Discussion: Will blockchain technology be a fake terminator?

Source: Medium;

Translation: First Class (First.vip) Saline

This article describes the impact of counterfeit and shoddy products on the brand, and further discusses the entry into the blockchain technology so that consumers can know whether the goods they purchase are genuine, in order to combat counterfeiters.

What can a blockchain do? This sounds like one of the absurd problems raised by contemporary young people, but it is very important and worth pondering. Whether we are prepared or not, the blockchain will penetrate into our lives. In addition to bitcoin and cryptocurrencies, blockchains have endless applications as distributed information books. All walks of life are preparing for the global distribution of distributed ledgers, which will become a common way of doing business in the future.

Smart contracts are like executable code running on blockchains, and applications on laptops and smart devices are the future use of blockchains in the industry. Future scientists at Matteryum, the leader in smart contract property registration, predict that in the future, blockchain will not only be able to buy and sell goods, but also transfer ownership from car to home. Imagine that you don't have to wait for a long time, just a few minutes (or even a few seconds?), the new house's formal documents can be found. In theory, this is the future direction of development. At the same time, it raises a question: How do you know that the things you bought are genuine?

Of course, cars are tangible items, and a fine piece of art or a designer bag is also tangible. So how do you make sure that what you buy is true for the last two items? How to identify the authenticity of a luxury item in the second-hand market? As the Internet becomes the most common second-hand market, it is increasingly difficult for the average consumer to tell the authenticity of the goods, because in addition to seller guarantees and commodity invoices (which are easy to copy), second-hand goods are usually not guaranteed. With the rise of counterfeiters and their use of technology to create fakes, sales receipts, and even product registration cards, consumers are in desperate need of something that will protect them when they shop. At this time, the immutable nature of the blockchain can come in handy.

Counterfeit goods

If consumers spend thousands of dollars in the second-hand market, they buy a fake package. The Global Brand Fake Report estimates that online fraud alone generates more than $30 billion in losses each year. This has a global impact on the industry.

The OECD (Organization for Economic Co-operation and Development) reported that the total value of imported fake goods in the world in 2013 was 461 billion US dollars, of which nearly 5% of the goods imported into the EU were fakes. And the situation is getting worse. In May of this year, the Harvard Business Review published an article about how luxury brands beat counterfeiters. The numbers mentioned in this article are astounding: total fake transactions totaled $4.5 trillion, of which luxury goods may account for 70%! In just 6 years, it has grown nearly ten times! Counterfeit goods are being sold every day on many aftermarket and second-hand market websites. Sometimes buyers know that they have bought fakes, but sometimes they are still in the dark. If the manufacturer can install a device that can emit radio signals in all products and receive it by the smart device to verify the authenticity of the product, this will definitely improve the fraud. It's as simple as using a transportation card or a contactless payment card. This method will work until the counterfeiter finally learns how to replicate the signal and label components. And this is the most frustrating problem today, because no matter how smart the manufacturer's solution to the counterfeit market is, the counterfeiters will always find a way to make the perfect fake and get everything back to the starting point.

It takes a lot of time and effort to create a product, and it takes only a few months (or even weeks) to have a copy of the product at a reasonable discounted price on the Internet. The industry's losses are increasing, and it is almost impossible for manufacturers to pursue them. Most countries where fakes are prevalent do not have relevant laws or are not interested in introducing laws to pursue relevant behaviors. It's easier to copy out the larger fake gangs, but this is like an arcade game. As long as one falls, other gangs will emerge instead. If you run a brand or product that caters to the public's aesthetic, there is no doubt that in some way, in some way, the product must have been imitation.

The only thing that will not be copied so far is the cryptocurrency (tokens). Encrypted assets are created based on timestamps and verified by a verification node on the blockchain. When a cryptocurrency is generated, its address and identification portion on the blockchain are based on a time code. This information has been verified and recorded and is immutable and therefore cannot be tampered with. If the criminal attempts to copy this information, it will be immediately rejected by other verification nodes on the chain.

Therefore, items on the blockchain cannot be forged (whether cryptocurrency or tokens). So how do we relate it to real-life items?

Digital mapping vs. encryption mapping

"Digital mapping", as the name implies, is a digital representation of a physical entity in the real world. This definition also includes the actual physical entities and the relationship between the two. Digital mapping has been around for a few years and was promoted by NASA as a 3D modeling concept in early 2010, where designs and ideas can be tested in the digital world and then built in the real world.

There is also a mapping in the encrypted world, called "encryption mapping", which is an encrypted entity (token or currency) associated with a real physical entity. The difference is that in the crypto map, the real entities remain unchanged and are represented by creating crypto tokens, the relationship between them being connected by the blockchain. The blockchain can also record its certification record.

Our goal is to mark real-world entities with some intrinsic value in a uniquely identifiable way that smart devices can read. Whether it's an article, an autographed item, an original piece of art, or a valuable luxury, we use a crypto map token to represent the real entity and use the blockchain to record, both connect together. This creates an unforgeable record.

Here are some possible practical examples:

A design company produces signature designer goods for high-end brands. Because their brands are highly sought after by the public, they are the hardest hit areas for counterfeiting. Counterfeiters and their agents sell these counterfeit goods through websites, street corners, flash stores and second-hand market auction sites. Whether the public can tell whether it is true or not is not known, but it cannot prevent the circulation of fake goods, and damage the authentic sales and its brand reputation.

Art has always been a very lucrative investment. If you choose the right artist, then the art you invest in can not only be used as a decoration, but also appreciate. Therefore, the second-hand counterfeit market came into being, and the market can produce many fake artists (such as Banksy, Invader and Warhol). Even fakes can be sold for thousands or even tens of thousands of dollars. So how do you ensure that they buy genuine, not worthless, products in the second-hand market?

The collection industry has been popular for thousands of years. The Romans in ancient times liked to collect manuscripts and proudly show off their treasures in places like the Alexandria Library. For centuries, people’s signatures on celebrities have been very enthusiastic. After the death of celebrities, their signatures have appreciated. As an investment, they may not be a portfolio, but they certainly have a value that can be greatly appreciated.

In 2008, the Hastings Communication and Law Journal stated that as many as half of the art sold in the UK each year is “disguised”, and the amount of art products sold is estimated to be between $250 million and $500 million. And between 1989 and 2003, the number of fake art pieces rose by a factor of five. Artifact identification is essentially a professional perspective derived from recognized experts. Artwork identification standards will change over time. This is not a science. The identification of some works of art can cost tens of thousands or even millions of dollars. If an expert doubts the authenticity of a work, it may result in the owner losing millions of dollars; regardless of the owner, the cost is high. At its first International Conference on Art Defects, Interpol put forward a series of guidelines to raise awareness of art, implement and encourage the adoption of local laws on art and products, and establish a central information database for member countries. Refer to the art product issue.

Difficulties: How do you know that the autograph of William Shatner (a Canadian actor) that he is bidding on is true? Take a quick look at a souvenir with his autograph on a second-hand market site such as eBay, ranging in price from a few dollars to a few hundred dollars. Since all signatures look similar, how do you know which ones are true and which ones are fake?

Under all of the above examples, and in many real-world situations where authentication is required, how to know the authenticity of an item remains a difficult challenge.

We tried to solve this problem by encrypting the mapping verification service. The concept is simple, but the mechanics of the mechanism are very complex enough to achieve anti-counterfeiting. Use radio frequency identification technology and other descriptive information (evaluation reports, manufacturing information, photos, videos, etc.) in the blockchain using tags or tags that can be physically attached to the product.

The on-chain record retention database is based on the Semantic Web format. Originally developed for the web a few years ago, its structured format allows for easy searching of databases of validated items using basic web tools and Boolean expressions. This format is also the preferred format for many museum collections.

When a user scans for an item on a smart device application, the built-in technology in the application performs multiple functions. The initial scan will look up the blockchain record based on the frequency ID and the application will determine if the item has been recorded. If there is no record, an error will be reported. If the scan indicates that the item has been entered into the blockchain, continue to look for the authenticity smart token for the item. If the token has not been distributed, you can set up the account by providing some basic information. The system then creates a simple encrypted wallet on the app and puts the authentication smart token into the wallet. Smart tokens become the “cryptographic map” of real-world goods and can verify their authenticity.

If the item owner sells the item on the second-hand market, the token can also be transferred to a new wallet registered on the app for a small fee. The counterfeiter may be able to copy tags or even signals, but unless the original item owner does not register the token, there is only one token per item. Therefore, goods without tokens are like a car without a photo, or a piece of art without a source. It basically divides the secondary market for the sale of genuine and defective products so that buyers and dealers can know what they are buying before the transaction takes place.

With this technology, manufacturers, artists and celebrities no longer have to worry about it. If an item is stolen, the future enhancements to the token can cause the owner to mark the token as stolen. Then, all second-hand market sellers who get stolen goods can scan the item and see if the item has been tagged. This will make it very difficult for the thief to transfer the stolen goods, and if the second-hand market seller contacts the relevant department, the stolen goods may return to the original owner. In addition, manufacturers, artists, or celebrities can use this service to whitelist and embed them in their smart device applications; to ensure more brand loyalty through their customer base.

The World Health Organization reported in 2017 that one out of every 10 drugs in developing and poor countries is a counterfeit drug. In this industry with more than $300 billion in global sales, counterfeit drugs have sales of more than $30 million. Many companies are looking for solutions from encryption companies. Everledger has been researching a blockchain solution that tracks diamonds and prevents the circulation of blood diamonds, a diamond that is mined in war zones and marketed. They are now applying the system to the premium wine industry. And hope to use a block-based ledger system to effectively contain fakes into the commercial system.

The adoption of blockchain technology may benefit manufacturers, artists and celebrities. Buyers can not only trust the quality and authenticity of goods, but the second-hand market can also enhance their trust. It strengthens brand loyalty and helps raise the price level of the healthy second-hand market to ensure that the brand's appeal and maturity in these markets continues. The encryption technology method not only enhances the public's acceptance, but also enables various future applications in daily life.

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