How does blockchain help fight counterfeits?

How does blockchain help fight counterfeits?

If you have never thought about how fake products are harmful to the world economy, here is the fact. According to the Global Brand Counterfeiting Report 2018-2020, world counterfeiting reached 1,2 trillion dollars in 2018. That’s almost equal to the Australian GNP in the same year.

Counterfeit goods are low-quality items and they are dangerous for your health. For example, fake clothes can cause skin infections and rashes. Cosmetics made by illegal manufacturers often contain toxic ingredients, like mercury, lead, cyanide, arsenic, and animal feces. Should we talk about medicines? Counterfeit drugs can literally kill you.

Statistics show that the numbers of counterfeits grow slowly over years. Still, the possible and caused damage requires urgent and efficient solutions. In particular, brands are investing in customers’ education to increase public awareness. Also, corporates looking for reliable supply monitoring software to spot fraud distributors. This is where blockchain projects can help.

How fake products end up in your hands

To gain your trust, fake goods bear the trademark of a famous brand. But they’re produced by another company, without following the original standards. These products are usually distributed via illegal channels and sold online. It’s difficult to trace them. No wonder some brands have gone to extreme measures and limited the number of online stores where you can buy their goods.

The main problem in the fight against counterfeit goods is the tracking of the supply chains. Products are delivered through a complex network of parties, each working with its own system. Thus, brand owners have a limited understanding of their activities.

To ensure the authenticity of products, businesses have to spend budget and time. Because this requires verifying the origin, communicating with partners, and completing extensive documentation. So they address blockchain technologies with transparent, trusted, and automated supply tracking solutions.

Verifying product authenticity with blockchain

The first blockchain is a decentralized network for storing and sharing digital files. Decentralization ensures trusted relationships and minimizes the possibility of the network breaking out. Blockchains don’t have a single controlling server or authority. Technically no one can influence the validators’ decisions or facilitate records. What does it mean for businesses?

  • Secure online storage — your account and data are protected with mathematical algorithms
  • Transparency in the relationships — anyone can check the transactions records
  • Trusted validation — transactions are confirmed by random anonymous participants
  • Quick data exchange — blockchain transactions are usually completed within minutes

The role of smart contracts

Blockchain smart contracts work on the if/then algorithm. They provide automated solutions for different spheres and don’t need third parties, like notaries. The rule is simple – if conditions of the contract don’t meet, it will not be executed. Blockchain is the main authority. The terms of the agreement are written in the application code. Then, parties sign the contract with their digital signatures.

For example, a logistics company undertakes to deliver goods to a distribution point. Logically, the store should pay for shipping. Then, the parties can sign a smart contract. Its terms are as follows: if the company delivers goods, then the store will pay for the shipment. When the shop manager gets delivered products, this record appears on the blockchain. After that, the computer code creates an invoice. Finally, payment is charged from the shop owner’s digital wallet. If the delivery fails, the smart contract will return the payment.

When using smart contracts for supply tracking we can add specific conditions needed for the fulfillment. It can be GPS coordinates, custody IDs, temperature, accelerometer information, etc.

In order to track the history of products through the supply chain, blockchain applications use special labels, RFID, or NFC chips. At each step in the chain, these chips should be scanned to complete the conditions of the smart contract. Then multiple independent blockchain nodes verify the received information.

Example of blockchain projects helping to identify counterfeits

● VeCain

Shanghai blockchain platform that helps to trace retail products by using NFC, RFID, QR codes. They launched the blockchain in June 2016 and aim to use distributed ledger and the Internet of Things (IoT) to create a supply chain ecosystem. To check and verify the product origin, everyday customers just need to scan the code in their mobile app.

In 2021, VeChain recorded digitized Covid-19 vaccine passports in the form of NFT tokens. They were approved and accepted by the Republic of San Marino.

● Arianee

Another blockchain platform for tracking the supply chains and validating luxury items’ authenticity. Each product registered in the network receives a digital certificate with encrypted records stating purchase dates, insurance, raw materials, etc. They use NFC chips and register digital passports with NFT tokens.

● IBM Food Trust

In 2018 IBM announced the Trust Chain initiative. It is a blockchain solution with the technology specifically designed to trace the global origins of the raw materials in the diamond and jewelry industry.

Later, the corporation told about their aim to help farmers to enter the global food market and improve supply chain logistics. With their Food Trust project, IBM connected producers, suppliers, manufacturers, retailers in a single digital ecosystem.

Conclusion — where to start

If you decide to optimize your business with blockchain solutions, you should get familiar with the industry first. Likely, there’re tons of learning portals and sites where you can learn about the digital economy. In particular, you can register in the crypto exchange. Most of them provide ultimate knowledge bases and allow customers to simply interact with blockchain services.

Why do you need an exchange platform?

Every blockchain network has a native or utility token. Usually, customers use these tokens to pay for the transaction fees or other services. Hence, you’ll need to have these tokens on your account balance before you start working with the project. And a regulated and trusted crypto exchange is the safest way to buy digital coins and tokens.

Namely, CEX.IO is a regulated crypto exchange and a complete ecosystem of various crypto-related products. There you can buy, sell and exchange cryptocurrencies at ease. Additionally, you can earn with crypto staking, get crypto loans, realize crypto purchases on your site, and more. Among other services, the platform has local versions of the site for different countries, such as CEX.IO Canada or CEX.IO Russia.  This exchange gives you easy access to a wide range of DeFi tokens – you can buy them in a few clicks by simply using your credit cards. You can then use the tokens to pay for transactions and services for DeFi projects and decentralized applications.

the authoraddison
Addsion Is a Blogger and an SEO professional. Co-founder of, I have 2 years of experience in SEO & 1 year of Successful blogging @ I have a passion for SEO & Blogging, Affiliate marketer & also interested to invest on profitable stocks.

Leave a Reply