Blockchain refers to a system that records information in a way that makes it virtually impossible to alter. This technology consists of a block of chains where each chain contains several transactions. Every time a new transaction occurs on the blockchain, a record of that transaction is added so that changes on the database can be noted and tracked. Blockchain is essentially a digital collection of transactions. The database is managed by multiple participants.
When you consider the concept of blockchain, it is natural to wonder whether this technology is secure and whether it can be trusted.
We will unpack below some examples of blockchain technologies that already exist, advantages and disadvantages of the technology and finally how to limit counterfeiting
There are a few blockchain-based technologies that already exist, arguably the most well-known is Bitcoin cryptocurrency (which cannot be imitated, tampered with, or double spent).A further example of blockchain-based technology is non-fungible tokens (NFT's).
Essentially, an NFT is a digital art piece that is created in such a way that it cannot be changed. These tokens are unique digital assets that create a certificate of authenticity and may be worth a lot of money when sold. Each NFT is unique and when added on the blockchain system, is secure and its ownership cannot be disputed. We have recently seen expensive NFTs being sold for millions of US Dollars.
If one block in the chain of a blockchain technology were to be changed, it would immediately be apparent to all the participants that it had been tampered with. If hackers want to corrupt a blockchain system, they will have to change every block in the chain, across all the distributed versions of the chain.
Another advantage of a blockchain technology is that it is not controlled by any organisations or institutions. Having no particular entity or individual in charge gives blockchain the freedom to be used anywhere in the world without any additional charges.
In order for a transaction to be added on the blockchain, it must first be authenticated and authorised by participants of the blockchain. Once the transaction has been authorised, a blockchain will then be created, which will be sent to all participants. All the participants will validate the transaction and a proof of work will be provided. Thereafter, the verified block will be added to the existing blockchain, and the final step would be to distribute the updated transaction. This is a laborious process.
Blockchain technologies do have disadvantages. The very same advantage that an entry can only be added on consensus, may be a disadvantage when certain entries are decided by the majority to not be included. Of course, this may have a devasting impact when a creator creates something new, but the majority of the participants have ill-intentions about the creation and thus not agree to add it as an entry on the blockchain, only to later take advantage of the same creation leaving the creator unable to prove ownership using blockchain.
The converse is also a disadvantage, where malicious participants may agree on including fraudulent transactions and relying on their majority consensus to add such transactions to the chain.
Blockchain provides the ability to track the origin of a particular product from when the product was first entered on the blockchain (at its initial stage). The process can be traced until the final stages when the product is completed and exchanged to another participant. Since imitators may have the ability to create identical products containing the same security features and information at face value, blockchain offers a solution to identify the unauthorised and/or offending products. The unauthorised product will not be able to provide the information history of the product, thereby creating an opportunity to act against the imitators.
Being able to track and trace genuine goods using blockchain will assist law enforcement agencies in stopping and seizing unauthorised counterfeit goods. Thereafter, the offenders will need to face the full might of the law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.