Decentralisation, transparency and immutability are the keywords of blockchain. The pillars in Luxembourg have been built to determine the right development strategy of these supply chains. Encouraging widespread adoption for the overall good of the country, is under way.
The technology: what is a blockchain?
A blockchain is a digital recording of transactions. Its name is derived from its structure, in which the individual records, called blocks, are linked together in a single list, called a string. At present, blockchains are mainly used in the financial sector, but digital identification, proof of land ownership, supply chain management and even voting are only a fraction of the potential applications that would be of interest to the public sector as well.
Because it is decentralised, it also makes it possible to solve problems connected with single points of failure in the event of incidents or attacks, giving it the potential to help public stakeholders reduce fraud and error and improve the transparency of both data and transactions.
Smart caps: a specific example
Guala Closures Group, which was founded in Italy in 1954, is now the world leader of the production of safety caps for spirits and one of the top manufacturers of aluminium caps for liquor, wine and beverages, producing 20 billion caps each year. In 2017, the group inaugurated its fifth research centre in the world, but its first one in Luxembourg. 'Smart caps' are partially developed here.
Guala Closure's new technology, NěSTGATE™, which was launched in 2019, revolutionised conventional bottle packaging by integrating a connectivity feature in bottle caps. Using NFC (Near Field Communication) technology or a QR code, the company can now offer a 360° service featuring new technological solutions like a platform and an infrastructure to manage large data acquisitions, the blockchain, etc.
The benefits of NěSTGATE™ smart caps are evident at three levels.
- Combating fraud: brand protection through anti-fraud tools activated by interaction with the product, including unique serialised identifiers (QR or alphanumeric codes) and blockchain systems.
- Track & Trace: tracking of bottles from bottling to distribution and consumer use.
- Consumer commitment: customer involvement directly through the bottles thanks to dynamic digital content that is constantly evolving (advice, recipes, loyalty programmes, lotteries, etc.).
The partnership between Guala Closures and Compellio, a Luxembourg software company, means that customers of smart closure products can, for example, create their own virtual cellars and receive information on wines and other products. With the blockchain system, consumers can also verify the product's authenticity, as it ensures the bottle's unique identification.
The technology is subject to GDPR regulations and must be consciously triggered by the customer by reading the NFC device or the cap's QR code.
Blockchain of the public sector: Luxembourg paves the way
In 2019, the Ministry of Digitalisation, in collaboration with the 'Syndicat intercommunal de gestion information' (SIGI) and the Government IT Centre (CTIE) announced the creation of the public sector's first blockchain. It's a first in Luxembourg, and probably in the world. This technology offers all players in the public sector the opportunity to improve the transparency, reliability and security of public sector digital information systems and processes.
Many associations and initiatives, partially backed by the government support research, education and development of blockchain technology in Luxembourg. In 2019, five of the main stakeholders, INFRACHAIN, LëtzBlock, LHoFT (Luxembourg House of Financial Technology), LIST (Luxembourg Institute of Science and Technology) and the SnT (Interdisciplinary Centre for Security, Reliability and Trust) of the University of Luxembourg, launched a collaboration to strengthen Luxembourg as an ultimate European blockchain hub.
In February of the same year, the Chamber of Deputies adopted a bill of law aimed at providing legal certainty for securities transfers using blockchain technology. Another bill of law on the direct issuing of blockchain securities is under way. This regulatory positioning not only shows that the Luxembourgish government wishes to promote as many blockchain-friendly projects as possible in the financial and other sectors, but also its willingness to innovate.