LVMH Set To Launch Own Blockchain To Aid Luxury Goods Traceability
Multinational luxury brand LVMH, which also owns the iconic Louis Vuitton brand, is in the process of launching its own blockchain that will track and validate the authenticity of its pricey goods, according to a news report published by CoinDesk.
Sources say that the project has been in development for more than a year, with LVMH’s blockchain team said to have collaborated with teams from Ethereum development studio ConsenSys and Microsoft’s Azure platform.
The project is built on JP Morgan’s Quorum blockchain and is code-named AURA. According to the report, the initiative will launch by May or June this year, with the first products to be tracked being Louis Vuitton (and probably Parfums Christian Dior).
LVMH expects to extend the service to all of its luxury brands, numbering more than 60, and eventually to those offered by the company’s rivals.
A source close to the project told CoinDesk that AURA is expected to “provide proof of authenticity,” tracing the origins of luxury items “from raw materials to point of sale and beyond to used-goods markets.”
The source reportedly added:
“The next phase of the platform will explore protection of creative intellectual property, exclusive offers, and events for each brands’ customers, as well as anti-ad fraud.”
The question of allowing rival companies and other third parties onto the network could be seen as a problem, especially when compared to the challenges that beleaguered the IBM/Maersk blockchain venture.
The source, however, notes that AURA will not be exclusively tied to LVMH, but will rather be white-labeled to competitors. As noted in the report, the project’s Intellectual Property (IP) will rest with a separate entity that will then be owned by brands and companies that join the consortium.
It means that all the brands using the blockchain will have an equal claim to the IP and consequently its use.
“So Gucci, for example, could decide to join the platform and be a shareholder – in which case their claim to the IP would be as great as Louis Vuitton’s claim to the IP.”
As such, users will not really see an AURA app. Instead, they’ll be seeing an app for each of the brands, say a Louis Vuitton app and so on.
Users will also benefit from the data privacy tools offered by the Quorum blockchain, ensuring that there is no information leak between various brands or from customers.
Blockchain could be critical in addressing the biggest problem facing the luxury goods industry- counterfeit and fraud. With tokens like the non-fungible (NFT) standard ERC-721, brands can leverage the underlying tech to have immutable and unique digital representations of every item.
For instance, it can allow a party to identify a given handbag; tracing its lifecycle- from the source of the raw material at an alligator farm to the first store, the item was sold. From here, the bag can be traced all the way to the last reseller or user in the chain.
Using the blockchain to improve supply chain traceability and authentication is one of the major use cases that have seen the nascent industry attract global companies and brands.
VeChain (VET) is among crypto platforms that have pushed this use case further, with mainstream giants like IBM keen on a global network.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.