Solving the Problem of Counterfeit Goods with a Decentralised Ledger
From clothes, software, intellectual property, to digital media, we are surrounded by counterfeit goods.
In the United States alone, the cost of counterfeit goods is put at a whopping USD 600 billion per year.
As per a report by the International Chamber of Commerce, counterfeiting is projected to drain as much USD 4.2 trillion from the global economy by the year 2022. Not just that, as much as 5.4 million jobs are put at risk because of the fake goods industry.
The disappointing aspect is that the lack of regulatory framework, international laws, and non-cooperation, all hinder the successful eradication of counterfeit goods from the world’s economy. That’s not all, the ineffectuality also results from a variety factors such as the innumerable array of consumer products, opaque supply chains, increased costs associated with enforcement, lack of resources, and large volume of international trade.
With a distributed ledger, the revolutionary Blockchain has the potential to streamline processes and subsequently put an end to the industry of counterfeit goods.
Let’s see how Blockchain can assist in the fight against counterfeit goods:
With its decentralised ledger, Blockchain tech can transform the supply chain by facilitating the storage of the entire transaction history on a shared database. Hence, the movement of goods can be traced with accuracy with Blockchain. Such a network would be able to provide the origin of the products.
Thus, users and manufacturers will be able to authenticate the originality of a any product. Leveraging this methodology is the New Zealand-based startup, Origins.The startup is using Blockchain technology to trace the production and sale of garments. It thus provides the end consumer with the facility to verify the source of the clothing item in the retail industry.
Blockchain-based supply chain solutions are also applicable in the pharmaceuticals industry.
By assigning each medicinal bottle or packet with a unique identifier, the end user as well as the manufacturer can trace the movement of the medicine across the manufacturing and transportation process to verify its legitimacy. As per a report, in 2014 counterfeit medicines imitating the ones manufactured by American pharmaceutical corporation, Pfizer, were being sold in as much as 107 countries. This black market is responsible for the growing number of fatalities.
The biggest impact that Blockchain technology will have is in the category of digital assets, intellectual property, and other intangible goods. Thus far, it has been very hard to prevent the misuse of Intellectual Property.
Reproduction of digital files without permission is also very prevalent.
With its Smart Contract system, Blockchain facilitates the enforcement of Intellectual Property agreements. In case of breach of IP rights or the illegal reproduction of an asset, Blockchain will enable us to trace the origins of the tampering.
Blockchain will have a revolutionary role to play in the intellectual property rights arena, because while internet helped ease communication and sharing of data , it will be only now that we will be able to enforce the intellectual property rights in the intangible assets domain.
Blockchain technology may be still in its nascent stages but the distributed ledger tech holds immense potential in curbing the counterfeit goods industry by making end customers aware of their purchase and the provenance of their goods.
Manufacturers will be able track the movement across the supply chain to ensure that there is no tampering with the goods.