• Blockchain technology to protect luxury brands
• “Digital twins” for design products create transparency in the supply chain
• Digital branding useful beyond the fashion industry
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Counterfeiting has long been a major problem for manufacturers of many luxury brands. According to CNN, luxury brands lost $98 billion to counterfeiting in 2017. In 2020, German customs alone confiscated branded clothing worth around 29 million euros. In addition to financial losses, counterfeiting means damage to the image of luxury companies. So it’s no surprise that luxury brands are now looking to digital ways to protect their products.
Digital twins using blockchain technology
Blockchain technology could be one such technology because it is a digital ledger that cannot be tampered with. Every transaction is recorded on the blockchain. In 2021, the luxury groups LVMH, Prada and Cartier therefore joined forces and founded the Aura Blockchain Consortium, with Mercedes Benz recently joining as another founding member. It is a non-profit, private blockchain on which “digital twins” of the branded products can be created to certify the authenticity of the designer products. Using the blockchain, the luxury products of the currently 20 brands are provided with a digital identifier to ensure that it is an original product.
The Ethereum-based technology offers “bank-grade encryption” that is impossible to counterfeit, Daniela Ott, secretary-general of the Aura Blockchain Consortium, told CNN Business. The digital certificates can be accessed via a website or app, which not only gives conscious consumers information about authenticity but also about questions of sustainability and ethics. However, Daniela Ott also sees limits here: data is only as reliable as the person who enters it. A blockchain only helps those brands that also have good relationships with their suppliers.
Sustainable Goals
On the homepage you can read that Aura is an association of luxury companies for a “higher purpose”, a non-profit organization that invests in technologies to ensure transparency and trust in luxury brands in the future. The blockchain not only records the authenticity and ownership, but also information about the product throughout the production cycle, such as the material, origin of the raw materials, place and time of manufacture and quantity of the products manufactured. This ensures the authenticity, ownership and traceability of the products and provides transparency in the supply chain.
Aura Blockchain Consortium is joining the SMI Fashion Task Force. Environmental sustainability has been a key value of the Aura Blockchain Consortium since its inception as they aim to leverage blockchain technology at the service of a more sustainable future. pic.twitter.com/kvI6d2gke3
– The Sustainable Markets Initiative (@TheSMI) June 6, 2022
Above all, sustainability is a concern of the Aura Blockchain Consortium, can be read in a Twitter message. That’s why they joined the SMI Fashion Task Force. According to the company, the energy consumption of the Aura blockchain is far lower than that of public blockchains.
Future Developments
The partners’ NFT collections, such as the new Ethereum-based “Timecapsule NFT Collection” from Prada, are also presented on Twitter. A limited edition of t-shirts and shirts has been sold in this “time capsule collection” since 2019 in collaboration with various artists such as Zach Lieberman or Cassius Hirst, now every owner should receive a corresponding NFT.
Aura’s one-year anniversary celebration in Paris unveiled new ecosystem partner Ledger, the world’s largest Web3 hardware wallet, alongside new NFT products that allow individual brands to give away NFTs or create their own NFT showcase -Offerer.
Other well-known brands are already using blockchain platforms such as the public blockchain Arianee to verify their products. The fast-growing luxury second-hand market can benefit from digital certification. The luxury products have to be authenticated on numerous online marketplaces.
Furthermore, the information about a product on the blockchain can be expanded as desired in the future, for example with regard to maintenance or servicing of technical devices or cars, and thus help to better determine the value of a product.
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Image sources: archy13 / Shutterstock.com, © LVMH/Christopher Anderson