Blockchain finally enables shopping with a clear conscience

Updated: Oct 19


Blockchain has become one of the most important buzz words in the technology sphere. This new technology created a lot of hype, as it has been predicted to be the next industrial revolution in many industries [1].


1. The Blockchain in a nutshell:

Blockchain is the technology behind virtual currencies such as Bitcoin. In its simplest terms, Blockchain can be defined as a collection of linked/chained records verified by a decentralized and distributed network of computers (see image 1), which makes records strongly resistant to alteration and counterfeiting as they are protected using cryptography[2].



2. Blockchain at the intersection of fashion and luxury

Did you know that Blockchain and the fashion & luxury industry are actually quite similar (see image 2)?



One characteristic that both have in common is uniqueness: Luxury brands have a unique stylistic identity [10]. Similarly, the decentralized nature of the Blockchain makes counterfeits of cryptocurrencies almost impossible.

Another similarity lies in their management of scarcity: Luxury car manufacturer Ferrari for instance, always delivers "one car less than market demand" [3]. Likewise, cryptocurrencies are also scarce as their supply is limited [4].

The last characteristic common characteristic is history/heritage and storytelling. Many luxury brands, such as Bulgari or Gucci, have a rich heritage (see image 3) used for storytelling [5]. In this regard, a best practice is Louis Vuitton (see image 4) with their Art of Travel storytelling [6]. The Blockchain itself engages in storytelling.



3. Blockchain could achieve what the fashion industry failed to accomplish:

Supply Chain Transparency

One very promising application of Blockchain in the fashion industry lies in supply chain management.

H&M's code of conduct does not allow child labour [7], but how can we know that their products have not been produced in a sweatshop [8]?

Here Blockchain comes into play. It functions like a shared Google Doc [9]: Customers could scan a code on their clothes to retrieve the chronological history of all value-adding steps involved from the raw fibre to the finished product (see image 5).



4. Limitations and conclusion

I believe that Blockchain could accomplish in the digital sphere what fashion & luxury can already do in the physical world. However, Blockchain's broader success will most likely depend on whether we can find a solution for the complex policy questions and excessive energy consumption that still surround Blockchain. Once solved, the massive potential of Blockchain becomes immediately evident.


Bibliography


[1] Landsman, S. (2018, May 12). Blockchain will help 'drive this next industrial revolution,' Wall Street bull predicts. Retrieved from CNBC: https://www.cnbc.com/2018/05/11/blockchain-to-help-drive-next-industrial-revolution-federated.html [Accessed: 10/09/2020]

[2] Rosic, A. (2020). What is Blockchain Technology? A step-by-step guide for beginners. Retrieved from Blockgeeks: https://blockgeeks.com/guides/what-is-blockchain-technology/ [Accessed: 09/09/2020]

[3] Perez, J. (2019, September 11). Ferrari boss claims Maranello will always deliver 'one car less than market demand'. Retrieved from The Drive: https://www.thedrive.com/news/29768/ferrari-boss-claims-maranello-will-always-deliver-one-car-less-than-market-demand [Accessed: 10/09/2020]

[4] Cheng, E. (2018, April 26). There are now 17 million bitcoins in existence - only 4 million left to 'mine'. Retrieved from CNBC: https://www.cnbc.com/2018/04/26/there-are-now-17-million-bitcoins-in-existence--only-4-million-left-to-mine.html [Accessed: 10/09/2020]

[5] Urde, M., Greyser, S., & Balmer, J. (n.d.). Corporate brands with a heritage. Journal of Brand Management , 15(1), 4-19.

[6] Bensoussan, I. (2019, April 3). Brand content in luxury: The case of Louis Vuitton . Retrieved from Medium: https://medium.com/@inesbensoussan/brand-content-in-luxury-ad0cf580f5b2 [Accessed: 08/09/2020]

[7] H&M. (2008). H&M Code of Conduct - Minimum Requirements. New Delhi: H&M.

[8] Butler, S. (2016, August 21). H&M factories in Myanmar employed 14-year-old workers . Retrieved from The Guardian : https://www.theguardian.com/business/2016/aug/21/hm-factories-myanmar-employed-14-year-old-workers [Accessed: 09/09/2020]

[9] Kleb, J. (2017, December 13). What is Blockchain? Retrieved from Sikich: https://www.sikich.com/insight/what-is-blockchain/ [Accessed: 10/09/2020]

[10] Corbellini, E., & Saviolo, S. (2009). Managing fashion and luxury companies. Milano: ETAS.

62 views

©2020 by Maik Wiedmann