Blockchain Technology and Fashion Industry – what is the connection?

If you keep yourself updated with technology trends, you probably have heard of the term ‘Bitcoin’ a buzzword in the fintech industry. I am not big on finance and investments side of things. But this word and the ‘bigger term’ so to speak behind it ‘Blockchain’ caught my attention when I heard about it being applied in fashion industry. Being an apparel and fashion industry professional, who likes to keep herself ‘in the know’ of latest technology and innovation shaping our industry, I decided to dig deep and understand what the fuss is all about.

What is Bitcoin? And what is Blockchain? And how are the two related?

Bitcoin first appeared in a 2008 white paper authored by a person, or persons using the pseudonym Satoshi Nakamoto. The white paper detailed an innovative peer to peer electronic cash system called Bitcoin that enabled online payments to be transferred directly, without an intermediary.  While this was considered ‘innovation par excellence’, the experts figured out that far more exciting was the technology working behind the scenes to make ‘Bitcoins’ work. That technology is the Blockchain Technology, and it can be applied to much wider cross-sections of industries, life situations and circumstances.

“[Blockchain] is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” — Sally Davies, FT Technology Reporter.

Ok so we get it, Blockchain is the big daddy behind the Bitcoin baby.

Let’s get to Blockchain.

The Blockchain is a decentralized ledger of all transactions across peer-to-peer network. Using this technology, participants can confirm transactions without the need for a central verifying authority. (Think of Banks, Governments etc.)

Here is a link to the beautiful infographic by PWC which visually explains this blockchain technology for us non-techie folks.

Decentralized – somewhere smells of either Democratization or maybe Chaos? Let’s read on further.

An interview given by Don Tapscott, CEO of Tapscott Group to Mc Kinsey, he explains beautifully what this technology means and could come to mean in the years to come. Here goes the choicest of excerpts.

In the early 1990s, we said the old media is centralized. It’s one way, it’s one to many; it’s controlled by powerful forces, and everyone is a passive recipient. The new web, the new media, we said, is one to one, it’s many to many; it’s highly distributed, and it’s not centralized. Everyone’s a participant, not an inert recipient. This has an awesome neutrality. It will be what we want it to be, and we can craft a much more egalitarian, prosperous society where everyone gets to share in the wealth that they create.

What if there were a second generation of the Internet that enabled the true, peer-to-peer exchange of value? We don’t have that now. If I’m going to send some money to somebody else, I have to go through an intermediary—a powerful bank, a credit-card company—or I need a government to authenticate who I am and who you are. What if we could do that peer to peer? What if there was a protocol—call it the trust protocol—that enabled us to do transactions, to do commerce, to exchange money, without a powerful third party?

How Block Chain Works?

The blockchain is basically a distributed database. Think of a giant, global spreadsheet that runs on millions and millions of computers. It’s distributed. It’s open source, so anyone can change the underlying code, and they can see what’s going on. It’s truly peer to peer; it doesn’t require powerful intermediaries to authenticate or to settle transactions.

It uses state-of-the-art cryptography, so if we have a global, distributed database that can record the fact that we’ve done this transaction, what else could it record? Well, it could record any structured information, not just who paid whom but also who married whom or who owns what land or what light bought power from what power source. In the case of the Internet of Things, we’re going to need a blockchain-settlement system underneath. Banks won’t be able to settle trillions of real-time transactions between things.

So this is an extraordinary thing. An immutable, unhackable distributed database of digital assets. This is a platform for truth and it’s a platform for trust. The implications are staggering, not just for the financial-services industry but also right across virtually every aspect of society.

End of Excerpt

I like the idea of a platform for truth and trust.

What also makes it interesting is ‘Unhackable’.

Music to the ears of a person whose website got hacked recently. Thank God, we restored it back.

When a digital transaction is carried out, it is grouped together in a cryptographically protected block with other transactions that have occurred in the last 10 minutes and sent out to the entire network. Miners (members in the network with high levels of computing power) then compete to validate the transactions by solving complex coded problems. The first miner to solve the problems and validate the block receives a reward. (In the Bitcoin Blockchain network, for example, a miner would receive Bitcoins).

This brings me to understand the next piece in the puzzle.

Who are Miners?

Are they even real people? Or some software/hardware tools / robots? You never know about this technology jargon.

I dig deeper to understand who are miners and what are they supposed to be doing and why?

In the most prevalent application of blockchain technology so far, that is bitcoins, the miners are folks who go about solving the complex mathematical problems that are cryptographic keys to validate the authenticity of the transaction details contained in that specific block. Once a block is verified by a miner, it is then timestamped or sealed and added to a chain in a linear, chronological order. New blocks of validated transactions are linked to older blocks, making a chain of blocks that show every transaction made in the history of that blockchain.  The entire chain is continuously updated so that every ledger is the network is the same, giving each member the ability to prove who owns what at any given point.

If you have the cryptographic key which validates the transaction of a block, you can rest assured that the transaction or information / data stored in that block is valid / authentic / unaltered or tampered! This trust or proof of authenticity is further reinforced by the fact that all the members in the blockchain network can verify the same.

Arguably, it is this cryptographic, open and decentralized nature of blockchain technology that makes it ‘unhackable’. For example — if someone wanted to hack into a particular block in a blockchain, a hacker would not only need to hack into that specific block, but all the proceeding blocks going back the entire history of that blockchain. And they would need to do it on every ledger in the network, which could be millions, simultaneously.

Now the connection with Fashion Industry

One of the most common problem that this technology can help to tackle is removing the opacity of the apparel supply chain.  Let’s say you make a claim to an end customer that your t-shirt is made with organic cotton.  How do you prove your claim? Unless you show the entire history of transaction that happened between the cotton seller to the spinner to the weaver to the t-shirt maker to you to the customer using the same organic cotton?

Transparent / Traceable Supply Chains in Fashion Industry.

Blockchain Technology comes to the rescue.

Provenance Consulting company has done some pioneering work in tracking the journey of raw material through the supply chain. In a recent case study, this collaboration between fashion designer Martine Jarlgaard and Provenance highlights the role of blockchain technology in increasing transparency and substantiating claims in the fashion industry.

Registering raw material on the blockchain via the Provenance app, they tracked sustainable alpaca fleece from shearing in the farm, through to spinning, knitting, and finishing in Martine Jarlgaard’s London studio – creating a digital history of the garments’s journey. The journey information was made accessible via the garment’s smart label. This serves as a Proof of Concept of blockchain implementation in fashion supply chains.

Another problem that blockchain can solve for fashion industry is the widespread one of ‘fakes’.

Fake or Genuine?

Blockchain can help here too to establish the genuineness of a product simply by incorporating a smart blockchain technology enabled tag that tells the blockchain verified history and record of the product from inception to endpoint.

A  Case that’s worth talking about here is recently when an  independent, trendy fashion label Babyghost teamed up with Shanghai-based Blockchain-as-a-Service (BaaS) company, BitSE, and its VeChain project, the result was a multidimensional sensory feast for the fashion crowd.

VeChain is a cloud product management solution integrated with blockchain technology that puts unique IDs on the blockchain and can verify if an item is genuine or not.

It focuses on four areas: anti-counterfeiting, supply chain management, asset management, and client experiences, each of which can be used independently or synergistically.

They put a unique ID tag on a clothing, which can be verified on the blockchain through Near Field Communications (NFC) — which allows devices to communicate with one another when brought into close proximity — or by scanning the QR code on the label. A person’s phone communicates with the small VeChain chip embedded inside the clothing or accessory, which then tells its “story” to the consumer.

The chip holds a unique public and private key pair. The public key is also stored in the blockchain and can be verified by the VeChain app. The app then verifies the public key with the VeChain servers to determine if the public key is genuine. As a result, product safety and quality assurance are maintained, helping to drive customer satisfaction.

Given the thrust on transparency and trust in fashion industry, I believe that this technology holds massive relevance and potential.

Now I am wondering how then is Blockchain technology different from DNA tagging? Or RFID tagging? Are they solving the same problems?  I leave that investigation for some other time and maybe my next post.

If you enjoyed reading this post or if you think I could have done better, please do leave a comment. I am a constant learner who takes feedback well.

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