One man’s quest to track responsibly-sourced minerals on the blockchain. Early 2017 was an unstable time. The world was waiting to see what regulatory changes would be introduced by the incoming Trump administration. Then the Washington Post published an article discussing how some prominent brands didn’t want to see the Conflict Minerals legislation rolled back. They were excited by the prospect of their products being ‘ .’ conflict-free Since 2010, the required US companies to perform due diligence to ensure the . Millions had already died in the conflict and stemming the violence meant cutting off their funding. Dodd-Frank Act Section 1502 gold, tin, tantalum, and tungsten were not funding armed conflict in the Congo This regulation served as the basis for the OECD’s responsible sourcing guidelines — and ultimately for the EU to adopt similar legislation in 2017. Coincidentally, I was introduced to blockchain around the exact same time. My background was in emerging technology in industrial settings, with my previous company being Subvise, a chemical regulations tracking platform. The applicability of blockchain to supply chain due diligence was clear. Exploring the problem space When considering a new startup idea, I believe it’s best to spend most of your time exploring and truly understanding the problem, instead of immediately starting work on the solution. I began by emailing everyone quoted in the aforementioned article. I asked them what they felt the biggest problems were, what had been done already, what had/hadn’t worked, and what the biggest pain points were. This was the beginning of a long exploratory process where I had to learn as much as possible about the mineral industry and conflict mineral policy, as well as blockchain and how to apply it. What did I discover during the process? Two key (unintended) consequences of regulatory efforts on conflict minerals; This left the market to unscrupulous actors, making the problem worse. Companies that wanted to be responsible simply stopped sourcing from Congo. A Congolese miner who pays for additional due diligence measures, still gets the world market price for their minerals — the same as a mine in the west. Collecting due diligence data has a cost, and this cost is usually paid by the miners. This is a disincentive for legal sourcing. For over a year, I met with people in innovation and blockchain divisions of some larger players in the mining industry, and was told of more immediate and practical problems: and can be mixed together at the smelter, obscuring their source. Minerals are fungible and companies do not want other companies to be able to see it. Supply chain data is very sensitive and control over the supply chain. Third party gatekeepers in a system have way too much power The more I spoke with the industry, the more it became clear that this was not a simple problem, but a complex issue with many facets that need to be addressed. Crafting the solution We originally had the idea of creating tokens that represented the minerals from a mine, and passing them along the supply chain like a baton in a relay race. It’s intuitive but it presents a couple of problems: When the tokens reach the end of the supply chain, how do we prevent them from being reused? When minerals are smelted together, how do we reflect the multiple sources of those materials to the companies downstream? Upon reflection, we created a different utility for the tokens, and stored the data without tokens using the data structure now featured in our white paper. It took about a year and a lot of thoughtful iterations to come to our current design. Yet all that effort paid off when the white paper was cited by the in their blockchain guidelines. I was subsequently introduced to many of the major players in the electronics, automotive, and gold industries. Responsible Mineral Initiative Since then, we have secured our first investments, won multiple startup contests, hired some terrific team members, received a lot of press coverage, and are moving forward with a pilot project soon — all because we have a solution that truly satisfies the industry’s requirements. featured Minespider. Wired It has been a long road, but in many ways we are still right at the beginning. Over the next few quarters we will be growing the team further, securing the next round of investment, preparing a token sale, and executing on our first pilot projects with our partner organizations. But it all began with that Washington Post article. is an experienced startup entrepreneur with a focus on emerging technology in the Regtech sector. He has founded Hinwise, Subvise, and Minespider. In addition, he runs the Blockchain podcast which has been downloaded over 150,000 times and is part of . Nathan holds a BS in computer science from McGill University and an MBA from Concordia University. Nathan Williams Analysis in Chains Cryptonews If you enjoyed this post — please give it some 👏👏👏 and kindly share it with your network! | | | | Website Twitter Telegram LinkedIn Facebook
