Fakes are a real problem
An earth-conscious car owner decides to switch from diesel to electric.
Meticulous about maintenance, this individual is confident of securing a good resale price on his car, having serviced the vehicle only at authorized service centers with well-preserved maintenance logs.
But the sale goes south. During inspection, the buyer discovers that a recently replaced tire is counterfeit. The owner had, just in one emergency instance, visited a non-descript automotive store.
When it comes to automotives or any industry that uses components, counterfeit products spell doom for quality and safety.
According to a survey conducted by the Motor and Equipment Manufacturers Association (MEMA), the global automotive industry loses $12 billion to counterfeiting, and counterfeit auto parts are responsible for 20% of the accidents on India’s roads.
And while technologies like serialization may help, they are not a foolproof deterrent. Which is why complementary technologies and strategies, including NFT-based blockchain solutions, are now emerging as a possible means to combat the problem.
NFTs (non-fungible tokens) can be tagged with physical products to help tackle counterfeiting by creating a unique and traceable digital identity for each product.
Generating a unique NFT that represents the physical product will serve as a digital certificate of ownership that can be attached to the physical product by either adding a QR code or a link to the end consumer to claim the NFT. The metadata stored on the NFT can be used to confirm the product's origin, ownership, and history throughout the product journey. You might say that this can be done using an RFID chip as well or merely a QR code. But a sharp cybercriminal can tamper with a digital code with relative ease.
An NFT is a unique cryptographic token recorded on a blockchain and used to certify ownership and authenticity. It has the capability to depict both digital and physical assets, such as digital paintings and real estate properties. The process of tokenization enhances the efficiency of transactions involving these tangible assets, streamlining their purchase, sale, and trade, while concurrently mitigating the risk of fraudulent activities. Blockchain platforms like Ethereum, which offer a decentralized and immutable ledger, are frequently used to build NFTs. Product details, ownership changes, and sales of NFTs are all captured in blockchain records.
An NFT is a unique cryptographic token recorded on a blockchain and used to certify ownership and authenticity. The unique properties of an NFT—openness and immutability—make it virtually impossible to fake or alter.
By utilizing the unique properties of an NFT—openness and immutability—it becomes virtually impossible to fake or alter data.
Each NFT is equipped with metadata that details the item’s attributes—model name, engine number, year of manufacture, ownership handover details—through the supply chain, from manufacturer to dealer to retailer to consumer. It also includes other pertinent details such as service logs. A frequently used method is to hash the information and save the resulting hash on the blockchain to link it to the NFT. The hash will change if the information is altered, making it possible to check the NFT’s integrity and validity.
NFTs can bring several other benefits and applications to the automobile sector apart from provenance and authenticity.
Industry-wide use cases
The adoption of NFTs in the automotive industry is still in its early stages.
A luxury car manufacturer has begun using this technology to store and track data related to vehicle maintenance.
And certainly, the use of NFTs can be expanded to nearly all industries because counterfeiting is a universal threat. For instance, in healthcare, where patient safety and data breach are of critical concern. NFT technology can ensure the security of critical patient data, including medical history, treatment protocol, personal details, changes in health status and so on through an immutable ledger. Each piece of data for an individual patient can be associated with a unique identifier that contains metadata. Hashing ensures that any changes made to the hash triggers an alert about the tamper or breach. In the luxury goods industry too—involving art, jewelry, fashion—NFTs, therefore, hold the promise of revolutionizing the way authenticity and provenance are verified for products across industry.