A fight against counterfeit products through blockchain
Our society is becoming more dangerous due to the vast number of fake products in circulation. A practical example is the prevalence of counterfeit drugs, causing harm and tarnishing the reputation of companies. The Major challenge is that these bad guys are so good at what they do that it is most times difficult to distinguish fake from authentic products. Various solutions, such as anti-counterfeit labels, serial numbers, QR codes, have proven less effective.
In the quest for a solution, IBM trust food discovered the potential of blockchain technology in combating counterfeit goods in 2018 through Hyperledger, a technology facilitating product traceability in blockchain.
you may ask, what is blockchain?
Renowned for its decentralization and immutability, blockchain records and stores transactions in blocks connected through a peer-to-peer network. Once a transaction is stored in the blockchain system, it becomes immutable.
How does blockchain work against counterfeit products?
This process involves collaboration among the manufacturer, supplier, and retailer. The product details are registered into the system by a smart contract developer, generating a smart tag, preferably a barcode.
The product is then sent to the supplier, who verifies it through the barcode and adds their details without altering the manufacturer’s information.
Next the product is passed on to the retailer, who similarly verifies and adds their details. Finally, the product reaches the consumer, who also updates the system.
If, upon scanning the product QR code, no details appear, it indicates that the data for the product is not present in the blockchain system, signaling a counterfeit.
A practical use case is in Walmart, a company enthusiastic about blockchain technology, particularly in the food and beverage sector. They use the blockchain technology Tracr to trace their food products from the farmer’s farm to the company and then to the final consumer.
Benefits of using blockchain for counterfeit products
Below is how this new innovation would be of great impact in our industries .
Immutability: The blockchain system is known for its immutability. This means that when data or a transaction is recorded in the blockchain system, it cannot be changed due to the cryptographic algorithms used to secure information and data stored. This makes it easier to store the details of a product in the system because, unlike the traditional method of storing data, this method cannot be hacked or tampered with.
Security: With the number of counterfeited products in circulation, supply chain management requires effective security to prevent this menace. This is why blockchain offers a vast amount of security, as it creates no room for diversity, centralization, and immutability.
Decentralization: Blockchain runs on a decentralized system, which means it isn’t controlled by anyone. This ensures that the supply chain process is limited to centralized authorities.
Controversy and challenges
Using the blockchain system to stop the production of counterfeit goods may be the solution for enterprises, but it invites a few challenges that should be looked into.
Since blockchain is still in its infancy and is yet to be fully accepted in countries like China and Saudi Arabia, and considering the possible requirements needed to introduce blockchain into their system and the cost, companies do not trust the system enough to invest such time and resources, which is one major blockchain limitation. Also, most companies in their infancy stage where blockchain is accepted do not have the finance to fund the operation.
To solve this issue, companies are advised to conduct adequate research on the future of blockchain technology, and if it suits their needs, they can start with small-scale projects before venturing into the large scale. Also, companies with low funds can collaborate with other interested companies to reduce individual implementation loss.
