Since Bitcoin was released in 2009, blockchain has been a new addition and firm fixture in the tech space. With trustless and transparent functionalities, the technology has proven to be universal and has been slowly integrating itself into new sectors. Since establishing itself in the financial sector, it’s time to see which new industries the technology will prove itself to be indispensable in. Let’s explore blockchain integration into the retail sector.
The Benefits Of Blockchain Technology
Blockchain has proven itself to be most useful in the cryptocurrency space, offering a backbone of support and numerous benefits. Originally invented in 1991 by Stuart Haber and W. Scott Stornetta, blockchain was designed to store office documents with timestamps that couldn’t be tampered with. In 1992, the pair were joined by Dave Bayer as they incorporated Merkle trees, allowing more documents to be entered into each block.
In 2008, Satoshi Nakamoto released the Bitcoin whitepaper fleshing out his innovative additions to the original blockchain concept. The renewed version solved the double spending problem, and incorporated a proof of work system to verify the transactions without the need for a trusted third party. The technology also acts as a distributed public ledger, displaying pseudonymous transactions in real time. By using a network to verify all transactions, blockchain is fully decentralized and does not rely on any organisation or entity to run it.
While not every business needs a public ledger of verified transactions, the technology can provide real time confirmation on processes, services, and production. Blockchain is believed to be able to save companies trillions of dollars in losses as well as saving consumers from low-quality goods through a transparent and autonomous blockchain supply chain.
Blockchain Integration Into The Retail Sector
While blockchain has integrated itself into the financial and entertainment sectors, with everything from crypto trading to DeFi and dApps to online gambling platforms, it’s yet to make a widespread mark on the retail sector. However, it has sparked a conversation and several companies are looking into incorporating the technology. As blockchain, as well as cryptocurrencies, are clouded by negative news and much FUD (fear, uncertainty and doubt), it will likely take one large corporation in the retail sector to onboard the technology before widespread adoption will take place.
Blockchain To Combat The Fake Luxury Goods Market
Luxury brands face incredible “losses” each year due to counterfeit goods on the market. Products are replicated and sold usually in much poorer quality and to the overall detriment of the brand. In 2019, the fake goods market came to $4.5 trillion in trades, with the luxury brands sector accounting for 60 – 70% of that. Luxury brand LVMH (Louis Vutton Moët Hennessy) is reported to spend $17 million a year on lawyers and anti-counterfeiting legal action.
Brands Joining The Chain
LVMH has since partnered with ConsenSys and Microsoft to develop an Ethereum-based blockchain platform. AURA will grant customers the right to verify the authenticity of their purchased goods, track its history, and more. Each product on the blockchain will be represented by an ERC-721 token, a non-fungible token that cannot be deleted or destroyed.
The same year, 2019, Nike also jumped on the bandwagon and began creating CryptoKicks, a line of Nike sneakers that can be authenticated as a real product on their blockchain. Each pair of shoes is assigned a cryptographic token, either ERC-721 or ERC1155 NFTs, which can be verified and the shoes proven to be original. These tokens can be stored in a customer’s (Ethereum compatible) wallet, and transferred to the next owner should they want to sell them.
More recently, New Balance also indicated their interest in using blockchain technology to combat counterfeit goods. Through the same tokenization process as LVMH and Nike are using, New Balance will use the Cardano blockchain to facilitate their verification process.
Universal Blockchain Integration
Only since 2019 has blockchain integration into the retail sector started happening, and it’s only upwards from here. While the technology will not completely eradicate counterfeit goods alone, it will certainly assist in creating a more trustworthy and transparent opportunity for consumers to verify that what they’re buying is the real deal.