The impact of Blockchain and E-currency within fashion, Pt.2: What is Blockchain?

IT IS all well and good that, in an ever-changing world, we’re introducing new and exciting ways to buy, sell or even trade clothing and other miscellaneous — however, there is one distinct phrase that springs confusion upon the face of change.

Blockchain, what is it and who in the fashion world has taken it under their wing?

First and foremost, the term has been commonly used for the last decade at least. This is nothing new, but the way in which it impacts everyday life is new; to put it simply, Blockchain is the technology behind Bitcoin’s network that creates trails. Albeit, a chain of blocks — starting to make more sense?

Individually, each block stores its own dose of information and is therefore separate from the last — but then, each block is split into three different areas of said information. For the sake of creating a theoretical model to aid visualisation, we’ll pretend NIKE are accepting e-currency payment methods; this will form a centre for the plethora of information you’re about to absorb. Nike as a company managed to obtain a patent to tokenise shoes on the Etherium Blockchain, but this will be ignored for the moment.

The foundation of a block, broken into three segments:

  • First of all, information is stored encapsulating transaction date, time and monetary cost equivalent regarding the user’s most recent purchase from a webstore-front. Similarly to your online banking application shall we say, your money-holder will display the above details with reference to each sale made so the buyer may keep track of expenditure — from this, figures regarding a payment of £30 to a retailer on 03/02/20 at 15:34 can be seen.
  • Secondly, a block stores the data regarding both/all parties involved in the purchase. But, and this is fundamentally the most important factor for those using the Dark Web as well as being an incredibly crucial detail to consider — the buyer is recorded under a username or digi-sig per se, not their real name. Expanding the example above, data would read as £30 to Nike on 03/02/20 at 15:34, payment made by TC-Streetwear. Of course, this is neither how it is laid our nor how the digital signature would be presented but simplicity is key.
  • Lastly, each block is distinguishable in the same way we distinguish between our friends — the DNA (algorithms in this case) that makes up a block creates a one-off code called “Hash”. Every single code is different, regardless of how similar or varied the transactions are.

Although the example above suggests a single transaction would be housed within each block — factually speaking thousands of transaction can sit within the same confines as each other, to be identified individually via Hash. Building on this, every transaction must be authorised by the complex network of computers — this is made up of Nodes, essentially a set of computer volunteers with high a processing power that keep the network afloat.

In becoming a Node, the user can see their own copy of the Blockchain; separate copies of the exact same Blockchain heightens security as hackers would have to alter every copy on the network, not just one. You may see Blockchain described as a “distributed public ledger”, the multiple node-construction of a network web would be the reason why; there is no central hub.

After this lengthy explanation you may be wondering, what does this have to do with the development of fashion? Remember how each block is made up of three strands of information, well this information can be used by higher-end retailers to track the whereabouts (with limitations) of their products following an increase in Grey-Market stock being bought by consumers; as well as retailers such as Nike obtaining a patent to tokenise sneakers using Ethereum Blockchain. Brace yourself, more explanations coming…

Let us delve into Louis Vuitton’s owner, LVMH, launch of a Blockchain that does exactly as stated above — it tracks luxury goods. Running with the code-name AURA, LVMH initially integrated two of its major names, LV and Parfums Christian Dior, with the goal of expanding and even including competitor brands. AURA was built using Quorum, a version of Ethereum idealised by JPMorgan to focus on data privacy. Their aim is to provide not only proof of authenticity, but the tracking of raw materials to point of sale and eventually branching into exclusive content or product offers and  protection of creative intellectual property. In doing all of this ERC-721 grew, an NFT (non-fungible token) that relates uniquely to a single item — this will hold the whole production line for this one product from leather-farm until current owner.

Onto Nike, who managed to do something very similar to LVMH using Ethereum as their base-platform for product-tracking — again, NFT ERC-721 will be used for some shoes. We can assume this would work in a fashion not dissimilar to StockX’s portfolio feature, whereby the sneaker owner could build an inventory through an app of sorts to track their collection’s progress, or access information in line with production levels. That’s right, owners of certain sneakers may be able to show-off just how rare their pairs really are. Brilliant!

To summarise in as little words as possible, the future of fashion is digital and for all the right reasons. Of course there will be hiccups and issues as each step develops, but in the long run misleading retailers could be eradicated alongside a reduction in counterfeit products infiltrating third-party markets. Buying online will become safer, all thanks to ERC-721 the non-fungible token.

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