Counterfeit goods are estimated to constitute a $460 billion industry according to the International Trademark Association. Much of this trade involves consumers being scammed by thinking they have purchased an authentic brand name product like Nike, Coach, Gucci, and so on, with no way of checking if the product is genuine or a fake.
To help to protect consumers in this billion-dollar market Bonafi has created a way to protect consumers by using blockchain. To discover more Digital Journal spoke with Steve Kuh, Founder and CEO of Bonafi.
Digital Journal: How big a problem are counterfeit goods?
Steve Kuh: According to a PricewaterhouseCoopers (PwC) report in 2017, the counterfeit market costs consumers $600 billion per year. It affects the following three major markets – – pharmaceuticals, electronics, and foods; followed by auto parts, toys, and fashion goods.
The report also states there has been exponential growth in the cost of counterfeiting. Revenues generated from counterfeit goods is more than 2% of the total global economic output which is estimated at about $1.6 trillion Euros.
The counterfeit industry not only impacts bona fide name brands and manufacturers, but there is also a detrimental impact on consumers. According to the Organisation for Economic Co-operation and Development (OECD), knockoffs can endanger people’s lives – auto parts that fail, pharmaceuticals that make people sick, toys that harm children, baby formula that provides no nourishment and medical instruments that deliver false readings.
DJ: Has this worsened in the digital age?
Kuh: Yes. Between 2008 and 2013, the Organisation for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) have done studies that showed an 80% increase in counterfeit products in international trades. This is in part due to increased activities in online retail sales worldwide. It has become easier to supply fake goods on a larger scale as the digital age has afforded larger sales channels such as Amazon and eBay.
One of the biggest concerns that I have is the fast growth of e-commerce stores. Companies like Shopify and web platforms such as WordPress & WooCommerce make it easy for counterfeiters to build a brand new online store in minutes and sell counterfeit products.
In addition, marketplaces such as AliExpress and DHgate make it easy for consumers to buy counterfeit goods directly from counterfeiters for their personal use or for resale to other consumers.
DJ: What can companies do to prevent their goods from being copied?
Kuh: There have been some advancements in finding solutions that look promising. They are blockchain-based solutions that will enable consumers to check for authenticity more easily. Consumers should keep an open mind, support them, and give them a trial test run to see if they will be useful. There are some applications that are already available on the market.
DJ: How about governments, should they be doing anything?
Kuh: Governments should require a stronger form of tracking authentic goods that is immutable, trackable and requires human intervention to check and verify authenticity. This way, the U.S. Customs and Border Protection officers can identify the fakes easily and effectively.
Adopting and testing new applications that are currently available, as well as training, can help prevent counterfeit goods from entering a country.
DJ: What should consumers be looking out for?
Kuh: Consumers can ask sellers to prove authenticity more often. This will drive the demand for new solutions in anti-counterfeiting technologies. Don’t just buy goods based on pricing. Do not trust that all items on Amazon are authentic. Do not trust User Reviews on Amazon either, they could be fakes.
Right now, the best way to avoid counterfeit goods if you’re buying online is to buy it directly from the brand’s website or contacting them to find out who their trusted sellers are. If you’re buying from a brick & mortar, you can also contact the brands directly to check.
DJ: In terms of solutions, what can blockchain offer?
Kuh: Blockchain is an immutable public ledger. It is like the internet. It is complex, yet it offers many benefits if used correctly. Specifically, it could be a good solution in providing authenticity-checks if it can be integrated for ease of use for the consumers.
What Netscape brought to the Internet in the mid-1990s, we are hoping that a new app can bring the blockchain to everyone today. And with the correct combination of applications and protocols, tracking products on the supply chain and having that information readily available to retailers, resellers, and consumers, blockchain can be a practical solution to identifying if a product is real or not.
DJ: How does Bonafi work?
Kuh: Bonafi integrates blockchain with a physical, electronic tag (it is made with an NFC tag) that does not require a battery. It is also copy protected with a Public Key algorithm so that the tag cannot be duplicated. The manufacturers would insert the Bonafi tag (we call it Crypto-Tag) into a product during manufacturing.
As the goods are shipped across the supply chain, they would be scanned and recorded on the blockchain. When it arrives at the hands of the consumer, Bonafi Phone App is used to scan the product and produce the evidence of authenticity by showing the original manufacturing date, ship date, arrival date, and other pertinent information such as product videos, instructions, and user reviews.
DJ: How did you develop Bonafi?
Kuh: We created it with a team of experienced experts in the fields of supply chain, phone App, and marketing. The Bonafi team also consists of seasoned advisors and partners with experiences in ICOs, media, supply chain and blockchain.
We have built up our social media channels and a Demo App in 2018. We are about to file Reg D 506(c) exemptions with the U.S. Security Exchange Commission. We currently have a Private Sale in progress with a maximum token bonus of 130 percent and plan to open pre-ICO during Sept 10 to Sept 30, 2018, and regular ICO during Oct 15 to Dec 23, 2018, to raise funds.