September 29, 2023

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Crypto is falling apart but the technology behind it could save billions of luxury brands

Crypto is falling apart but the technology behind it could save billions of luxury brands

These losses can damage profit and reputation – which is why some brands are now turning to technology to protect their products, brand value, and consumers.

Despite being a competitor, it is the conglomerate of luxury brands LVMH (LVMHF) joined forces with Prada (PRDSY)and Cartier in April 2021 to establish Aura Blockchain Consortiuma non-profit platform that creates a “digital twin” of designer products.
Blockchain is a file digital ledger It cannot be modified, altered or tampered with. It’s the same technology that underpins cryptocurrencies, which have seen their prices plummet recently. But it has many other applications — and Aura uses it to give luxury products a unique digital identifier that helps customers ensure that their purchase is the real deal.

“Blockchain is a really fast-moving and complex technology,” says Daniela Ott, general secretary of the Aura Blockchain Consortium. “What Aura is all about is making blockchain easy for luxury brands.”

So far, more than 20 brands use Aura, with more than 17 million products registered on the platform, Ott says.

“These brands are competitive in every other aspect, but they are collaborating on this technology to move forward in the fastest, safest way,” she says.

‘Trace and Trust’

By creating a “digital twin” of physical products such as shoes or handbags, Aura software compiles a ledger of information such as the type and source of the material, where and when it was made, and how many products were produced.

Ott says this will give consumers a higher level of proof and protection by acting as a digital certificate of authenticity that uses “bank-level encryption” and “impossible to counterfeit” — thwarting counterfeiters. It adds that digital twins, which can be accessed via a web page or mobile app, will provide greater insight into the origin of the product, promoting “traceability and trust” around sustainability and ethical issues for conscious consumers.

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However, blockchain has its limitations — information is only as reliable as the person who enters it, Ott says, warning that “if the brand doesn’t have a good relationship with the supplier, the blockchain won’t help.”

Sustainability is a major concern of the consortium. As a private blockchain built from scratch, Aura says its platform is using Less power than public block chains. Ott says the platform also gives brands control over the information they share and keeps brand and consumer data safe.

Aura launched its cloud-based software in early 2022. Ott says its plug-in technology will allow brands to integrate the product into their existing operations “without blockchain knowledge.”

And more brands are joining. street fashion designer OTB . group He became a founding member in October 2021, and last month he specializes in diamonds and gemstones Sarin Technologies Join the consortium as well. Founding members contribute to development costs and have a greater say in governance, Ott says, while all members pay licensing fees for software services and every digital twin produced.
Counterfeit goods, like the ones pictured, cost designer brands billions each year — in addition to damaging their reputations.

New technology

Other fashion brands are also using blockchain tools. Audemars Piguet and Vacheron Constantin have joined the Paris-based open source blockchain platform arianiWhile Karl Lagerfeld Photo Archive It is approved in Lukso . network public blockchain.
Creating a digital identity may be increasingly important for sellers of second-hand luxury goods, a fast growing market. Online platforms like You rarely wear it And the Collective Vestiaire Products need to be authenticated before they can be sold — a multi-step process that includes digital and physical checks, says Victoire Boyer-Chamard, global head of authentication at Vestiaire Collective.
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“Counterfeiting has been around for decades and is constantly evolving,” Shamard says. Vestiaire’s team of 60 validators check digital documents, including photos, before examining each item. Shamard says AI and blockchain could help speed up the digital authentication process, adding that this would help rather than replace human validators.

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“We still need an expert to perform a physical check to verify all digital data,” she says, adding that if luxury brands used the same technology, it would help sellers easily access and use the information.

Ott says that Blockchain technology can also be useful beyond fashion: It can benefit luxury sectors including art, cosmetics, perfumes and furniture. In the future, Ott says, the ledger could also contain information about product maintenance and maintenance, helping to better determine the value of the product for resale.

The latest addition to the Aura consortium is the German automaker Mercedes Benzwho joined as a founding member and plans to use the platform to explore different aspects of digital branding, such as creating NFTs (non-fungible tokens) for in-car digital art experiences.

“The measure of our success is the inclusion of every luxury brand,” Ott says.