Authenticated provenance: How to prevent counterfeit products with blockchain

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Blockchain Supply Chain Development

Although blockchain started as a decentralized network, it would go on to pave the way for a wide range of business opportunities. As a database, it stores information that cannot be changed or swapped, guaranteeing fidelity and the security of data records without the need for a trusted third party. 

The information and history are irreversible. Blockchain not only verifies transactions but a variety of other information like state identification, legal contracts, proof of ownership, inventory, etc. 

All in all, blockchain is a secure record-keeping system by nature. There is no single point of failure in blockchains that make these decentralized systems less vulnerable to attack or data manipulation. 

As such, many companies and entrepreneurs across multiple industries have seen the potential of blockchain to securely record data that can be then used for physical and digital object tracking. 

Blockchain for authenticated provenance of products 

100% extra virgin coffee. Organic-raised poultry. Most of us are quite familiar with all these product labels, but how can we check if they are real or not? In fact, tons of products are mislabeled to justify their premium pricing and increase margins. 

Customers frustrated with fraud are becoming savvier by demanding more transparency around the products that they purchase in terms of authenticity and sustainability. With the rise of blockchain and IoT devices, the transparency of supply chains has reached its maximum potential. This technological breakthrough has enabled businesses to verify the authenticity of products by keeping an immutable record in a distributed ledger system powered by blockchain. 

The good news is that authenticated provenance is just entering the market together with Web 3.0. Hopping on the bandwagon early can enable you to take your business to the next level and win over your competitors. 

The adoption of blockchain can not only improve the transparency of a product’s life cycle but also enable:

  • Product traceability 
  • Product authenticity and provenance 
  • Transparency of manufacturing and distribution processes
  • Digitalization of documents 

The counterfeit business is booming, generating billions of dollars. In fact, the counterfeit product market accounts for 3.3% of the global trading volume and costs the U.S. $600 billion per year. 

Product counterfeiting gives rise to a wide range of problems like lawsuits, loss of sales and consumer trust, product recalls, consumer injuries, and reputational harm. But that’s not the full list of how counterfeiting impacts the lives of millions. Counterfeit airbags that malfunction in car crashes, counterfeit batteries that explode, baby carriers that easily break, counterfeit drugs that cause fatal reactions – these are only a few examples of the most dangerous counterfeit products. 

But how can blockchain connect physical objects to a digital record system? Provenance identification can be implemented through the use of smart tags attached to a product. These tags can identify its place of manufacture, location, and specify all the necessary information at any stage of the supply chain. 

There is a variety of smart tags to be used for blockchain provenance identification, these include:

  • QR code. It’s a type of interactive barcode that can be easily read by smartphones. QR codes encode information like internet addresses or phone numbers.
  • RFID Tag. This tag uses radio waves to provide access to product information. To read the information, consumers need a reader, a device that can emit, receive, and read signals from RFID tags.
  • Signature on Ceramic or Metallic Surfaces. With lasers, manufacturers can etch barcodes onto ceramic or metal surfaces. Using a special scanner, consumers can trace the product and verify all the necessary information. 

This approach helps to track products or components through every stage of their lifecycle. At each stage, smart tags can be scanned and verified in the blockchain ledger system. Every data entry into a blockchain system is cryptographically signed and encrypted to eliminate fraud and minimize the occurrence of hacking. 

With blockchain-based supply chain systems, transparency is brought to the forefront to validate the authenticity of any product. But that’s not all. Isn’t counterfeiting smart tags even easier than copying luxurious products?

In fact, it’s practically impossible to accomplish since smart tags are just keys to a record kept in an immutable blockchain system. Scanning a counterfeit tag would reveal the history of a genuine item and help customers identify that the product is counterfeit. 

Such a system can minimize the chance of counterfeiting in many industries, including:

  • Fashion
  • Pharmaceuticals 
  • Electronics
  • Heavy manufacturing 

Other use cases may include the verification of specialty crop certifications like organic, authenticity, and the origin of high-value items like diamonds, luxury goods, conflict-free designation, and provenance of medical drugs. 

Authenticated provenance to claim ownership of NFTs

In the traditional art world, provenance is associated with buying unique, physical objects with verified authenticity. This verification process is usually conducted by art institutions, auction houses, and other companies that are considered authorities in distinguishing a copy from an original work. 

Before NFTs and blockchain, people would just buy a painting, hang it on the wall, and claim this right to ownership. But when it comes to NFT artworks, they don’t simply involve the same method of transferring ownership rights. There is no legal contract or any form of ownership protection. Pseudo-anonymity of the crypto world confers ownership protections. 

To be clear, anyone can download an exact replica of famous paintings by googling the piece’s title. It’s not difficult to fool people into thinking that you own an original work of art. The ugly truth is that the NFT marketplace doesn’t require people to actually own the copyright to something to mint it. 

Thus, the NFT market is also in need of value and ownership attestation in a highly secure distributed ledger system powered by blockchain technology. NFTs, like traditional forms of art, derive their value from a verifiable provenance. 

By keeping a DLT system of all NFTs, transactions, and tokenized assets, it would be easy to verify and track all the data including who created what, when, and where. Simply put, it’s a blockchain-based certificate of authenticity. 

Though verified authenticity doesn’t provide any extra value to an NFT itself. It protects its value if it’s desirable. So creating a meme of your dog and turning it into an NFT doesn’t give it as much value as the DOGE meme has. 

Summing up 

Blockchain-based authenticated provenance can ensure that the authenticity of physical or digital products will never be in question. Their provenance can be verified by anyone, anywhere, and anytime. Contact us to discuss the tech side of blockchain-based certifications of authenticity for your products.