The exponential rise in counterfeit products directly threatens to disrupt the flow of international trade, matching anti-counterfeiting efforts stamina-for-stamina and strategy-for-strategy.
From Nigeria's Alaba international market to New York’s Canal Street, counterfeiting presents a huge problem hiding in plain sight, difficult to curtail, and hard to ignore. More so, global trade data reveal that counterfeiting is a vast with a “huge chunk” of total world trade.
Over the years, anti-counterfeiting efforts have equally grown in fervor. But the problem doesn't seem to abate. How can blockchain technology tackle what is now a $600 billion trade problem? To answer this question, we recently sat down with Provenance Tags Founder and CEO Soerensen.
Niels, thank you for honoring my invitation. Can you briefly tell us about yourself and your route to blockchain?
Thank you for inviting me to discuss this important topic. My career in IT and system development began in 1994 at Bang & Olufsen in Denmark, focusing on Manufacturing Execution Systems and Supply Chain solutions. This period marked the inception of my extensive journey in technology.
My tenure in the BioTech and Pharmaceutical sector, spanning over 15 years, brought me face-to-face with the critical issue of counterfeit medications. The dire consequences of this problem, where the authenticity of medication is a matter of life and death, led me to explore innovative solutions.
The challenge of counterfeit drugs in the pharmaceutical industry prompted my interest in blockchain technology, specifically the Concordium Blockchain. This technology's potential to provide verifiable authenticity and traceability was pivotal in my decision to delve deeper into this field.
This culminated in the establishment of Provenance Tags after engaging with Seier Capital. Initially conceived to address the counterfeit medication crisis, Provenance Tags has since expanded its scope to offer solutions across various industries where verification of authenticity is critical.
In the 80s, counterfeiting was a $30 billion trade problem. Now you have a scarier statistic in comparison. How did we get here?
The escalation from a $30 billion trade problem in the 1980s to the much larger figure we face today in counterfeiting can be attributed to seven key factors: one, globalisation and expansion of trade; two, advancement in technology; three, the rise of E-commerce; four, consumer demand and price sensitivity; five, the lack of effective enforcement.
In the last few decades, there has been an unprecedented increase in global trade and cross-border commerce. This has inadvertently created more opportunities for counterfeit goods to penetrate global markets.
The ease of movement of goods across borders, often through complex supply chains, has made it challenging to track and authenticate products. Besides, technology has brought many benefits and has also made it easier for counterfeiters to produce high-quality fake products.
Advanced printing, manufacturing, and replication techniques have allowed counterfeiters to create products that are increasingly difficult to distinguish from the genuine article. And speaking of the rise of E-Commerce: the internet and e-commerce platforms have provided counterfeiters with new avenues to sell their products. Online marketplaces can obscure the origins of goods, making it harder for consumers to verify authenticity.
The anonymity of the internet also makes it easier for counterfeiters to operate without being detected. In some cases, consumer demand for cheaper alternatives to genuine products has fueled the growth of counterfeit markets. Price-sensitive consumers may knowingly or unknowingly purchase counterfeit goods, driving demand.
Lack of effective enforcement is also a huge concern. Counterfeiting is a global problem that requires a coordinated international response. However, differences in regulations, enforcement capabilities, and priorities across countries have made it difficult to effectively combat counterfeiting. In some regions, legal frameworks and enforcement are not robust enough to deter counterfeiters.
In summary, the dramatic rise in counterfeiting can be attributed to a combination of increased global trade, technological advancements, the rise of e-commerce, consumer behaviors, regulatory challenges, the complexity of products, and the growing value of brands and intellectual property. These factors together have contributed to the significant growth of the counterfeit trade, turning it into a far more complex and extensive problem than it was in the 1980s.
Overlooking the savior complex surrounding blockchain, one can say it's a pretty simple idea. How can it be used to address this problem?
Indeed, setting aside any overzealous perceptions about blockchain, its application in tackling counterfeiting, particularly through initiatives like Provenance Tags, is rooted in a straightforward yet powerful concept. Blockchain technology can be effectively utilized to address the counterfeiting problem in the following ways:
- Immutable Record-Keeping:
Blockchain's primary attribute is its ability to maintain an immutable ledger of transactions. Once a product's details are entered into the blockchain, they cannot be altered or deleted. This ensures the integrity of the product's history, from manufacturing through to its sale.
- Traceability and Transparency:
Blockchain enables the tracking of products throughout the supply chain. Each step of a product's journey can be recorded, creating a transparent and verifiable trail. This traceability is crucial for confirming the authenticity of products and identifying the points in the supply chain where counterfeits may be introduced.
Unlike traditional centralized databases, blockchain operates on a decentralized network. This means no single entity has control over the entire database, reducing the risk of manipulation and increasing trust in the data recorded.
Utilizing digital tags like NFTs (Non-Fungible Tokens) can provide each product with a unique, tamper-proof digital identity on the blockchain. These tags can be scanned, allowing consumers and stakeholders to verify the authenticity and origin of the products easily.
Blockchain enables the use of smart contracts, which are self-executing contracts with the terms directly written into lines of code. Smart contracts can be used to automate and enforce agreements in the supply chain, further ensuring compliance and authenticity.
Blockchain can be integrated with IoT (Internet of Things) devices for real-time tracking and monitoring. This integration can provide additional layers of security, such as monitoring the conditions of goods during transportation to ensure they haven’t been tampered with.
Reducing Reliance on Intermediaries: Blockchain allows for direct verification of product authenticity without relying on third-party intermediaries. This reduces the chances of counterfeit products being introduced into the supply chain.
In essence, blockchain, when applied correctly, can offer a robust and effective solution to the problem of counterfeiting. Provenance Tags leverage these attributes of blockchain to create a system where the authenticity and history of products are verifiable and transparent, thereby significantly mitigating the risks associated with counterfeit goods.
Medications verification:
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User engagement at Galleri:
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What are the strategies you employ to tackle counterfeiting?
To tackle counterfeiting effectively, we employ a comprehensive strategy that leverages technology, partnerships, and continuous innovation. Here are the key strategies:
Utilizing blockchain technology as the backbone of Provenance Tags. This provides a secure, immutable ledger for recording the lifecycle of products, ensuring that each product's history is tamper-proof and transparent.
- Digital Identity with NFTs:
Assigning non-fungible tokens (NFTs) to products to create unique digital identities. These digital tags are used to authenticate products, making it difficult for counterfeiters to replicate.
- Cross-Blockchain Validation:
Thanks to our integration with the Umbrella Oracle service, Provenance Tags can authenticate and validate tags across multiple leading blockchains, enhancing the robustness of our anti-counterfeiting measures.
Incorporating Internet of Things (IoT) and Near-Field Communication (NFC) technologies for real-time tracking and easier verification of products. This allows for monitoring various aspects like location, environment, and handling.
- Partnerships and Collaborations:
Forming strategic partnerships with manufacturers, supply chain stakeholders, and regulatory bodies. These collaborations help in standardizing and enforcing anti-counterfeiting measures across the supply chain.
Conducting educational initiatives for businesses and consumers about the importance of authenticity and the role of technology in ensuring it. Educated consumers are less likely to fall prey to counterfeit products.
- Adapting to Industry-Specific Needs:
Customizing solutions to meet the unique challenges and requirements of different industries. This involves understanding the specific pain points and vulnerabilities in each sector.
Ensuring that our solutions comply with international trade laws and regulations. Staying abreast of legal changes and adapting our technology accordingly is crucial for global operations.
Continuous Monitoring and Improvement: Regularly updating and improving our technology to stay ahead of sophisticated counterfeiting techniques. This involves continuous research and development.
- Transparency and Trust Building:
Maintaining transparency in operations to build trust with clients and consumers. Trust is a key element in the fight against counterfeiting.
Speaking of blockchain technology, why did you choose to build on Concordium blockchain?
The decision to build Provenance Tags on the Concordium blockchain was influenced by several key factors that align with our objectives of ensuring authenticity, transparency, and trust in product traceability. These include :
- Identity-Centric Approach:
Concordium differentiates itself with its built-in user identity layer. Unlike most blockchains that operate on principles of anonymity, Concordium provides a level of user identity verification while maintaining privacy. This feature is particularly valuable in combatting counterfeiting, as it ensures accountability and traceability of transactions while respecting privacy concerns.
Concordium is designed with regulatory compliance in mind. It offers a balance between the decentralized nature of blockchain and the need for regulatory oversight. This aspect is crucial for businesses that require adherence to various regulations and standards, particularly in industries like pharmaceuticals, luxury goods, and retail, where compliance is critical.
- Scalability and Efficiency:
The Concordium blockchain offers high transaction throughput and scalability, essential for handling the vast amount of data involved in tracking and verifying products across supply chains. Its efficiency ensures that Provenance Tags can operate smoothly and handle the required volume of transactions without compromising speed.
- Low and Predictable Transaction Costs:
Concordium provides a stable and predictable transaction cost model, which is vital for businesses to plan and manage their blockchain-related expenses effectively. This predictability is especially important for Provenance Tags, as it allows for better financial planning and cost management.
Concordium’s focus on interoperability aligns with the need for Provenance Tags to interact with various systems and platforms across different industries. This ability to integrate seamlessly with other systems is essential for widespread adoption and effectiveness.
- Strong Security Protocols:
Concordium offers robust security features, an essential consideration for Provenance Tags, given the sensitivity of supply chain data and the need to protect against tampering and unauthorized access.
In summary, the choice of the Concordium blockchain for Provenance Tags was driven by its unique combination of identity verification, regulatory compliance, scalability, cost efficiency, interoperability, and strong security protocols. These features make Concordium an ideal platform for developing solutions that require trust, transparency, and efficiency, such as those needed to combat the global issue of counterfeiting.
Do you have any ambition to internationalize this solution with a potential collaboration with the WTO?
As the founder of Provenance Tags, internationalizing our solution is indeed a significant ambition. Collaborating with global organizations like the World Trade Organization (WTO) aligns perfectly with our vision of providing a universally applicable, transparent, and secure system for product authentication and traceability.
The WTO, with its focus on regulating international trade, could be an ideal partner for several reasons:
- Global Reach and Influence:
The WTO has a vast network and influence over international trade policies and regulations. Collaborating with them could facilitate the adoption of blockchain-based provenance solutions in global trade practices, making a substantial impact in combating counterfeiting worldwide.
- Standardization of Practices:
Working with the WTO could assist in developing and promoting standardized practices for using blockchain in international trade. This would help in creating a uniform approach to combating counterfeiting across different countries and industries.
- Policy Advocacy and Regulation:
Collaboration with the WTO could aid in advocating for policies that support the use of blockchain technology in international trade. The WTO's involvement could also help in navigating the regulatory landscape, ensuring compliance with international trade laws and regulations.
- Enhancing Trade Security and Efficiency:
The adoption of Provenance Tags on a global scale, facilitated by the WTO, could significantly enhance the security and efficiency of international trade. It would provide a reliable method for verifying the authenticity of goods, thereby protecting brands, businesses, and consumers.
- Educational and Awareness Campaigns:
Partnering with an organization like the WTO could also enable us to conduct educational and awareness campaigns about the importance of product authenticity and the role of technology in ensuring it.
Research and Development Support: Such a collaboration could open avenues for further research and development, informed by the diverse needs and challenges faced in international trade. This would aid in the continuous improvement of Provenance Tags.
- Building Trust in Global Trade:
Ultimately, our collaboration with the WTO would aim to build greater trust in the global trade ecosystem, benefiting economies and consumers alike.
In summary, internationalizing Provenance Tags through collaboration with the WTO or similar organizations is not only an ambition but also ran a strategic direction that could immensely benefit the global fight against counterfeiting. It would mark a significant step towards achieving a more transparent, secure, and efficient global trade environment.
Building Provenance Tags involves a multifaceted approach, combining technological innovation, strategic planning, and effective team management.
As the founder, coping with the demands of leading such an initiative requires a balance of technical expertise, leadership skills, and personal resilience. Here's a breakdown of what it takes to build Provenance Tags and manage the founder's responsibilities:
- Technical Knowledge and Expertise:
Proficiency in blockchain technology and its applications is crucial. This includes understanding how to integrate blockchain with other technologies like IoT, NFC, and digital tagging. Keeping abreast of the latest technological advancements and being able to apply them effectively is key.
- Strategic Vision and Planning:
Developing a clear vision for Provenance Tags and mapping out a strategic plan to achieve this vision is vital. This involves identifying target markets, understanding the unique challenges in different sectors, and tailoring solutions to meet these challenges.
- Team Building and Leadership:
Building a strong team of professionals who share the vision and have the skills necessary to execute the plan is essential. Leadership involves inspiring and motivating the team, setting clear goals, and fostering a collaborative and innovative work environment.
Partnership and Network Development: Establishing partnerships with other companies, organizations, and industry leaders is important for growth and credibility. Networking can provide valuable insights, open new opportunities, and enhance the product offering.Funding and Resource Allocation: Securing funding and efficiently allocating resources is a continuous process.
This might involve engaging with investors, applying for grants, or reinvesting profits. Effective financial management ensures the sustainability and scalability of the project.Compliance and Legal Considerations: Navigating the complex legal landscape of blockchain and international trade and ensuring compliance with all relevant laws and regulations is critical.
- Marketing and Public Relations:
Communicating the value proposition of Provenance Tags to potential clients, stakeholders, and the public is essential for market penetration and brand building.Personal Management: Balancing the pressures of being a founder requires strong personal management skills. This includes time management, stress management, and maintaining a work-life balance. Continuous learning and personal development are also important to stay effective and resilient.
- Customer Focus and Feedback:
Engaging with customers to understand their needs and gather feedback is crucial for continuous improvement of the product.Adaptability and Problem-Solving: The ability to adapt to changing market conditions, technological advancements, and unforeseen challenges is essential. Effective problem-solving skills are necessary to navigate the complexities of building and scaling a technology-driven solution like Provenance Tags.
In summary, building Provenance Tags requires a combination of technical expertise, strategic planning, effective leadership, and the ability to manage both business and personal challenges. As the founder, staying focused on the vision while being adaptable, continuously learning, and maintaining a balanced approach is key to coping with the demands of this role.
What piece of advice do you have for budding blockchain entrepreneurs?
Blockchain entrepreneurship is as challenging as it is rewarding. Staying informed, adaptable, and committed to your vision is key to succeeding in this innovative and rapidly evolving industry.
As a founder deeply involved in the blockchain space, I would offer the following advice to budding blockchain entrepreneurs:
- Understand the Technology:
Have a solid grasp of blockchain technology. It's important to understand not just the basics but also the nuances and potential applications of blockchain. Continuous learning in this rapidly evolving field is crucial.
- Identify Real-World Problems:
Look for genuine problems that blockchain can solve. The most successful blockchain projects are those that address real-world needs, offering practical and innovative solutions.
- Focus on User Experience:
While the technology behind your project is important, user experience is key. Design your blockchain solution with the end-user in mind, ensuring it is user-friendly, accessible, and adds real value.
Surround yourself with a diverse team that shares your vision and complements your skills. The right team should bring in various expertise, including technical, business, marketing, and legal.Network and Collaborate: Engage with the blockchain community. Attend conferences, join forums, and participate in discussions. Networking can lead to valuable partnerships, mentorship opportunities, and insights into the latest trends and best practices.
Understand the legal and regulatory framework surrounding blockchain in your target markets. Compliance is crucial, and navigating the legal aspects can be complex, especially with the ever-evolving regulations in the blockchain space.Be Prepared for Volatility: The blockchain industry can be unpredictable. Be prepared for a rollercoaster journey and plan for various scenarios, both financially and strategically.
- Focus on Scalability and Security:
Ensure that your blockchain solution is scalable and secure. These are key considerations for any successful blockchain project, as they directly impact trust and long-term viability.
- Seek Feedback and Iterate:
Be open to feedback and be prepared to iterate your product based on user and market feedback. Flexibility and adaptability are key in a fast-paced and evolving industry like blockchain.
- Maintain Transparency and Ethics:
Blockchain is built on the principles of transparency and decentralization. Uphold these values in your business practices. Being transparent and ethical not only builds trust but also fosters a positive reputation.
Given that blockchain is still a relatively new and complex technology for many, part of your role is to educate your potential customers and stakeholders about the benefits and workings of your solution.
- Stay Passionate and Resilient:
Finally, believe in your vision and stay passionate about your project. Resilience is crucial in overcoming challenges and setbacks that you will inevitably face in this dynamic field.
Any parting words?
As we conclude, I'd like to emphasize the core ethos of Provenance Tags: "Trust in Every Scan." This phrase encapsulates our commitment to ensuring authenticity and transparency in the products people use daily. Our mission goes beyond just technological innovation; it's about building a foundation of trust in a global market often shadowed by the specter of counterfeiting.
We invite businesses, developers, and consumers to join us in this journey towards a more authentic and transparent world. Together, we can redefine the standards of product integrity and consumer confidence. With Provenance Tags, every scan isn't just a verification of authenticity; it's a step towards a future where trust is embedded in every product and every transaction.
Thank you for your interest and support in this endeavor. We look forward to continuing to drive innovation and trust in the realm of product authenticity together.
