There is a great hope that a blockchain would put a check to the counterfeit market. But actually blockchains could turn out to be the markets filled with counterfeits, if it depends only on the ID, serial numbers etc for verification of the deliverables.
Why?
In the case of cryptocurrency, the double spend could be effectively stopped, because bitcoins can only be used for transactions. However this may not be possible if the bitcoins are also useful without getting involved in transactions.
For example, let’s say that, in the middle ages gold coins were used as the global currency. But the gold coins were also used as ornaments. So unlike bitcoins, gold was useful outside of transactions as well.
Let’s extend this a bit. You have a phone with a specific serial number. You can exchange this phone for some money. However the difference is, phone is useful without getting into transaction also, but money isn’t.
Still not getting?
Alright, let’s get into a full example.
So, you’re the legitimate owner of this phone with a serial number. And there is a guy who specializes in providing fake phones. Given a phone model and serial number, he can get you a fake phone almost identical including the serial number, but much cheaper.
So you sell your phone online, but instead of the original phone, you get the fake phone and send it to the buyer. Let’s assume that this transaction uses a blockchain which recorded your previous buying your phone from the manufacturer. So this transaction gets cleared without issues because you are the legitimate owner of the phone. And verification by the buyer using the serial number also succeeds. You still got your original phone with you which you can continue to use, but may be not sell it again on the same blockchain. Also you can use different blockchains for different products while registering your purchases.
Where is the problem?
This is a race between the techniques to attach a secure ID to an object and the techniques that can do the same thing for a fake. Blockchain has nothing to do here. Blockchain doesn’t have any intrinsic capabilities that can help attach an ID to a physical asset.
For the assets like digital media or cryptocurrency, the cryptographic mechanisms can provide the required verification. But for the physical assets, there is no “hashing” of the molecules that make up the object nor a digital signature. So we are back to square one, faced with the problem of telling originals from the fakes.
But it is a good thing that we have a problem to solve. A very interesting one.
