Cardano is partnering with the University of Wyoming to fight counterfeiting in luxury goods using blockchain tech.
According to the OECD "Imports of counterfeit and pirated goods are worth nearly half a trillion dollars a year, or around 2.5% of global imports, with US, Italian and French brands the hardest hit and many of the proceeds going to organized crime, according to a new report by the OECD and the EU’s Intellectual Property Office."
Luxury brands and companies tried to fight illegal activities using serial codes, holograms, RFID tags with moderate success. The luxury goods industry suffers when its authenticity is questioned as brands become weaker in the buyer's heads. Not to talk about financial losses.
The University of Wyoming (UW) is working on a solution against counterfeiting based on the Cardano Blockchain. IOHK (The company behind the research and development of the Cardano ecosystem) provided $ 500,000 in ADA to UW to develop chips that are capable of holding what is essentially proof of ownership of luxury goods.
According to Charles Hoskinson, IOHK CEO, this is a project that goes beyond the scope of 2020. If the project is executed correctly, its possibilities are endless and could lead to a total revolution in the luxury goods industry.
In a YouTube video, Hoskinson explains how the solution works, assessing the current industry supply chain system and its problems from component integration to the final retail step.
UW solution will use a combination of software and hardware to address the issue. An inexpensive chip with the capability to store private keys is hidden in the desired product (in a shoe sole, for example). This chip is hardened against information extraction. The chips will be equipped with RFC, RFID, or a similar standard and will be extremely cheap to make, costing an estimated 1 to 10 cents. And it would be easy to implant the chips in items such as luxury bags, shoes, watches, etc.
WU plans to issue tokens, using Cardano blockchain that represents the authenticity or ownership of a luxury good. Thus, once the private key has been flashed in that asset, it can never be altered or erased, since the private key itself cannot be moved. And since the private key is locked in the chip forever, so is the authentication token.
Hoskinson expects these chips to get better over time. He said that it will be possible to add extra metadata. It is possible to store the item's history, where it was manufactured, and where it was sold.