Blockchain is becoming more and more popular, tempting companies to replace their current anti-counterfeit solutions with a blockchain approach. Although blockchain has many advantages, including tamper-proof data and perfect traceability of the supply chain, one must be cautious about compromising the security of physical products. While blockchain alone cannot replace anti-counterfeit solutions, it can be an extremely valuable add-on in the case of luxury goods, the pharma industry, and other areas.
This article, decrypts the advantages and disadvantages of a blockchain solution to the counterfeiting of physical products.
Is blockchain new?
Blockchain has been used for many years to provide a financial ecosystem and is increasingly widely used to ensure traceability in supply chains. It has also been tested for medical data and voting systems, buthe those attempts have been unsuccessful to date.
What is a blockchain?
The blockchain system is a technology to store and transmit information. It’s like a book in which everyone can write data and which everyone can read but which no one can either erase or destroy. This is, of course, impossible with a book but can be achieved with blockchain, as the data are not centralized in the network. Blockchain is based on an open source code, which means that the development of new features is publick and the code can be widely tested by the community before being used.
Transactions are grouped by blocks of data that are validated by the network. A validated block is added to the chain and the transaction can be read. Therefore, one cannot change a block without modifying the whole chain and breaking the data integrity..
Blockchain was initially used only for digital products but it is now also employed to ensure the provenance of physical products. In that case, a smart tag or at least a serial number is required to link the digital information to the corresponding physical product.
What is a smart tag? A smart tag is a unique identifier that accompanies each product through its complete life cycle in the supply chain. This tag can send data to a remote gateway, thus transforming the object into an IoT (internet of things) device.
Consequently, this kind of blockchain solution is reserved to products with an appreciable value, because, for mass commodity products, consumers are unwilling to pay the additional costs associated with the complex logistics of such systems, even if they bring an increased level of protection. Indeed, the time needed to enter all the data into the system by itself adds complexity.
The use of blockchain anti-counterfeit solutions
Some companies now claim that they could use blockchains to prevent counterfeiting. In my view, the biggest advantage of blockchain anti-counterfeiting solutions is that their data cannot be tampered with or altered.
Now, let’s analyze how this blockchain system works for a physical product that needs to be protected against counterfeiting, for instance an expensive watch.
- A serial number is added to the watch. It can be simply engraved or added as a smart tag, such as QR code or RFID.
- The serial number is entered into the blockchain along with other useful data about this valuable product (information on its provenance, previous owner, associated characteristics, and so on).
- All the important steps in the watch’s life are recorded in the blockchain.
Essentially, this process provides an improved certificate of authenticity for physical goods. And, thanks to the blockchain, you can be certain that the certificate of authenticity is genuine.
Being certain that the object in hand is not a product of counterfeiting and knowing its history provide valuable information to the customer. For example, a counterfeiter could not claim to be the watch’s owner and try to resell it.
Therefore, some pioneers, especially in the luxury goods industry, like handbags industry for instance, are using the blockchain in addition to other anti-counterfeit solutions for physical goods.
Blockchain is also entering the pharmaceutical industry thanks to initiatives such as PharmaLedger; with which AlpVision is fully compatible. The goal is to read a 2D barcode or data matrix that allows the consumer to determine the provenance of a medicine and obtain useful information, such as the electronic product information (ePI) or a e-leaflet. It can also provide other userful information, such as the status of the product (whether it has been recalled, etc.). Finally the PharmaLedger App informs users whether they can verify that the product is genuine and, in some cases, even allows them to verify whether the product is genuine.
It must be noted that the verification and traceability information are complementary. Indeed, although the 2D matrix code may be counterfeited, we can build confidence in its authenticity by using other layers of the multi factor authentication system, such as covert features. For instance, the Cryptoglyph covert feature already appears on many pharmaceutical packages.
Using blockchain as unique solution to product counterfeiting
Now imagine you rely solely on the blockchain as an anti-counterfeit solution. If you have in your hand a watch with a specific serial number, you can retrace the entire history of the watch with that serial number.
However, even using the available data, you would not know whether you are holding the authentic watch or a counterfeit product featuring the same serial number. Therefore, this kind of anti-counterfeiting solution would probably be rejected in a court case.
Furthermore, a perverse effect of blockchain anti-counterfeit solutions, when used alone, reflects the problem associated with serial numbers years ago: end users feel more confident and less cautious, eventually leading to an increase in the number of circulating counterfeits.
AlpVision provides Forbes 2000 companies with solutions to prevent counterfeiting that are perfectly compatible with blockchain and in some cases already integrated into the blockchain. This has the advantage that an object can be authenticated, even if the serial number is scratched and no longer readable.
For example, AlpVision Fingerprint technology in combination with blockchain offers a supremely effective solution against counterfeiting thanks to this block technology, which also secures the supply chain.
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