Luxury brands lose billions of dollars every year due to counterfeit goods. In recent years, there has been an increase in the production and capitalisation of fake products. Research firm, Fronteir Economics, have predicted that the global counterfit trade will hit a value of $991 billion, just next year – this is almost double the value of what it was in 2013. High-end labels are often the main target for these production lines, as it’s an easier option for consumers to buy fake items, to get the ‘luxury’ goods, without the expensive price tag that comes with them.
Believe it or not, the idea of counterfeiting goods has been around since the early days of the Roman Empire. The first ever counterfeit items were found in Ancient Greece, after currency was forged during a time of coinage changes – coins’ precious metals were reduced after being made entirely out of silver, down to just 1%. This made it easier for people to duplicate the coins with plated metal and create counterfeit money. However for the Romans, in a difficult period for the economy, the counterfeit coins coming to fruition, unusually benefitted the financial system, as there were very little rules during this period. Apparently, many of the higher quality counterfeit coins looked so realistic, that they entered monetary circulation, helping the economy to recover.
Recently, it has been announced that LVMH, Richemont’s Cartier and Prada SpA are teaming up to offer a solution to the verification of their luxury goods – where customers and brands can get peace of mind on the authenticity of products available on the market. The solution involves the use of Aura Blockchain – a database that would make products and transactions traceable by recording every transaction made in a chronological order.
If, like me, you haven’t got a clue what a blockchain is, in short terms, blockchain is a type of database which stores data in blocks and chains them together. New data is created in a fresh block and added into the chain in chronological order. It is often used to validate transactions, as blockchain can keep a record of all legitimate transactions on one place.
Many high-end brands and products have previously implemented blockchain systems, like the Aura Blockchain Consortium, for similar reasons. Products such as Breitling Watches and Scottish Whisky are protected by the technology, in an attempt to combat fakes, whilst leading companies like Ford and Unilever have alternatively been known to use blockchain in order to manage supplies and quality of materials.
The involved firms of the Aura Blockchain Consortium recently told Bloomberg, that although blockchain technology is one developed around the idea of cryptocurrency (a digital currency produced by public networks, such as Bitcoin), the brands will not be accepting the latest form of currency which is now becoming increasingly popular.
According to a report from CoinDesk a couple of years back, the LMVH group have been working on the project since around March 2019 in secret – a worthwhile project finally coming to life this year.
So, in a nutshell, if you’re wondering how this new technology will benefit you… When buying from these brands, or these labels from resellers or second-hand markets, you will gain more authenticity and peace of mind for your purchase, as each original transaction from the stores will be recorded.
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