The Capucines, the latest Louis Vuitton handbag modeled by actress Zendaya, costs a whopping $7,250. A fake one costs about $50, and the price goes up depending on quality. Now, imagine being a regular office worker or a teenager who wants this popular purse but does not have $7,250 to purchase the original. Maybe buying the counterfeit makes sense for them. They are not really hurting anyone; they just want a nice-looking handbag.
This shows how high prices on luxury goods are the primary factor driving consumers to purchase counterfeits to satisfy their wants without living above their means, making it a lucrative business model for many criminals. These people prey on bargain hunters and unwitting customers by mass producing fake goods to reap profits with little legal or financial risk. Many also trick clients into buying these fake products, passing them off as a slightly less expensive original.
While the figures are difficult to quantify, the U.S. Chamber of Commerce estimated that counterfeit items cost the global economy over $500 billion annually. This is despite having a plethora of anti-counterfeiting solutions at their disposal, such as radio frequency identification (RFID) tags, thermally activated tamper-proof seals, and color-shifting inks.
Because of this significant loss, luxury brands are turning to blockchain technology to prevent any kind of counterfeiting along the supply chain. Broadly speaking, blockchains are classified as either private or public. Anyone can write to and build on a public blockchain, while private blockchains require authorization to access and use.
Even though public blockchains like BTC and Ethereum have dominated the market for years, none of these networks have come close to Satoshi Nakamoto’s original design in terms of security and scalability. But rather than addressing its on-chain scaling issues, the principal development teams for both blockchains opted for off-chain solutions, adding governance, complexity and security risks to any implementation.
So far, it is only through BSV blockchain, which restored the original Bitcoin protocol as close as possible to how the Bitcoin whitepaper designed it, that a blockchain is able to scale unboundedly. BSV now supports 4GB data blocks and processes 50,000 to 100,000 transactions per second (TPS), with the capacity to scale up to zettabyte-sized blocks and millions of TPS.
Its independence from off-chain solutions maintains data integrity throughout the network, making it a useful tool in detecting irregularities in the supply chain process at a time when counterfeits have even infiltrated prestige cigar brands. For instance, Habanos, a cigar brand hailing from Cuba, announced a $531M in sales in 2020, along with a $50M loss in the European market alone because of counterfeiting.
These counterfeit goods often bear the trademark of a legitimate brand, but it was produced by a third party and does not meet the original manufacturer’s specifications. This design of cheating consumers infuriated traceability app Manufact Founder and CEO Ali Beydoun last year when he unknowingly bought a fake cigarette box for $2,000.
It apparently stung so much that Manufact was born the very same day and has since incorporated blockchain in the workflow to track a product’s life cycle, from the manufacturing and right down to the consumer. Manufact converts the manufacturer’s data on each box that leaves the factory into a digital token on their BSV blockchain-based software and updates the information at each stage.
Manufact’s digital token contains information about the seal, the box’s whole supply chain history, and details about the products inside, which the consumer can view by simply tapping or scanning the seal on each box. Recently, Beydoun flew to the Swinging City to showcase how Manufact plugs the gaps in the supply chain at the London Blockchain Conference (LBC).
The LBC is an inaugural event that brought together various industry experts whose enterprise-grade technologies were built on BSV. Beydoun told the audience that while everyone has heard of BSV, few understand how it improves one’s livelihood. An example of which is BSV restoring customer trust in the luxury products they purchase since counterfeiters cannot change or fabricate the recorded data on its public ledger.
However, Manufact’s use of BSV is not just a matter of safeguarding people from being conned into believing they are purchasing an authentic item, it is also intended to protect unsuspecting consumers from the fatal consequences of consuming counterfeit items.
A report by the Office of Justice Programs found counterfeit cigarettes contain higher levels of carbon monoxide, nicotine and tar that exceed national standards. Inhaling excessive amounts of these substances, especially for long-term, increases the risk of cancer, as well as cerebral-vascular and cardio-pulmonary disorders.
Worse, the counterfeit cigar market has extended to low-income young smokers, quickly turning a former marginal issue into a major problem that requires an immediate and proactive approach from authorities and manufacturers alike.
Refining supply chain security can be a good place to start for manufacturers in deterring the foul practice of counterfeiting, but a step that involves an upfront investment of money and skills. Manufact’s value proposition of a better chain of custody recording with no prior blockchain knowledge necessary thus signals a watershed moment for the sector.
Although its benefits will not be felt overnight, it will become more apparent over time. Gone are the days when an average person has little hope of distinguishing a counterfeit product from an authentic one, and with BSV powering Manufact’s solution, both have demonstrated that counterfeits have no place in a fair, legal market.
