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Cryptocurrency is failing, but the tech behind it could save luxury brands billions

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These losses can hurt both profits and reputation, which is why some brands are now turning to technology to protect their products, brand value, and consumers.

Despite being competitors, the luxury brand conglomerate LVMX (LVMHF) joined forces with Prada (PRDP)and Cartier in April 2021 to launch the Aura Blockchain Consortium, a non-profit platform that creates a “digital twin” for design products.
Blockchain is a digital ledger that cannot be edited, altered or faked. This is the same technology that underpins cryptocurrencies, whose prices have plummeted in recent times. But it has many other uses – and Aura uses it to give luxury items a unique digital ID that helps customers make sure their purchase is the real deal.

“Blockchain is such a rapidly evolving technology and it’s really complex,” says Daniela Ott, Secretary General of the Aura Blockchain Consortium. “The essence of Aura is to make it easier for luxury brands to use blockchain.”

To date, more than 20 brands use the Aura software, and more than 17 million products have been registered on the platform, according to Ott.

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

“Traceability and Trust”

By creating a “digital twin” for physical products such as shoes or bags, Aura software builds a register of information such as the type and source of the material, where and when it was made, and how much was produced.

Ott says it will give consumers a higher level of proof and protection, acting as a digital authentication certificate that uses “bank-level encryption” and “impossible to forge,” which discourages counterfeiters. Digital twins, which can be accessed through a web page or mobile app, will allow for a better understanding of a product’s provenance, increasing “traceability and trust” on sustainability and ethical issues for conscious consumers, she said.

However, blockchain has its limitations: information is only as reliable as the person entering it, Ott says, and warns that “if a brand doesn’t have a good supplier relationship, blockchain won’t help.”

Sustainable development is a key objective of the consortium. As a private blockchain built from the ground up, Aura claims that its platform consumes less power than public blockchains. The platform also gives brands control over the information they share and keeps brand and consumer data secure, Ott said.

Aura launched its cloud software in early 2022. Ott says its plug-in technology will allow brands to integrate the product into their existing operations with “zero knowledge of the blockchain.”

And more brands are joining us. Streetwear design group OTB became a founding member in October 2021, with diamond and gemstone specialist Sarine Technologies joining the consortium last month. According to Ott, founding members contribute to development costs and have more say in governance, while all members pay license fees for software services and each digital twin produced.
Counterfeit goods like the one pictured cost designer brands billions of dollars each year and damage their reputation.

Modern technologies

Other fashion brands are also using blockchain tools. Audemars Piguet and Vacheron Constantin have joined the Paris-based open source blockchain platform Arianee, while the Karl Lagerfeld photo archive is being authenticated on the Lukso Network public blockchain.
Building a digital identity could become increasingly important for second-hand luxury sellers, whose market is growing rapidly. Online platforms like Hardly Ever Worn It and Vestiaire Collective must authenticate products before selling them, which is a multi-step process that includes both digital and physical verifications, says Victoire Boyer Chammar, global head of authentication at Vestiaire Collective.
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“The fakes have been around for decades and are constantly being improved,” Shammar says. Vestiaire’s team of 60 authenticators verifies digital documentation, including photographs, before examining each item. AI and blockchain can help speed up the digital authentication process, Shammar says, adding that it will help human authenticators, not replace them.

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

Blockchain can also be useful outside of fashion, Ott said: luxury goods sectors, including art, cosmetics, perfumes and furniture, can benefit from it. In the future, Ott says, the ledger could also store maintenance and repair information on a product, helping to better determine a product’s resale value.

The most recent addition to the Aura consortium is the German car manufacturer Mercedes-Benz, which has joined as a founding member and plans to use the platform to explore various aspects of digital branding, such as creating NFTs (non-fungible tokens) for vehicles. digital art experience.

“Our measure of success is in attracting every luxury brand,” says Ott.

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