A while back we looked at the possibilities offered by the blockchain in journalism and in particular in fashion journalism. But fashion is a vast universe and the blockchain is a fascinating concept also for other sectors of the industry. It is therefore only natural for a powerful conglomerate such as Louis Vuitton Moët Hennessy (LVMH) to get interested in it.
Different companies have tried to employ blockchain, the technology behind cryptocurrencies such as Bitcoin and Ethereum, also in other fields, since it allows to distribute data on a network of nodes using cryptography, removing in this way the necessity for information to be controlled by a central authority.
News about the French luxury goods conglomerate LVMH exploring the blockchain first arrived around March, but the platform, called AURA, was presented last week at the VivaTech trade show in Paris.
The AURA blockchain was developed over a year in collaboration with Microsoft's Azure platform and blockchain software technology and Ethereum design studio ConsenSys (also linked to the Civil Media Co. project for a new journalism economy using blockchain). AURA uses a permissioned version of the Ethereum blockchain known as Quorum, developed by JPMorgan and focused on data privacy.
How will LVMH use this technology? Thanks to the ERC-721 non-fungible tokens (NFT; ERC-721 tokens arrived at the end of 2017 with the CryptoKitties, one of the first blockchain games; NFT-tokens are useful in the world of art, real estate and even in document circulation processes), the technology will be employed to prove the authenticity of high-priced luxury goods.
It will also allow the company to track the products they offer from raw materials and original components to point of sale and follow those products on the used-goods markets (think about a handbag being tracked through different phases, from materials and production to sale and resale). Besides, the blockchain may be employed for the protection of creative intellectual property, for exclusive offers and as a way to gather ethical and environmental data.
The information about products will be recorded on the shared ledger during the manufacturing process, consumers will receive the AURA certificate with the product information when they purchase the products and will be able to track it down and discover more about the back story behind an item.
So far luxury brands protected their products with serial numbers, watermarks, holograms, barcodes and RFID technology. Too often, though, such attempts proved to be ineffective, as a hacker may have been able to corrupt such data or database. Whereas no one can alter, lose or destroy records on blockchain systems. Blockchain will therefore also facilitate luxury authentication processes.
The most interesting news about AURA, though, is that, being developed by and for luxury brands, this application will be open for use also to other companies, LVMH competitors included. The AURA platform will indeed incorporate Luis Vuitton and another LVMH brand, Parfums Christian Dior, but, little by little, the technology will expand to over 60 brands and be available also to competitors, its Intellectual Property (IP) will indeed be handed to a separate entity which will be owned by different brands. In a recent press release ConsenSys described therefore Aura as "a consortium", a solution that should allow for greater cooperation among firms as all brands that join the platform will become shareholders with an equal claim to the IP.
Luxury brands see the blockchain as a way to fight the counterfeiting market that every year causes them heavy losses. For example, according to the Global Brand Counterfeiting Report 2018, losses incurred by luxury brands because of sale of counterfeiting through the Internet accounted to 30.3 Billion USD in 2017. So any system that can help brands fight this trend is embraced enthusiastically by luxury companies.
Louis Vuitton is not the first luxury group to jump on the blockchain bandwagon: Swiss luxury giant Richemont and diamond industry brands and companies such as De Beers and Taylor & Hart started using the blockchain to enhance their supply chains, just like San Francisco jeweller Brilliant Earth that will introduce blockchain-integrated diamonds through a partnership with London-based Everledger to track a gem's lifecycle.
There have been further luxury provenance platforms and mini consortia, such as Paris-based non-profit Arianee (that developed a blockchain-based protocol that creates a digital identity for valuable goods, such as bags, sneakers and watches) or public blockchain VeChain.
In theory AURA sounds intriguing, though it may pose questions and dilemmas about Louis Vuitton's competitors who may not be so willing to join in the blockchain platform.
That said, it is fascinating to see technologies opening new paths for fashion brands and maybe young people interested in a career in the industry should consider focusing on these technical aspects that may reserve to us some surprises in future.
Could fashion designs become digital cryptocollectibles like the CryptoKitties that can change ownership through the blockchain? Who knows, maybe that will happen at some point and, rather than buying expensive luxury items, fashionistas will go for digital clothes and accessories. Cryptowardrobes anybody?
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