Today’s global supply chain is largely powered by new technologies and systems. But, as the supply chain continues to expand and become more complex, it has become increasingly difficult for manufacturers to track, trace, and authenticate their products. Luckily, just like emerging technologies have enabled the transformation of the supply chain, they are also providing solutions to today’s issues. In particular, new technologies like NFTs and Blockchain have been helping manufacturers regain control over the journey of their products through the supply chain to the end-user. Thanks to this, manufacturers can now protect their products from counterfeit, safeguard the customer’s experience, and prevent financial losses. In this guide by the product authentication experts at Authena, you’ll learn more about how Non-Fungible Tokens (NFTs) operate in the metaverse to authenticate physical products.
Before diving into the ways in which NFTs are revolutionizing the world of product authentication, it is important to understand what product authentication is and why it’s important in today’s global market.
Product authentication is an umbrella term that refers to all those processes and systems a company invests in to gain control over the product’s journey through the supply chain, enhance unit-level visibility and traceability, and ultimately deliver a transparent and authentic product to the end-user.
Product authentication is part of your brand protection strategy and can take on many shapes. For example, tools like NFC (Near Field Communication) stickers, smart packaging solutions, and emerging technologies can all help you track, trace, and protect your products from adulteration and diversion throughout the supply chain.
Introducing product authentication solutions undoubtedly involves a financial investment. So, it is more than normal for manufacturers and company owners to doubt the importance of this implementation. However, today, having a robust product authentication strategy in place is more important than ever.
Indeed, the global counterfeit market is set to reach $3 trillion in 2022 and the volume of fake products in circulation is constantly on the rise. But what’s even more important is that the availability of these low-price fake goods can have catastrophic effects on your company’s financials, reputation, consumer trust, and customer loyalty.
In some cases, counterfeit medicinals, cosmetics, and FMCGs that are not subjected to national and international regulations can also pose a significant public health risk and lead to scandals and costly recalls.
As we have seen, having a product authentication strategy in place is paramount for all large corporations or companies that are looking to expand or grow internationally. But how can you gain better visibility and control over each of your products when the supply chain continues to expand at an unprecedented level?
NFTs can help. Non-Fungible Tokens can be conceived as digital twins of physical products, existing in the blockchain. By tracking an NFT linked to a physical product or unit, you can gain immediate visibility of the product’s steps through the supply chain.
Thanks to the underlying blockchain technology, NFTs guarantee:
Transactions of NFTs (which are linked to the physical products) are recorded on the blockchain, making them immutable and nearly impossible to be tampered with.
Today, NFTs – or the digital certificate associated with physical assets – have been used particularly in certain industries, including digital art, real estate, and entertainment (i.e.: video games). But as a technology in its infancy, it is impossible to have a clear understanding of its long-term potential.
But what we do know so far is that NFTs are a great alternative to create a bridge between physical products or units and the metaverse. In turn, tracking your products and their transactions through the supply chain is much easier and straightforward.
When introducing NFTs to track your products and deliver unprecedented transparency and authenticity to your users, you should ensure that:
If you are looking to deliver product information to your production managers and customers, Authena M3TATM provides an end-to-end authentication system that is designed around your company’s individual needs and meets international standards of security.
NFTs are nothing more than a string of letters and numbers recorded on the Ethereum blockchain. So, how can they influence the world of product authentication so much?
When a product is linked to a unique piece of code on the metaverse, a digital twin of that same product is created. Every time the product is subjected to a handoff, trade, or any other interaction, these movements are recorded on the blockchain. Once these transactions are recorded, they are immutable, impossible to tamper with, and immediately visible.
This means that the moment one of your products becomes a victim of counterfeit, adulteration, or diversion from the supply chain, these movements will become visible to both you and the customer. Since these movements cannot be overridden, this makes it impossible for bad actors to carry out fraud and get away with it!
Manufacturing NFTs has become more available to everyone. But this doesn’t mean that you should attempt to create Non-Fungible Tokens for your products by yourself. Instead, you should work with a specialized product authentication expert like Authena M3TA™ that can help your NFTs to suit your unique needs and meet international standards.
When making an NFT, it is important to keep in mind that they produce proof of authenticity and ownership to buyers. Therefore, they need to be immediately accessible by each part of the supply chain as well as both company managers and end-users. This is achievable by connecting NFTs to Near Field Communication (NFC) security seals, which can be read by any enabled device.
When creating NFTs to authenticate your products, it is of vital importance to follow the highest international standards. For example, opting for the ERC20 token will cause you to end up with a fungible asset, which can be exchanged for similar tokens in the blockchain. When used for product authentication, this kind of token allows for assets to be exchanged, which can affect your level of security.
Oppositely, the ERC721 token standard is a solution to create non-fungible (or unique in value) tokens that are non-divisible.
Non-Fungible Tokens – or commonly called NFTs – refer to assets that are unique in value and, therefore, cannot be exchanged evenly. For example, two $1 bills can be exchanged, but two different works of art might not be traded for the same value.
NFTs are a string of code – numbers and letters – recorded on Ethereum Blockchain and existing in the metaverse.
NFTs are today used as digital collectibles and ownership certificates. Authena transformed them into a bridge between real-world assets (like a real estate property or work of art) and the metaverse. When the assets are traded, each transaction is immutably recorded on the blockchain.
When looking to introduce NFTs in your supply chain, it is essential to work with a specialized product authentication expert who can understand your needs and create an ad hoc system around your goals. Learn more about using NFTs to secure your products at Authena.