Crypto is crashing, but the technology 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 equity and consumers.

Although they are competitors, they are a conglomerate of luxury brands LVMH (LVMHF) affiliated with prada (PRDSY)and Cartier in April 2021 to launch the Aura Blockchain Consortium, a non-profit platform creating a “digital twin” for designer products.
Blockchain is a digital ledger that cannot be edited, altered or tampered with. It’s the same technology that underlies the cryptocurrencies that have seen their prices plummet lately. But it has many other uses – and Aura uses it to give luxury products a unique digital identifier that helps customers ensure their purchase is the real deal.

“Blockchain is such a fast-moving technology and very complex,” says Daniela Ott, Secretary General of the Aura Blockchain Consortium. “Aura is about making blockchain easy for luxury brands.”

To date, more than 20 brands are using Aura’s software, with over 17 million registered products on the platform, says Ott.

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

“Traceability and Trust”

Aura’s software creates a “digital twin” for physical products such as shoes or handbags, creating a register of information such as material type and source, where and when it was made, and how many were made.

According to Ott, this will offer consumers a higher level of proof and protection by acting as a digital authentication certificate that uses “bank-level encryption” and is “impossible to forge” — thwarting counterfeiters. Digital twins, which can be accessed via a website or mobile app, will provide more insight into the origin of the product and improve “traceability and confidence” around sustainability and ethical issues for conscious consumers, she says.

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

Sustainability is a central concern of the consortium. As a private blockchain built from the ground up, Aura uses less energy than public blockchains, according to Aura. The platform also gives brands control over what information they share and protects brand and consumer data, Ott says.

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 other brands are getting involved. Designer streetwear group OTB became a founding member in October 2021, and diamond and gemstone specialist Sarine Technologies also joined the consortium last month. Founding members contribute to development costs and have more say in governance, Ott says, while all members pay a license fee for the software services and each digital twin produced.
Counterfeit goods like the ones pictured cost designer brands billions every year – and damage their reputations.

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Other fashion brands also use blockchain tools. Audemars Piguet and Vacheron Constantin have joined Paris-based open-source blockchain platform Arianee, while Karl Lagerfeld’s photo archive is authenticated on Lukso Network’s public blockchain.
Creating a digital identity could become increasingly important for resellers of second-hand luxury goods, a fast-growing market. Online platforms like Hardly Ever Worn It and Vestiaire Collective are required to authenticate products before they sell them — which is a multi-step process that includes both digital and physical checks, says Victoire Boyer Chammard, global head of authentication at Vestiaire Collective.
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“Counterfeiting has been around for decades and is constantly evolving,” says Chammard. Vestiaire’s team of 60 authenticators review digital documentation, including photos, before examining each item. AI and blockchain could help speed up the digital authentication process, says Chammard, adding that it would help rather than replace human authenticators.

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

Blockchain could also be useful beyond fashion, says Ott: luxury sectors like art, cosmetics, perfume and furniture could benefit. Ott says the ledger could also include product maintenance and care information in the future, which would help better determine a product’s value for resale.

The latest member of the Aura consortium is 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 digital art experiences.

“Our measure of success is to take every luxury brand on board,” says Ott.