While Non-Fungible Tokens (NFTs) are often closely associated with the art world and crypto assets, an innovative application of blockchain technology can also see them used for supply chain integrity.

NFTs are unique digital tokens that represent ownership or proof of authenticity of a specific item or piece of digital content.

NFT applications in supply chain

When applied to supply chains, they can offer several benefits, including:

• Provenance tracking: NFTs can be used to track the origin and history of products within the supply chain. Each product can be assigned a unique NFT that contains information about its manufacturing, transportation, and handling. This ensures transparency and allows consumers to verify the authenticity and origin of the products they purchase.

• Counterfeit prevention: NFTs make it difficult for counterfeit products to enter the supply chain. Since each NFT is unique and tamper-resistant, it becomes nearly impossible to replicate or alter the NFT associated with a genuine product. Buyers can scan the NFT to confirm the product’s authenticity.

• Quality assurance: NFTs can also store data related to quality control and testing procedures. This information can be accessed at any point in the supply chain, ensuring that products meet the required quality standards before reaching consumers.

• Traceability: Supply chain participants can use NFTs to trace the movement of goods from the source to the end consumer. This can help identify bottlenecks, inefficiencies, and potential issues in the supply chain.

• Smart contracts: Smart contracts, which are often integrated with blockchain and NFT technology, can automate various aspects of the supply chain, such as payments, verification, and compliance. For example, payments can be automatically released when certain conditions are met, reducing the risk of disputes.

• Consumer confidence: NFTs can enhance consumer confidence by providing a verifiable and transparent record of a product’s journey. Consumers can scan the NFT with a mobile app or visit a website to access detailed information about the product.

• Environment: NFTs can also be used to track the environmental impact of products. Information about the carbon footprint, recycling options, and sustainability certifications can be stored in the NFT, allowing consumers to make informed choices.

• Marketplace integration: NFTs can be integrated into e-commerce platforms and marketplaces, making it easy for buyers to verify the authenticity and integrity of products before making a purchase.

• Regulatory compliance: NFTs can help companies comply with various regulations by providing an auditable and immutable record of their supply chain activities.

More education around NFTs needed

Bryan Daugherty, Global Public Policy Director for the BSV Blockchain Association notes that there is still a great deal of education which needs to be provided to policymakers and governments about NFTs and blockchain in general.

He adds that NFTs should be considered more for their data capabilities compared to micropayments. This includes document verification systems with the capability of storing hashes of documents on-chain.

‘Anytime that you need to provide proof that a job is done or issue a form for something (we can use blockchain and NFTs). Imagine a building permit or scaffolding in New York City, the inspector can just scan the token and see if it is authenticated.

‘So it really just improves the efficiency and cost-effectiveness by creating a transparent, immutable ledger of events,’ he said.