore public confidence in the health care system.

Li Xiaolai, one of China’s best known virtual currency entrepreneurs who has 290,000 followers on the microblogging site Weibo, wrote on Monday that he believes the technology can help improve transparency.

“If the entire vaccine supply-chain was to use the token-free blockchain solution to record everything from start to finish, then most of the problems in drug safety could be solved,” Li said.

One Shenzhen-listed software firm, YLZ Information Technology, saw its shares surge by nearly 10 per cent on Tuesday after the company was quoted in Chinese media as saying it is looking into how blockchain can be used to enhance vaccine safety.

There have already been a number of initiatives in China that use the technology to trace and track the entire supply chain of food, from farm to store, by simply scanning quick-response codes, including one led by US tech giant IBM.

In December IBM, along with China’s second largest e-commerce firm JD.com, US retailer Walmart and China’s Tsinghua University set up the Blockchain Food Safety Alliance to improve the tracking, traceability and safety of food, thereby increasing transparency across the country’s food supply chain.

But many in the blockchain industry have questioned whether the technology really could be the answer to food and drug safety problems.

Blockchain is a digital data structure, or ledger, commonly used for verifying and recording transactions using a network of computers rather than a centralised authority. Each entry, or block, is connected to the previous entry and is secured with cryptography, making the ledger resistant to modification.

Blockchains are slow and expensive. The amount of data that can be stored in them is minuscule

Leonhard Weese, Bitcoin Association of Hong Kong

While it might seem a natural fit because of its strength in transparency, there are some limitations.

Blockchain can still carry fake data if someone intends to falsify records, according to a report published yesterday by the research department at China’s largest social media and gaming firm, Tencent.

The report also said that since there are multiple parties on the blockchain, it is necessary to educate companies that would be part of the system and to have regulations governing its use.

“Blockchains are slow and expensive,” said Leonhard Weese, president of the Bitcoin Association of Hong Kong. “The amount of data that can be stored in them is minuscule.”

And there are other systems that are also decentralised and transparent, but far cheaper and faster to use than blockchain, according to Weese.

Another challenge in improving safety in food and drugs is how to record the movements of something that cannot be digitised – an apple or a capsule, for example.

“Instead we should first figure out how to put it in a computer, then on the internet, and only then should we start talking about blockchains,” Weese said.