Blockchain – the key to provenance
Purchasing a quality watch should be an occasion of joy and celebration. However, with counterfeits and Frankenstein’s lurking behind so many deals, it isn’t always that easy to verify that your purchase is in fact what you think it is.
Wouldn’t it be cool if all you needed to do was to scan a watch with your smartphone to find out everything about it?? When it was produced, when and where it was sold, it’s original specs, it’s service history, is the dial correct?
Unless you have been living under a rock, you most surely have heard the term ‘Blockchain’. Blockchain is the new Black! According to some commentators, Blockchain will solve everything from global warming to saving the dolphins.
If you ignore the hype, Blockchain is an amazing technology, and highly applicable to the wonderful world of watches.
What is Blockchain??
We all understand what a ledger is. It used to be a book where you wrote down details of financial transactions, money in and money out. Time has moved on and obviously ledgers are now electronic, with most being held in a computer database of some sort.
Databases are used everywhere. But they have their challenges in terms of security and openness.
As a database is typically controlled by a single entity (e.g. a Bank), it’s integrity is only as good as the protection afforded it by its owner. In fairness, banks in particular, are fairly obsessive about IT / Cyber security, but none the less databases get compromised (hacked) all the time.
The database is the single repository of information. If it is compromised then you are reliant on whatever backups exist to effect repair, assuming that you realise that you have been hacked in the first place. With a standard database, historical data can be inserted, changed or removed.
Blockchain offers two key solutions to the challenges listed above.
The first is that it is a ‘distributed’ technology. Blockchain is often referred to as a DLT – Distributed Ledger Technology. Instead of having one central data ledger (database or data repository) which is run by one entity, with Blockchain the data is held across a number of ledgers. These distributed ledgers are all kept in sync with each other, keeping each other honest and are in fact a complete copy of each other.
Instead of having one central data store, you have multiple data stores, spread around different owners, all in sync, all totally accurate and complete.
The second key element of Blockchain is the ‘chain’ piece. Blockchain is referred to as a WORM technology – Write Once, Read Many.
When data is written to the Blockchain, it is stored in a ‘block’. At the start and end of that block are two keys. The footer key allows the new block to be appended to the previous block (the key fits with the header key of the existing data block) and the second is the new key, which will ensure that any new data being added must have the correct key be to added into the Blockchain.
It’s Lego. Unless you have a piece that fits you can’t stick one block on top of another.
Now build a Lego wall. Can you take a piece out from the middle without disturbing any of the others? No, you can’t, and Blockchain is exactly the same. Once you write in some data, that data is there forever. You cannot change or delete it. It is a permanent record. Just like the Lego wall, you would have to totally dismantle the entire Blockchain to change any data, resulting in the destruction of the Blockchain itself, making all of the data corrupt.
Combine the two key features of Blockchain, a distributed data store which is kept totally in sync and the use of the keys, and you have an amazingly strong way of storing data which is impossible to hack.
If the Blockchain is in the cloud, then it will be around forever.
Blockchain and Bitcoin
Bitcoin is the most widely used technology which is currently based on Blockchain. Today Bitcoin (as a crypto asset class) is worth over $300 billion. Bitcoin has been around since 2010, and you can bet your life that every single hacker on the planet has tried VERY hard over the past 8 years to hack it. They have all failed. To be clear, some of the applications around Bitcoin have been successfully hacked, for instance, some of the currency exchanges, but not one single hack has ever been successful against the Blockchain.
Blockchain is the most secure, always available, stable and permanent data store ever invented.
How does this apply to watches??
Traceability and providence.
If a manufacturer uses Blockchain to store details about any watch, it’s movement, serial numbers, dial detail, it is stored, safely, forever.
A manufacturer can do this today by using the serial numbers and inventory control systems they already have in place.
If a manufacturer wants to go to the next level, they can create unique encrypted codes for the key components in a watch.
Using existing technology, a manufacturer can laser engrave a unique code onto specific components of a watch. The code can be engraved on the case, rotor arm and on the back of the dial (for instance). The codes are stored in the Blockchain, along with the component details. This match is there forever and can never be changed.
Other tagging technologies can be used, NFC chips for instance.
The beauty of using laser engraved codes or NFC chips is that they can all be read using a standard smart phone. This means that the manufacturer can release an app to allow its customers scan the codes to verify that the watch is genuine, not on a stolen list and to display the provenance of same.
The AD’s can have a manufacturer app on their devices which can be used for verification of used stock and for servicing.
Each time the watch is serviced, the presence and status of all the major components are updated in the Blockchain, providing irrefutable proof of the provenance of the watch and its major component parts and indeed it’s service history.
This technology can also be retro-applied to vintage watches to preserve their provenance going forward. The codes can be printed on wafer thin labels which can be applied to specific components and the case, or they can be laser engraved onto key components. The details of the verified watch are then posted to the Blockchain which can be tracked going forward.
The use of this technology offers many additional advantages for both the manufacturer and the consumer.
The consumer, when purchasing the watch, can be given the option to auto register the watch with the manufacturer. This provides proof of purchase for insurance, ownership and guarantee purchases. It also allows the manufacturer have a direct connection with the end purchaser. The manufacturer will also be able to see from where the watch was purchased, helping them improve their retail operations.
Should the original purchaser wish to sell the watch, they simply click on their app, make the item as sold, and the Blockchain is updated.
Similarly, if you are purchasing a used watch, one scan will reveal everything. No more Frankenstein, counterfeit or stolen watches. Counterfeiters simply won’t bother if they know that a particular brand is Blockchain protected. They will have no way of duplicating the codes used and cannot write anything to the Blockchain, so producing ‘quality’ counterfeits is a waste of time.
We all love watches. For most of us an expensive watch is a hard-earned treat. We expect and deserve to get what we pay for. It is the sad truth that a considerable number of ‘genuine’ watches out there are anything but, and the counterfeiters are getting better and better every day.
The watch industry is traditionally slow to adopt new technologies. With Blockchain making traceability fairly straightforward, the brands have a duty of care to us, their customers, to make it easy for us to check it’s real.