You first might’ve heard of “blockchain” in the context of bitcoin as the underlying mechanism behind its transaction security. Blockchain was initially created as a ledger infrastructure to ensure security, transparency, and attribution for transactions. A regular ledger system isn’t secure enough in most cases. We’ve all seen evidence of that in the news with breaches reported monthly; even banks haven’t been spared.
Simply put, the security behind blockchain comes from the mechanism by which transactions are stored and verified. Here’s a quick overview of how blockchain works: a private key is used in conjunction with the transaction to form a unique “signature.” This signature is used both to verify the sender, as well as direct the transaction to the proper recipient without revealing the sender’s private key. Transactions are stored in blocks, and the network works together to form a block chain. As the chain gets longer, it gets more and more difficult to modify old blocks, and breach the integrity of the chain. The result? More security than standard centralized data storage.
Chronicled, a relatively new valley startup, is using blockchain to change the game around authenticity in a hot new space: high-end kicks. The problem of counterfeit goods is significant: the Organization for Economic Co-operation and Development estimates the counterfeit market at $461B.
“In the collectible sneaker segment, some estimates suggest that 75% of sneakers on eBay are fakes.” – Chronicled
Chronicled’s solution is unique: a smart label or stamp is applied to sneakers, acting as a digital deed. A companion app is used to verify authenticity. Chronicled uses NFC technology and cryptography to ensure individual labels cannot be forged.
Consumers are currently stuck using traditional and often faulty verification techniques seen in the luxury sphere: checking if stitching is precise, checking if the colorway ever existed in production, shoe shape, degree of matte/shiny logos and graphics, verifying materials used i.e. carbon fiber vs. cheaper plastics on fakes. While the trained eye could probably catch the most advanced counterfeit goods, it wouldn’t prevent consumers lacking professional expertise from shelling out hundreds or even thousands on pairs that are less than legitimate.
Chronicled is an example of blockchain being used in the consumer technology realm with an application for solving the problem around transferring titles and ownership of luxury goods. Sneaker collectors could easily verify rare pairs before buying.
Chronicled hasn’t stopped there – they’re bringing social commerce into the mix by giving collectors the ability to share collections, browse pairs and make wish lists. Sneaker enthusiasts, appropriately dubbed “sneakerheads” already interact in forums and sites devoted to the hobby. It wouldn’t be far off to envision some of the larger sneaker media sites allowing technology like Chronicled to show a seal of verification on user posts as a way to distinguish authenticated pairs from those unverified.
The luxury industry is wide and varied – high-end purses and women’s shoes are exceedingly counterfeit when bought from secondary retailers. The fakes are harder to spot, simply put. The problem could be solved by buying straight from the source, but that might involve luck, influence, or a hefty waiting list. Prime example: In the case of Hermès Birkin bags, which famously range anywhere from $11k-$150k, customers have reported waiting years to have the bag made available. Secondary retailers provide an outlet to purchase vintage goods, make rare pieces accessible, and find discounts. With blockchain, the potential innovation around authenticity could help the wider reseller market establish legitimacy and save consumers a lot of headaches and money in the process.
What other ways could the reseller market provide digital authentication at scale? Comment below, and join the conversation on Twitter. #smartshinyobjects