Image by Matt Hoffman
Image by Anastasia Zhenina

The Problem With Counterfeit Alcohol and How the Blockchain can Help

Alcohol is one of the most consumed substances in the world. Unfortunately, you can never be sure if you’ve bought high quality liquor. Counterfeit alcohol puts many people at risk because it can contain high levels of methanol or other dangerous chemicals that could cause serious illness and death.

Counterfeit alcohol has reached epidemic proportions. With more than 20% of all spirits sold worldwide being counterfeits, it's costing businesses and governments around the world $30 billion in lost revenue each year. It also poses an enormous threat to public health due to its illegal properties, including exposure to toxic levels of methanol.

One way to solve this problem is to provide additional traceability to the alcohol supply chain, and selling & purchasing alcohol online could be one way to implement it. However, as there are so many moving parts to the supply chain it’s difficult to implement control across it in a transparent and cost-efficient manner.

This is something that has recently been possible to change with the adoption of blockchain technology.

What is Blockchain?

Blockchain is a distributed ledger that records transactions and information in an immutable way. Meaning the data cannot be changed or tampered with once it has been recorded on the blockchain. This technology can provide for increased transparency across the supply chain, ensuring traceability of products to their origin as well as assurance of authenticity from point-of-origin through to final destination. Blockchain also provides a way for organizations along this supply chain to interact with one another in a decentralized manner without any centralized authority.

Blockchain benefits-

  1. Greater transparency because its transaction ledger for public addresses is open to viewing. This adds an unprecedented layer of accountability, holding each sector of the business responsible to act with integrity towards the company’s growth, its community, and customers.

  2. Increased efficiency by reducing the need for intermediaries. Compared to traditional financial services, blockchain enables faster transactions by allowing P2P cross-border transfers with a digital currency.

  3. Each new transaction is encrypted and linked to the previous one for increased security. As the name suggests, a blockchain consists of a network of computers that are connected to form “blocks” and then added to the ledger to form “chains”. A blockchain is a complex set of mathematical numbers that, once created, cannot be changed,

  4. Improved traceability due to the fact that each time there is an exchange of goods it is recorded on a Blockchain, an audit trail is present to trace where the goods came from.

Defi Spirits is using the blockchain to secure the alcohol supply chain by providing additional transparency of each physical bottle. Using tamper proof digital seals and the blockchain we can ensure that the seal is verified and authentic and we can provide the full history of that bottle from its production source to your glass at home.

The alcohol industry is just one of the many industries where blockchain technology can be implemented to improve supply chain management. And, while this is relatively new for a liquor distribution company, it certainly seems to be working wonders to solve the problem of counterfeit liquor.


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