As I said in a previous post, one of my favorite films on wine is the documentary Sour Grapes. A story of fraud and scandal in the world of wine and wine auctions. I won’t rehash that post here but simple it was the story of a man who passed fake wines off as authentic to some of the wealthiest collectors in the world.
What can collectors and auction houses do to combat these frauds? One answer is Blockchain.
At its basic level, Blockchain is a ledger. Blockchain records data which is immutable due to the fact that each block is connected to the block before it and to change the data in the Blockchain would require the entire chain to be changed. Also, Blockchains are transparent with no hidden entry points as addresses are displayed in the transaction. Adding to that is Blockchain is generally decentralized meaning that the data is spread out across the internet and not stored in any central place, making hacking or attacks harder than normal databases.
So how does this help winemakers and sellers fight fraud? Say, you have a Sonoma Valley Winery that has produced twenty bottles of Pinot Noir 2015. Before shipping, the winery’s accounting person logs the number of bottles or crates being shipped out onto their Blockchain of choice, the stores or auction houses who are to receive the bottles can view the type and number of bottles being shipped and where the shipment is originating and if they choice can record who purchased it.
So how does the figure back into Sour Grapes? An auction house can check the Blockchain on the shipment to verify the number of bottles shipped and where they originated. So when a third party comes in and says they want to sale a bottle of Sonoma Valley Pinot Noir 2015, the auction house can check the Blockchain and see if this person purchased said bottle or if a twenty-first bottle was made.
Now the question comes up, why bother? Why this when a phone call or email could suffice? The answer to this, as stated before, is Blockchain transactions are immutable and transparent, consider it a heightened security protocol. The auction house can be certain that the bottles of twenty they received are the only real bottles of Pinot Noir 2015 shipped as agreed from the winery. And when we consider that the auctions Rudy Kurniawan supplied with fake wines, the subject of Sour Grapes, netted over 10 million dollars USD, the added security of Blockchain shouldn’t be overlooked.