This week's interview is with Marton Ven, CMO of TE-FOOD. TE-FOOD is a farm-to-table fresh food traceability ecosystem on the blockchain. It provides full physical (identification materials) and virtual (client software, blockchain ledger) elements which are necessary to implement food traceability. Stay tuned for part 2!

I’m always fascinated to see the real-life adoption of blockchain technology, and you are already tracking products with QR codes in stores right now (although not yet on a public chain). How did this adventure start for you and when was decided that TE-FOOD wanted to start tracking all their products on a blockchain?

In 2015 we started to work with the government of Ho Chi Minh City in Vietnam to create a fresh food traceability system to make the pig supply chain more transparent, improve food safety and consumer trust, and decrease food frauds.

TE-FOOD launched in 2016, tracking daily 1200 pigs. During the years, this has grown to 18 000 pigs per day (sometimes over 20 000). During 2017, the system was extended to track chickens and eggs as well from farm to table.

As the adoption grew, we experienced the distrust amongst the food companies. The food industry is full of debates amongst the supply chain companies, maybe more than in any other industry. It turned out that many times the companies didn’t trust that we, a third party could handle the critical supply chain data (e.g., freshness information) in an unbiased manner. Although we have never touched the data, in theory in a centralized system we, as operators we can access the data and would be able to modify it.

First, we had third-party audits to prove we don’t touch the data, but why would these companies trust an auditor if they don’t trust us? So we started to seek another solution and found in early 2017 that blockchain does exactly what we need. We started experimenting with it and decided this is the way we have to go.

Your node tiers are pretty complex, having different nodes for different functions. This would probably take a couple of years to develop. As you pointed out the token model of TE-FOOD can change over time, and there will be different blockchain solutions in between, depending on current technologies. Currently, you are experimenting with storing the hash on the Ethereum testnet. Can you tell something about this short-term solutions? For example, how will TE-FOOD masternode owners be rewarded in this model? Will this use a Prove of Stake model, where higher tier nodes will receive more Calories (your second token)?

We are in the corporate IT business since 1996. We are founders and leaders of two IT companies which made custom hardware and software developments for large European organizations, providing millions of transactions each day.

We have learned that IT develops so quickly that we have to be very careful to select an environment we plan to build on a long term. And here is crypto, which is right at the start, it has all the problems of immature environments, but is developed with an extreme pace. From a business viewpoint, it’s a waste of money and efforts to spend years and a lot of resources to try to build large-scale application in this situation.

But as our customers require the use of blockchain ledger, we planned to build a shorter term solution for the next 12-18 months. We believe that a lot of current technology problems will be solved by then, and we have time to find the proper framework to build on. If we would try to build a long-term solution right now, we could end up spending a lot of money, and develop obsolete tech.

The same approach is valid for the token economics. As this industry matures, as the regulation changes, we have to adapt to the changes. Rules and structures can become obsolete too quickly in this industry, so we have to keep refining ours. We believe most of the crypto projects will change their token economy in the future as the regulations will be more clear.

Putting the traceability data on Rinkeby, the Ethereum testnet was an effort to show our commitment towards transparency through blockchain. Until we have our own blockchain ready, we continuously publish the traceability records there, but we will move the data to our blockchain when we launch it during the autumn this year.

I’ve seen a lot of “VeChain vs TE-FOOD” comments, and while I think there is enough room in the supply chain business for multiple successful projects, I’m also seeing an opportunity for cooperation. Where you are spending a lot of money on fees for Ethereum transactions, you’d be able to hold VeChain tokens to generate the gas for transactions. They are also working with temperature IoT sensors and because VeChain is based on the Ethereum platform, you could use the same smart-contracts you would use for Ethereum. Have you considered this scenario, and what do you think of it?

First, we don’t consider Vechain or any other crypto company as a threat to our business. We even wrote a blog post about this.

We believe in cooperation, and would be happy to cooperate with VeChain in the future. As TE-FOOD is an end-to-end solution (we provide physical identification materials, client applications, and blockchain ledger), we can and are happy to work with customers who want to use just a part of our services. Right now we have customers who don’t use our security seals, or our B2B mobile app, because they already solved internal traceability. The same way, we are already working with companies which want to use our security seals and B2B mobile app, but e.g. Vechain as blockchain ledger.

IoT sensors will be very important in food traceability in the future to replace as many manual data entry as possible.

The first problem, however, is that there is a lot of data (feedings, use of vaccines, use of antibiotics, veterinary check results, lab test results, etc.) which can not be measured by IoT sensors, at least not today.

The second problem is that IoT sensors put a huge financial overhead both on implementations and on maintenance/servicing as well. Most companies in the fresh food industry in emerging markets cannot afford this extra cost.

This is why we think the adoption of IoT will be a slow process in the next 5-10 years.