Discover how digital tokens can put an end to the swelling multibillion-dollar fake products market.
Spotting fakes have become increasingly harder in recent years. As more and more fraudsters are getting better at counterfeiting, it’s sometimes impossible to catch a fake without having an expert around. And not everyone has one on speed dial.
Product authentication is a major industry challenge because it is often difficult to check the authenticity of a product, especially if it was bought online or through unauthorised channels.
Many sources estimate the market for consumer fraud to be anywhere from 400 billion to a mind-boggling 600 billion USD every year. That’s more than the GDP of some countries! It’s hurting both consumers and businesses.
For consumers, getting duped into buying fake products is never ideal. Counterfeit products can be a safety risk for consumers because they are likely made with low-quality materials or ingredients and under hazardous manufacturing conditions. They can lead to potential health risks such as food poisoning and toxic exposure.
To boot, fake products tend not to work as advertised, misleading consumers into feelings of disappointment or frustration after realizing they got duped.
For businesses, counterfeit products can be seriously damaging to their brand’s reputation. Negative experiences with imitation products might make consumers less likely to trust the brand. Fake products also hurt a business’ potential revenue because of redirected lost sales. Not to mention, the rising costs of resources and legal fees needed to go against counterfeiters.
Counterfeit products can make a negative impact on both consumers and manufacturers. They pose a risk to consumer health, trust, and business financial growth. Current product authentication methods are no longer enough.
That’s why businesses in all industries should get ahead of the curve at ensuring their products are authentic and safe to use. Industry giants such as Adidas and Bacardi are starting to use digital tokens to authenticate their products because of their unchangeable nature.
Digital tokens are becoming a more foolproof alternative to product authentication. And it may soon be the industry standard. Let’s find out why:
How Can Digital Tokens Verify Authenticity?
Digital tokens or better known as NFTs are digital assets that are unique and cannot be exchanged for other assets in a one-to-one basis.
For example, if you want to exchange a dollar for a dollar you’re getting the same thing. On the other hand, digital tokens are so inherently unique that even if you exchanged it for something similar or looking exactly like it – you’ll never be getting the same thing. And, there’s a way to prove it.
They are usually used to represent ownership of unique items and in the process, certify its authenticity. (That’s where product authentication comes in!)
One way digital tokens can support product authentication for consumers and businesses in all industries is through a tamper-proof digital record system of products’ history and provenance.
Manufacturers and sellers mint and attribute digital “twin” tokens to each of their products that get recorded in their system’s blockchain. Consumers can then confirm the authenticity of their products by scanning QR or bar codes printed by the manufacturer on the products. These codes contain copies of the digital “twin” tokens attached to each item. The unchangeable system used by the company then confirms whether or not this copy of the digital “twin” is indeed authentic.
So, how exactly does that work?
Digital tokens use the blockchain, a decentralized, distributed database containing growing list of records called blocks. Each block contains a timestamp and a link to the previous block, creating a chain of blocks that cannot be changed without leaving a traceable record. Hence the name.
Blockchains are decentralized. They are not controlled by any single entity meaning even companies cannot make fraudulent changes if they wanted to. Blocks cannot be altered or deleted, ensuring the integrity and security of stored data including digital tokens.
They are also transparent, giving companies full visibility of anyone accessing their network. But because the blockchain uses cryptographic techniques to secure data, they can make it difficult for unauthorised parties to access or alter the data.
Because digital tokens use an unchangeable, transparent, and secure database, they have become a promising alternative for ironclad product authentication.
However, one of the misconceptions holding businesses back to adopt digital tokens are the gas fees or fees needed to mint (make) each token. While that’s true in most cases, there is already a business-dedicated platform for minting digital tokens gas free.
How Businesses Use Digital Tokens For Authentication
With consumer fraud pushing business growth back, manufacturers need a more effective and foolproof way to authenticate products.
By using digital tokens as “digital twin” identities for each product, businesses can track the production, distribution, and purchase of their goods. Its ability to authenticate products is endless, authenticating anything from food, beverages, prescription drugs, clothing, equipment, computer programs, and luxury goods, just to name a few.
Right at the beginning of the manufacturing stage, these digital tokens will get updated after every process and transaction. Once it gets in the hands of the consumer, they can easily scan the code on the product for cross-checking its digital “twin” token. Then, verifying its authenticity, contents, and provenance.
This new way to authenticate provenance and originality of goods can significantly reduce the risk of counterfeiting – to the point of possibly eliminating it.
Ownership and exclusivity
Intellectual property is another area where authentication with digital tokens can be incredibly useful.
Through digital tokenisation, businesses can easily take ownership of their digital assets, particularly databases and research work. Most of all, proving and maintaining exclusive rights to patents and licenses.
Luxury is one such industry where exclusivity and originality thrives. The more exclusive a product is, the more it becomes valuable.
But, how can buyers know if what they've received is truly an original? How can they prove how exclusive it is if they ever decide to resell it?
Digital tokens can store data that proves a product is an original. The token's inherent uniqueness will prove how exclusive the item is, making it even more special.
They are also unchangeable until maybe the end of the Internet (which doesn't look like happening anytime soon.)
Looks like, just like diamonds, "digital tokens are forever."
File and Document Authentication
Business documents like registrations, licenses, and invoices will also benefit from digital tokenisation.
They are among some of the most faked documents across all industries. It's all about who owns what and if they are allowed to do it. Important documents give businesses the ability to operate lawfully and smoothly.
Without them, they contribute to a rising number of unregulated and illegal businesses including *drum roll* counterfeiters.
By authenticating business documents, it can be easier for authorities to crack down on counterfeiting. And make documents harder to change, lose, or imitate.
Legitimate businesses will benefit from digital tokens for defending the legitimacy of their business and fighting against illegal competition.
They can also be used to authenticate credentials, especially for fresh grads, job applicants, and licensed professionals.
The need for better authentication processes is universal. Ongoing research tells us how prevalent the counterfeiting problem is. And, why the world needs a more foolproof way to authenticate things now more than ever.
While digital tokens will play a major role in improving product authentication, it can also change the way we authenticate documents and intellectual property.
For now, both manufacturers and consumers are still starting to realize how impactful digital tokens can be for authentication. Soon, it may no longer be an alternative but instead, the industry standard.
Fortunately, authentication is not the only major aspect of business digital tokens can help with. Discover more real-world NFT use cases in your industry. Find out how you can use digital tokens to scale your business.