LVMH's new blockchain tool could spell the end for counterfeit goods

Fashion has been notoriously slow to embrace advancements in technology. But as consumer appetite for transparency grows, huge conglomerates are looking to an innovative technique: the blockchain. Sounds complicated, but it’s a rather simple concept.

Invented in 2009 as a way to track Bitcoin transactions, blockchain technology allows stakeholders to enter uneditable information. The more entries or “blocks” that are added, the longer the chain becomes. And instead of just being able to see the latest addition, viewers of a single blockchain can see every entry including authors, dates and times.

In fashion’s case, it’s a useful way to detail the supply chain of an item and prove its authenticity. So it’s no surprise to hear that LVMH — the company that owns numerous luxury brands from Louis Vuitton and Christian Dior to Fendi and Givenchy — has developed its own blockchain tool.

Debuting the tech at Paris’ VivaTechnology fair, the conglomerate announced that Louis Vuitton and Parfums Christian Dior would be two of the first brands to adopt it. According to partner company ConsenSys, the tool is named Aura and uses Ethereum blockchain technology along with Microsoft’s Azure services.

Any person that buys an Aura-certified product will be able to see the full history of the item, ranging from its raw materials and manufacturing locations to where it was initially sold. Any secondhand purchases will also be noted. This lifecycle will be met with instructions relating to product care and warranty, making it a one-stop source for inquisitive consumers. LVMH also announced that it is willing to share its development with other luxury houses and groups, allowing the entire industry to benefit.

Such technology is particularly important right now. Not only will it satisfy any environmental or ethical concerns, but it will hopefully lead to a drop in counterfeit sales. Currently, people wanting to buy a secondhand luxury item may turn to social media accounts or one of many resale sites. While the former evidently comes with a barrage of issues, the latter is also not a guaranteed marker of authenticity. In November 2018, Chanel filed a lawsuit against consignment site The RealReal, claiming that the site has sold counterfeit bags and that its authentication experts are not “properly qualified or trained” to carry out such checks.

Blockchain technology can swiftly put an end to arguments over whether an item is real or fake. It can also help brands in a number of other ways. For example, intellectual property documents can be added to the chain, legally protecting certain designs. The tool is also a way of accurately managing inventory stock.

However, LVMH’s Aura and blockchain in general may not be the complete answer the luxury world is looking for. The technology cannot verify whether information is accurate, potentially allowing a particular stakeholder to distort the truth. And if a false statement is entered, it can’t be altered or deleted.

There is also the issue of whether other brands will want to take up LVMH’s offer. Although Aura is a decentralised tool (meaning that no one person or company controls it), having a rival name as its creator may push some companies to look elsewhere.

Aura isn’t the only blockchain name on the market. Arianee and VeChain have been trying to drum up luxury business too. But whichever developer luxury brands decide to go with, it can’t be denied that blockchain is currently the best way of proving an item’s status. And that is something that both consumers and CEOs will lap up.