LVMH introduces Blockchain Technology to track luxury goods
A technology formerly created to optimize and protect the cryptocurrency Bitcoin, Blockchain cannot be tampered with or altered by any entity. It will be used by the French conglomerate to verify the authenticity of its high-priced goods, trace it’s origins and eliminate counterfeit issues.
Over the last twenty years, the market for luxury goods has been valued at approximately $3 trillion globally. However, the Global Brand Counterfeiting Report 2018 estimates that the losses suffered due to counterfeiting have amounted to $323 billion in the year 2017, with luxury brands incurring a loss of $30.3 billion through internet sales.
Plagued by a flourishing counterfeit industry driven by fraudulent imitations and near-original replicas, the largest luxury conglomerate LVMH has come up with a solution to ensure the authenticity of every product bearing its label – the Blockchain technology.
To circumnavigate a products life cycle, blockchain technology is being viewed as a trusted verifiable system. Codenamed ‘AURA’, the cryptographic derivation platform is meant to diligently track the movement of goods by Louis Vuitton, as well as other LVMH brands, which include Christian Dior, Fendi, Givenchy, Bulgari, etc.
With this platform, the company can provide their consumers with the necessary data to determine the origins of the goods tracing it to the raw material manufacturing stage, the point of sale and eventually to the used-goods markets.
The functioning of AURA is similar to the way ownership of a Bitcoin is traced as it moves between different users from current owner back to the very creation of the coin, the consumer would have access to the entire life story of their luxury purchase. This is applicable to fresh as well as pre-loved items.
An owner would be able to trace the delicate vachetta leather back to the farm where the animal was raised and ensure the welfare standards and protocol, confirm the design is authentic and find out more about the craftsman or woman who completed the stitching of their bag.
This revolutionary technology’s main premise is to authenticate transactions. Blockchain’s regionalized, distributed and public digital ledger can be used to record movement across multiple platforms so that a documented record cannot be altered retroactively, without the revision of its subsequent blocks.
LVMH has enlisted a specialized blockchain team who have been in stealth mode for over a year, working closely with ethereum design studio ConsenSys and Microsoft Azure. They also intend to offer the technology in a white-label form to other brands including competitors.
The next phase of the platform will explore the protection of creative intellectual property, exclusive offers, and events for each brands’ customers, as well as decisive anti-ad fraud.
This technological advancement goes beyond proving the provenance of your designer bag or diamond ring. This level of authentication and traceability can have a direct influence in improving working conditions in third world sweatshops, counter animal rights violations and the rampant flouting of labor laws.
While luxury brands seem to be the early adopters due to their predisposition to demarcation if applied to mass-market brands and the wholesale industry it has the power to transform several lives and change the dynamics of the industry altogether.