Anti Piracy
& Anti Counterfeit Blog

How startups use blockchain to fight fakes and piracy

Posted by Laura Urquizu on Thursday, Aug 10, 2017

Blockchain is a public ledger that enables cryptocurrencies, but startups are gradually discovering its other uses, like fighting piracy and counterfeits.

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Bitcoin is the first of many digital cryptocurrencies that have been shaking up the financial world since 2008. Cryptocurrencies are uniquely decentralised, and work through verified peer-to-peer transactions over public ledger called blockchains, which encrypt links between blocks.

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In 2014 Bitcoin had taken off, and tech-savvy entrepreneurs were beginning to explore new uses for blockchain technologies. By removing intermediaries, blockchain facilitates transactions in an entirely new way, without limits and designed for a changing digital environment. We previously wrote on how blockchain is being used in legaltech to benefit lawyers, where data transferrals, smart contracts and timestamped transactions can be made autonomous. Outside of the legal world, the technology has been applied to concepts as diverse as digitising Sweden’s land registry to voting to a couple even getting married over a blockchain.

Startups are jumping on the blockchain trend with all the zeal you can expect from entrepreneurs on a caffeine high, and the worlds of brand protection and anti-piracy see no exception, across many industries:

Fake fashion

Fashion counterfeits are a huge threat to luxury brands as they diminish exclusivity and surrender carefully-refined trademarks to unregulated and inferior products, not to mention having devastating effects on sales where consumers believe they are getting the real thing.

Brands that do anti-counterfeiting right have of late implemented tech into brand protection solutions, using radio frequency identification (RFID) to invisibly tag products for retailers to keep track of inventory and identify products. Blockchain solution provider Faizod has absorbed RFID into the blockchain, so that the identifying RFID tag can securely track every transport step in a product’s global supply chain, automating authentication in the tamper-proof system.

Similar to the application of supermaterial graphene in fighting fakes in ‘fingerprinting’ products to verify and provide information on products, the tamper-proof security of blockchain systems is being used to store and combine already-existing records to authenticate products. This is the basis behind London startup Everledger, which protects diamonds through blockchain certificates, in which consumers and insurers can securely view the history of a diamond, as well as any claims made against it.

Counterfeit food

You’re probably not too concerned about counterfeit food, which in western countries tends toward mislabeled sushi fish and “Made in Italy” olive oil. However in China the counterfeit food industry is deadly, from fake plastic rice to contaminated pork to adulterated infant formula that hospitalised tens of thousands of babies. QR codes have been used to control fake food, but recently more secure blockchain-based efforts are being tried.

E-commerce sites like Alibaba and JD, but also brick-and-mortar stores such as Walmart, are beginning to experiment with blockchain to record history of food items. Quartz profiled the purchase of a QR-coded steak, which detailed the cow’s farm, age, diet and slaughter, but also results of safety tests conducted on the meat. Because of how the blockchain is structured, this data cannot be edited once it has been entered, so as long as the end-to-end channels are secure the food product can be guaranteed. This technology could restore long-awaited faith in China’s struggling food industry, but even in the west could drive e-commerce within the food sector and facilitate strategic recalls preventing food safety scandals.

Meanwhile, Vinfolio have suggested how bitcoin could stamp out the fraudulent wine industry. The rare wine retailer, supported by startup Coin Sciences, have proposed that valuable wine be sold and re-sold with included bitcoin as digital tokens. The bitcoin can then be used to verify the wine by displaying its chain of ownership, so that an end consumer can check the public signature against the official winery’s. Whilst this would not entirely guard against reproduction of wine, it limits any credible wine reproduced to the amount purchased, thereby putting a cork in the wine resell market and draining the profits from the fake wine industry.

Movie Piracy

Perhaps most interesting is how the blockchain is being used to combat movie piracy.

You may or may not know that the period that a movie is most susceptible to damage from piracy is during or before its cinematic release. This is usually caused by leaked movie screeners, a digital copy of a movie that is sent out to critics and industry professionals in order to generate hype about a movie to ensure of a successful opening weekend.

South African startup Custos is using bitcoin to fight piracy during this stage of release. They embed an imperceptible bitcoin ‘bounty’ of around $5-10 into digital screeners, thus providing pirates with an incentive to check the file. When the pirate goes to claim their prize (anonymously, due to the cryptocurrency), Custos can locate the origin of the leak, and secure distribution channels accordingly.

A somewhat similar approach is being pioneered by Indie film writer and director Tim Lea, who founded startup Veredictum.io after discovering pirated streams of his films. Veredictum.io is still refining its technology, but hopes to launch a blockchain-based digital registry of video content. The blockchain means that content will be registered and ‘fingerprinted’ permanently, and could, for example, provide the content behind an automated infringement-detection filter like YouTube’s Content ID system or Facebook’s recently-acquired Source3 IP recognition and licensing software. Lea has other plans, however. Alongside the tech, Veredictum.io will also launch a cryptocurrency, Ventana, and will use the community to establish a volunteer-based decentralised reporting system, akin to the a humanised version of the very structure underpinning Blockchain.

These solutions to piracy and brand protection all recognise that their problem is online. E-commerce has given rise to an uncontrollable counterfeit market, with genuine brands finding their own reputation threatened by fakes that at least appear to be of a high quality. Similarly, wide availability of online content has given rise to a high expectation, particularly in younger generations, of all media available on demand (see: Has Netflix made piracy worse?), and where there is demand, high profits, and low penalisation, supply tends to find its way in. The solution is to fight fire with fire - or tech with tech, anyway. Just as pirates and counterfeiters find new ways to circumvent laws or avoid detection, so protection strategies should be tailored to stay one step ahead of their capabilities. A sound solution will be technologically advanced, but also able to evolve with a changing industry, and furthermore it should be supported by human expertise.

To find out more about how the piracy industry is adapting to a new audience, take a look at our free eBook.

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About the author

Laura Urquizu

Post Written by Laura Urquizu

The Red Points CEO, Laura has over 20 years experience as an executive and board director in banking, venture capital and start-ups. She has worked with companies like Arthur Andersen, Caja Navarra, Corporación CAN and Inspirit. Laura is a respected expert in the start-up field and Innovation based businesses.