June 2022 | Commentary | Supply Chain Security

Integrating NFC and Blockchain

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Amir Khoshniyati, VP and GM, Transponder Business, Identiv, 888-809-8880

Counterfeit supply chains cost U.S. manufacturers upwards of $131 million, and the problem is growing amid supply chain shortages. This crisis is also exacerbated by a time of technological advancement—not only are supply chains carrying in-demand products, but they also house incredible amounts of data that are susceptible to breach. Of the many security threats this poses, three attacks are most common and most pressing:

1. Modifying product details, such as expiration date

2. Cloning genuine product details on a counterfeit product's tag

3. Reapplying a tag from a genuine product and attaching it to a counterfeit

These challenges represent the convergence of physical and digital security vulnerabilities in a centralized system that can often be ignored and lead to substantial consequences. What can be done to alleviate these threats? The answer is closer than many think: unified near-field communication (NFC) and blockchain technology.

Researchers suggest that a block-supply chain, which relies on NFC to detect counterfeiting, would bring security and efficiency to supply chain management. The decentralized, distributed qualities of blockchain processing lends security, transparency, reliability, and authenticity to all kinds of systems. Systems using both NFC and blockchain promise high performance for a range of highly secured networks.

How Would This Work?

Through blockchain-based solutions, engineers and designers can build an immutable digital ledger and transparent exchange of electronic information. However, blockchain alone operates in a purely digital space; there needs to be an intermediate step to connect physical objects to a blockchain and the benefits it could provide.

NFC tags serve as that intermediary. They translate physical objects, locations, and markers into the digital world. The relatively short range of NFC sensors discourages interference from afar, as close physical proximity is needed to interact with the NFC system.

Combining both NFC and blockchain into a single system balances the weaknesses of either technology on its own: NFC provides a medium for blockchain to interact with the physical world, and blockchain verifies NFC tags to detect and prevent tampering.

In a decentralized block-supply chain, each node maintains a blockchain for each genuine product. Each block in the chain is an authentication event. To change any information in the blockchain, the node that currently has the product proposes a new block (or new authentication event), which is validated by a number of other nodes.

If the other nodes successfully validate the new block, a copy of this new block is added to all nodes in the network.

Highly sensitive, data-heavy supply chains are most at risk for compromise, and see the farthest reaching impact from a breach. By decentralizing existing protocols with blockchain, researchers detected over 95% of modification, cloning, and reapplication incidents in large-scale supply chain systems. In certain industries—like pharmaceuticals—this can dramatically improve product quality of essential goods.

NFC and blockchain offer a unique solution to a growing crisis. Decentralizing processing, encrypting access, and adding a physical element of security can make supply chains dramatically more secure.

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