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Counterfeit Problems and the Need for Blockchain Solutions 



Counterfeit problems continue to plague various industries, mainly due to the lack of transparency, visibility, and verifiability of provenance among different stakeholders. 

Mohammad Jaber, Co-Founder & COO Elas, speaking at the London Blockchain Conference 2023 said that “the counterfeit problem still is very rampant and exponentially growing today, largely due to the limitations of Legacy technology.”

Without knowing the origin or history of a product, its value diminishes significantly. Moreover, the reliance on trusting third parties introduces risks, costs, and potential data integrity issues. Blockchain technology has emerged as a solution to address these limitations, he explained.

However, these limitations can be overcome with Blockchain Technology. Blockchain technology offers several advantages in combating counterfeit problems. Mohammad affirmed that the “Blockchain provides a mechanism for immutable storage, distributed consensus, timestamping of events, scalability, and enhanced security.”

Further, he mentioned that the distributed ledger ensures that information stored on the blockchain is permanent and agreed upon by multiple stakeholders in the supply chain. It provides a chronological order of events, enhancing transparency and understanding of why certain events occurred, he said.

How Blockchain Could Solve Counterfeit Problems

Ali Beydoun, Founder & CEO of Manufact, at the conference, estimated that “counterfeiting has grown over ten thousand percent since 1980, affecting 10 percent of luxury goods brands.”

Counterfeit problems have had a significant impact on the luxury goods market, with the growth of counterfeit goods outpacing the growth of the industry itself. Ali cited the cigar industry as an example stating that “Habanos, a prestigious cigar brand from Cuba, reported a loss of $50 million in the European market due to counterfeiting.” The need to address this issue as the CEO highlighted his experience with a counterfeit cigar box prompted the birth of Manufact, he said, a company dedicated to combatting counterfeiting.

Manufact collaborates with manufacturers to track the entire lifecycle of a product, from production to consumption. By capturing data on a software platform supported by blockchain, each physical item receives a digital token. This process makes it easier for regular consumers to access and benefit from blockchain technology. Manufact has implemented this approach in the cigar industry and is expanding its efforts to combat counterfeits in other sectors, such as liquor, coffee, and honey.

Using a cigar box as an example, Manufact showcased how blockchain technology verifies product authenticity and prevents tampering. By tapping a smartphone on a sealed cigar box, consumers gain access to detailed information about the product, including its limited-edition status, production date, factory details, and description. 

Moreover, the integration of location tracking helps manufacturers identify potential theft or unauthorized distribution. If a box is scanned in a location different from its intended destination, a warning is triggered, allowing for immediate action. The blockchain-based seal ensures that once a box is opened, it can no longer be resealed, making counterfeiting extremely challenging, Ali said.

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