Can block chain solve the problem of wine counterfeiting, at least for future vintages?

That was suggested in the Rudy thread. I think the answer is No, because wine in a bottle is a physical commodity that can be transferred without reference to what the block says, in contrast to Bitcoin and, let’s say, street name non-paper stock certificates, where the block chain is the manifestation of the item itself. However, I am willing to listen to and consider arguments on the other side that it can work. Would anyone like to make the argument?

Please note that I have posed the question for future vintages only. I think it cannot possibly work for existing wine (save perhaps ex chateau bottles never before sold) because there would be no baseline to start the chain.

ABSOLUTELY!

That is why 2.5 years ago I partnered with the leader in both proving authenticity and provenance of diamonds - as well as being a leader in using blockchain technology for logistics and supply chain tracking Everledger, to create the Chai Vault. Everledger was a force behind the new eBay Authenticate platform. They can track diamonds from dirt to finger, and food from dirt to table.

We are already loading in authenticated secondary market wines as well as wines of provable direct provenance. This info will be visible to potential buyers to make more risk adverse, informed purchase decisions - because that is where anti-fraud matters. I am training authenticators all over the world to be able to do secondary market authentication, and have retailers (all in europe so far) using, or interested, in the platform to provide a better, more transparent buying opportunity for their clients. Chai Vault certification also adds value by having an authenticated product which will remain authenticated for insurance uses, or in the event of resale by them, or future generations.

Soon we will be using the technology at production - so the provenance can go all the way to the producer.

Mod: edited out direct contact info for business related emails as well as links to business

After reviewing Maureen’s answer, with which I have no disagreement except as to the 1000% certainty of the verification process for wines already in circulation, I guess I asked the question incorrectly. What I should have asked is . . . Assuming that a winery wants to guaranty that its wines are not counterfeited once they get into circulation, can the winery adopt a block chain system to accomplish the result. I think the answer is “NO” because every owner of the wine would have to agree to cooperate with the block chain and would have to agree not to transfer physical ownership of the wine without also transferring the ownership token on the block chain. You can’t transfer Bitcoin without engaging the Blockchain but you can transfer a bottle of wine without transferring the related token. I can’t figure out a way around that.

Jay, I see your dilemma and agree that the only way I can see to insure the commodity is still verifiable in the block chain is if it remains virtual and secure and physical possession does not transfer until the current owner says I want to consume it. Then it would be removed from the security “container.” I don’t see another answer, either.

You could still have a verifiable chain of possession for those bottles for which every transaction is properly recorded. It would just eliminate bottles that, for whatever reason, loop out of the chain - which is kind of the point. Any bottle that doesn’t have 100% tracing of provenance becomes worth a lot less.

Except I buy a verifiable case of wine subject to the block chain. I then counterfeit 12 bottles and sell them as the originals, using the block chain. You can’t tell whether the bottles I sell you are the same as the bottles in the block chain. I now have the money and 12 bottles to drink.

Alan, how do you verify bottles that are not stored in a secure facility. If the bottle leaves the secure facility, there is no traceability. 100% tracing of provenance requires, really requires security. Transactions mean nothing if the item isn’t secured.

To have a verifiable chain of possession would require extreme security. It would need to be locked away, under a continuous monitoring camera, or with a traceable coded bottle RFID tag that would need to remain in contact with the reader.

To say that I bought a verified bottle and the record transferred it to me is fine. Now I sell the bottle to you and the record is transferred to you, but what physical bottle did I give to you, and how do you verify that it is the same one that I purchased? You can’t.

In a word, no.

I can envision a scenario where the token rides with the bottle. You etch a QR of the public key onto a protected area of the bottle such as the punt, then place the private key on a small chip on the interior of the bottle at the base of the cork in a hermetically-sealed bidule similar to what’s on a champagne crown cap. The chip could be RFID powered, or powered through magnetic coupling, and it would hash the verification to be checked on the blockchain. Remove the cork and the chip is destroyed, destroying the private key.

Given a couple bottles of wine and some lively conversation, I’m sure the crowd here can come up with some good ideas.

Existing bottles would need a trusted third party similar to what Maureen is providing, if I understand it correctly.

With if said bottled is Coravined avoiding your chip and refilled?

I think it would be difficult to prevent with a natural cork, but a synthetic cork could be designed that would prevent a Coravin insertion. An insertion that would destroy the RFID coupling antenna is probably the better bet to implement on both types of corks. A twist off cork might work, but the metal might interfere with the power transfer for a chip.

By the way, I’m not saying any of this is cost effective to implement.

All true. I guess if you want to drink the wine, and are devious enough to repackage that bottle in way that is undetectable, that can’t be stopped. But that doesn’t seem like a very efficient model for counterfeiters to be using.

Really, I don’t much care about any of this, because a) I don’t buy or drink wines that are likely to be counterfeited, and b) I think it’s a little crazy that such wines exist at all.

But if I did care, I would be focusing not on block chain (which, frankly, I find to be the latest cool buzz word people like to throw around, and think is some kind of salvation); I’d be focusing on doing things to a bottle that make it impossible to counterfeit, and easy enough to validate.

Um - Of course we can can tell if the bottles presented are not the same as those certified in the blockchain: That is kind of the whole point.

Chai Vault Certification occurs on the bottle level. We join the ledgers of individual bottles to form cases and connect those together, and to their packaging. Individual bottle ledgers are joined to make the case at production, or in direct provenance with paperwork from the producer/negociant. (no exceptions - we don’t care how “trustworthy” anyone thinks they are - this is about relying on docs and data, no more opaque “trust”!) If it’s not direct from the producer with paperwork, or it does come from the producer as a case - you cannot prove it was a case. By joining the bottles (and the exact wood) at production, in the future you will know you are not purchasing some “Frankenstein-ed case” which is what happens now the VAST majority of the time today, all over the world.

In the user portal online, the owner screens include many views, including one with individual bottle certificates combined as part of a “case” be that 2, 3, 6, or 12 bottles and if there is an OWC attached to the case.

You simply cannot counterfeit bottles that have been certified and loaded into the blockchain; you cannot recreate them, and you cannot empty and refill them. In either case, the bottle will not match the blockchain ledger, no matter how good you are - the AI, tech and strength of the unique “bottle thumbprint” are better.

So when you present your counterfeit case to someone to sell it, when they verify the bottles (and the OWC if applicable) so they can use that data to market the case and demonstrate BOTH authenticity and provenance information to potential buyers - the bottles will not attach to a blockchain ledger. Then the seller cannot place the links/URLs online connecting to the individual bottle’s/ or case’s ledger which displays the online Certificate of Authenticity and Provenance. All the data about the provenance, how, when, where and whom the bottle was authenticated, and all the condition reports about the bottle - will not be accessible if a bottle is pretending to be something it is not. Similarly, if you have reassembled a case of similar bottles that were not originally sold together - the bottles individual ledger’s will not link, and that will tell that story too- but you will be able to see the authenticity and provenance info on the individual bottles.

You cannot counterfeit these. You wont get into a ledger using counterfeits. even if you could - the bottle will not match the unique “thumbprint”: on the ledger which is more than a just chip. The whole point is to display the ledger for stronger sales by the seller as buyers will be able to make more informed, sound and authentic purchases. So this fraud will be discovered BEFORE you can victimize someone. Everybody wins.
(The applications we will be able to integrate for inventory management with the different chips we use will be revolutionary for producers, vendors and collectors. The tech is off the charts! But I digress.)

Yes the Chai Vault has tackled the Coravin issue. Done and done.

Yes, to use the Chai Vault, the seller will have to be have to either be a licensed user, or hire a licensed Authenticator to verify bottle info from the Chai Vault, and upload data for sale and after the sale, including the change of ownership to the new buyer… (We have found it remarkably easy to tie the tech to most existing, modern, retail POS/inventory systems - so it is not a feat to bring it live for a retailer - as long as they are licensed or have one of our people come in and verify bottles.)

Yes, ownership can be encrypted, but the name of the authentication, the vendor, dates, condition reports and provenance data will never be encrypted.

And yes - we are looking at addressing temperature issues. Right now the best battery is about 10 years, and is the size of a credit card. That is something that we will want to be putting into packaging - sooner than later. Most bottles need to be inspectd more than every 10 years… There will be alerts set to inform people when it is time to change out.

This is something thought through by my team and me, and the people that dominate the global diamond trade and logistics of meant and product to computer parts to Chanel perfume and bags. The implications for insurance and buyers in revolutionary - and we are already logging bottles in.

Blockchain certification of bottles of wine and spirits in the Chai Vault is the solution to combating counterfeits and provenance issues: After all, one is moot without the other.

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Sounds fantastic!

That’s great Maureen. It still depends on a trained human to detect the type of swap Jay suggested, and that costs money above and beyond the cost of maintaining the blockchain ledger.

How much money will influence the price point at which it becomes cost efficient to use the technology. So it may be effective for pricier wines but it wont eliminate all counterfeits.

And over time there may be less costly competitors entering the market who may not be as good at the human part. Which can add uncertainty back into the system.

This is not a criticism of what you are doing. I think it’s fantastic. But it’s not practically applicable to all wines.

So what happens if ownership is encrypted and the owner either forgets the encryption code (senility strikes!!!) or dies?

But why would you need blockchain? You can use a chip, put it in the capsule, and it will tell you if the capsule was removed or the cork removed. And it can contain a chemical analysis of the wine, maybe an x-ray analysis, etc. Maybe we can’t determine yet what would differentiate one wine from another, but if the concept of terroir is valid, certainly the wine from St. Emilion must be different from the wine from Seralunga. We have chips for dogs, why not wine? If a bottle has been opened, it’s fraudulent, unless opened at the facilities of the producer and re-corked there. It would eliminate the requirement for visual inspection of the bottle.

There seem to be at least a couple others attempting to do this, but they rely on QR codes on the bottles:

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There are a couple of projects similar to this in the works but for shipping/logistics (WaltonChain/ShipChain etc). Usually they rely on some sort of RFID or tamper proof sensor that can be logged or scanned at each point of arrival/change of hands. Thus, you would know ‘where’ the item is supposed to be, who the (current and past) owner is, and what the (geolocation and temporal) history of said item is since inception.

In the supply chain world, Blockchain is the trendy topic and presented as the answer to … well … everything. I share the skepticism to some degree but also the hope we can gain better transparency - whether for wine or other goods.

I did recently meet a young woman who has started a company that embeds RFID information into basically a thread which can be woven into apparel - providing continuous tracking of the individual item from initial fabric through customer’s use. For example, a store where I bought a t-shirt would be able to flag when I returned to that store and have a sales person suggest items to go with, etc. Pretty astonishing - and potentially … interesting.