Author – Kate, Australia
Counterfeit goods have always been a big problem for luxury brands. While many attempts have been made to stop counterfeit goods, the results are regretfully closer to the classic game of whack-a-mole. Once an illegal operation is shut down, another three pops up just as easily. As of 2013, the counterfeit industry is valued at USD$461 billion or 2.5% of total global imports, comparable with the entire GDP of Austria and this is showing to be an upward trend. Not just that, counterfeit goods are getting increasingly sophisticated each day and some copies are so exceptional that makes it very, very hard for even experts to tell the difference.
Blockchain technology can be the answer here. Known for enabling the creation of bitcoin, the differentiating factor for blockchain technology is its decentralized and tamper-proof digital ledger valued for its record-keeping ability. Luxury goods can travel to many places before finally landing on the customer, from raw materials to manufacturing, from wholesale to retail. Blockchain technology can be excellent for keeping record of anything that’s of value and its application can very much be extended to a wide range of industries.
Everledger, a start-up based in London has already successfully recorded 1.6 million diamonds on its blockchain that includes attributes such as size, colour, and certificate number as inscribed using laser on the girdle or crown of the diamond. While diamonds do have record-keeping schemes like the Kimberley Process to avoid the acquisition of conflict diamonds, many of its recording processes are outdated compared with the technologies available today. In fact, the 2016 Mid-term Report of Kimberley Process did mention the possibility of utilizing blockchain technology to solve the issue of false certification and human error in the uploading of data. Blockchain does offer a great opportunity here and CEO of Everledger, Leanne Kemp shares that the permanence and immutability of records on the blockchain makes it difficult to cover up fraud activities. This can be the ultimate solution to address counterfeit goods.
Already Everledger has placed bottles of wines and fine arts on its blockchain and has huge ambitions to penetrate further into the entire luxury goods, jewellery, fine arts, and diamonds market. This can be further extended to electronic goods and pretty much “any asset with a serial number” and could even be adapted for usage with online retailers such as eBay and Amazon to ensure authenticity of products sold there. Enabling authenticity with products sold can restore customer’s confidence amidst a murky market place that is trying to clean up.