Blockchain use case tracking precious wine and building a community around it (Netmi Blockchain Labs)

Blockchain use case tracking wine

In my latest tour through China to find the most promising use cases for blockchain technology, I needed to come to Hangzhou. In this article I will share my learnings about the Blockchain use case tracking wine with you.

Hangzhou is one of the most beautiful cities in China. When Venetian merchant Marco Polo visited Hangzhou in the late 13th century he called the city “greater than any in the world”. If you have not been there you need to go and see the West Lake (西湖) area and the lovely surrounding parks and temples.

Besides its natural beauty, Hangzhou is also home to some of the most fascinating Chinese companies. The most well-known of these is Alibaba. Started by the Chinese internet pioneer Jack Ma, the Alibaba empire resides on the triangle of: E-Commerce, Logistics, and Finance. As a starter to understand the story behind Alibaba I highly recommend Duncan Clark’s 《Alibaba: The House That Jack Ma Built》from 2016.

With the IPO of Alibaba in 2014, a lot of early Alibaba employees got enough capital together to start to invest into new and promising startups. It is thus not surprising that in the Alibaba ecosystem also a lot of blockchain companies were born. Either founded by Alibaba alumni or financed by them.

Blockchain use case tracking wine and creating a community around it

In this article I want to reflect on what I learned from visiting NetMi Blockchain Labs, a company in Hangzhou that is developing Blockchain applications for corporates. Here are some of my learning from sitting down with Evan, the CEO of NetMi Blockchain Labs.

Lesson 1: The ban of ICOs in China was a good thing – in contrast to Europe, Chinese blockchain entrepreneurs need to earn their money with real-life use cases

The first topic I was curious about was: how did the Chinese Blockchain ecosystem change after the government stepped in and banned ICOs to protect ordinary investors, aka retail investors, from scams? Interestingly, Evan pointed out that this was even a good step, as Chinese blockchain entrepreneurs now need to think about a real business model for their companies. Simply raising money though an ICO is for most teams out of reach. Therefore, real-life use cases need to be developed. While everyone outside China is busy preparing an ICO, China already arrived at what I call the “post-ICO” area.

How can one build a serious business on top of blockchain technology?


With Evan, the CEO of NetMi Blockchain labs in HangZhou, China

Lesson 2: Supply chain is still one of the killer-applications of the blockchain

Evan helps me to walk through some of the projects that they were doing recently. All of them are very interesting and very well thought out. I guess this is because the goal is not to produce a marketing whitepaper for an ICO but to convince a corporate to embark on a transformative blockchain project. One of the examples we discuss in detail is the blockchain use case tracking wine.

  • Background: a large wine company is integrating blockchain technology into their century old business model – producing and selling wine.

The way it works is an interesting combination of supply chain use case, community engagement, and gamification.

  • Every bottle of wine produced gets equipped with two different QR codes
    • A first QR code visible for everyone on the outside of the bottle. This QR code acts as unique ID for the bottle and is stored in the blockchain.
    • A second, secretly hidden QR code is inside the cap of the bottle. The code is not visible unless you open the bottle. This acts as verification for the end user to prevent counterfeiting along the supply chain.
  • For every new bottle produced a digital representation of the bottle on the blockchain is generated. In blockchain language, this means a new non-fungible token is mined for every bottle. For insiders: this is similar to what Cryptokitties (a blockchain gaming project out of Canada) and Hyperdragons (project out of China) are using to represent their digital avatars in the game. Each token is different, which is different to traditional cryptocurrencies where 1 Bitcoin is worth the same as any other 1 Bitcoin. One popular standard that emerged to represent such tokens on the blockchain is the ERC721 token standard from the Ethereum community.
  • Buyers of the wine now hold a digital representation of their purchase, one unique token for bottle they bought. The token holder gets a promise from the wine producer: anytime he wants he can redeem the token for the specific bottle of wine.
  • The physical location of the wine is a professional storage facility at the site of the producer.
  • The tokens now allow for a secondary market for the wine bottles. Instead of holding the token the buyer can decide to trade the “wine” token with other users. Even a futures market is possible. Example: I’m buying a bottle of 2009 Bordeaux wine from your for 10.000 RMB in on May 1st 2020.
  • This agreement translates into as a smart contract and lives on the blockchain.

NetMi Blockchain labs is not the only one betting on the supply chain as one of the game changing use cases for the blockchain – Vitalik Buterin, founder of Ethereum, is bullish on this use case too.

Lesson 3: Integrating blockchain technology into your traditional business has many merits

Lastly, Evan helps me to understand the primary motivation of corporates in China to integrate blockchain technology into their products. “It is a mix of different factors for them to start working on blockchain technology”, Evan explains. First, there is an obvious problem such as transparency along the supply chain they need to solve where blockchain can make a difference. But that is not everything, as other factors are also in play here. Some are going to adopt blockchain technology to prove to their employees that they are also a technology company, thus helping them with their digital transformation. Lastly, the same logic applies externally – it makes a nice story for investors if you report the use of blockchain in the annual report.

To learn more about NetMi, check out their website: 

About the author

Dr. Thomas Reinbacher is former computer scientist and McKinsey management consultant and works as independent adviser in Munich and Beijing. If you want to work with me on the blockchain use case of tracking wine or other precious goods on the blockchain,  please find my contact data here

Disclaimer: This analysis on Blockchain use case tracking wine is  provided without warranty or any claim for completeness. All opinions expressed about Blockchain use case tracking wine are my own. All information on Blockchain use case tracking wine is given strictly on a non-reliance basis and under the exclusion of any responsibility or liability, in particular with regard to loss or damages and/or administrative and regulatory sanctions.