By Steve Kuh, CEO of Bonafi
These days, blockchain technology is used everywhere. Whether it’s in healthcare, financial, or the security sector, the possibilities are endless. But first, let’s recap: blockchain is a growing list of records, in which each ‘block’ is linked to the others using cryptography.
The system is decentralized, and every individual block contains a timestamp, a hash from the previous block and details as to the transaction or exchange. In addition, the information is distributed over millions of computers, or nodes, and is considered an immutable public ledger since it is impractical to fake information on all nodes of the blockchain network.
The Problem of Counterfeit Goods
In many retail industries, there is a growing problem of counterfeiting, especially with jewelry. Luxury brands spend a significant amount of resources trying to prevent the sale of counterfeit goods, but in every case, no real preventative action works.
Various luxury brands have become victims of counterfeiting and have filed lawsuits against illegal manufacturers, but in these situations, the damage has already been done. The retailer loses an established reputation, a consumer ends up with a product that is less valuable than what they hoped, and a brand’s exclusivity is tarnished.
Blockchain technology can be used to provide a solution and increase security in the retail industry, such as prevention of the sale of counterfeit jewelry. Using a decentralized chain of records, manufacturers, brands, retailers, and customers can access information about a product and check its authenticity. The idea intends to conclusively rule out chances of retailers selling counterfeit goods and customers falling for high-quality fakes.
Utilization of the Blockchain
It all begins with manufacturers and brands of jewelry to join the blockchain. This is an immutable, digital public ledger which is powered by a cryptography engine. It uses a physical tag that is slightly smaller than an inch in diameter and paper thin. Once attached to an item, it is scanned by a phone App and information is recorded on the blockchain. The data contains the location, time, date, SKU, UPC, serial number, picture, video of the item, manufacturing site, shipping point, inventory, and sales - the supply chain information.
Embedding products with the tag will allow different events to be recorded in the blockchain as the jewelry moves through the supply chain. For instance, moving from a manufacturer’s location to a retailer’s store will trigger the shipping recording process, and the data is added to the blockchain.
The tag will continue to record information even after retailers and third-party sellers receive the item. The blockchain will possess unique identities for each piece of jewelry, and the data will remain on it because of its immutable nature. Let’s not forget that since all similar pieces will go through the same process, all the records will have the same data.
Retailers and Consumers Can Verify Authenticity with a Phone App
After receiving a supply of jewelry, retailers and sellers can use a phone App to scan individual pieces of jewelry. The application communicates with the blockchain through the tag to verify each piece’s authenticity. This can help manufacturers track the use of their products and retailers can avoid selling counterfeit products in error.
The tag and application protect customers as well; end consumers can use the App to verify the authenticity of the piece they purchase. Through the online platform with the app, they can review the product and communicate with the manufacturer directly as well. This protects the customer from buying a counterfeit product.
Thanks to a blockchain-oriented solution, customers do not have to be wary of buying from retailers in fear of buying a fake. However, this is just the beginning. The solution applies to a wide variety of exclusive products and goods.
About Steve Kuh
Steve Kuh CEO of Bonafi, a startup that builds an online platform where manufacturers and consumers come together to share information to authenticate goods that we buy every day. Bonafi uses its Bonafi-Tag to record the supply chain information on blockchain and its phone App to show the authenticity. For more information, please visit www.bonafi.io.