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Blockchain: Improving Transparency in Transactions

by Spencer Woody / /

There may be nothing worse than purchasing what one thought was a top-of-the-line purse, watch, or pair of shoes, only to find out that it was a cheap knockoff. It is even worse when one spends a tremendous amount of money on such items, believing it’s genuine. In an increasingly globalized and constantly trading society, consumers should be able to verify the authenticity of the good they are purchasing.

This verification process should ensure that the people involved are real, and the products purchased in the transaction are authentic. Without such confidence in the marketplace, especially the online marketplace, buying and selling would grind to a halt.

Some entrepreneurs have sought to use emerging technologies like Blockchain to provide the needed verifications to consumers. Using Blockchain technologies to ensure the quality of their product not only increases consumer confidence, but also marginally protects the market from the dumping of knockoff goods and black market trade.

Organizations like Everledger have used Blockchain to bring transparency, ensure provenance of goods, and reduce fraudulent activities within the diamond market. According to Leanna Kemp, Founder and CEO of Everledger, there are a number of gaps in the diamond supply chain, like document tampering, but Blockchain has the ability of help fill some of those holes. Blockchain helps solve these problems by taking information and data gathered by geologist and machines at certain points in the diamond’s life cycle and laying that information in the Blockchain system.

In other words, by simply taking the verification data points about the quality, shape, size, cut, and provenance of a diamond and embedding that in Blockchain’s immutable system, it ensures the quality of the good and allows consumers to know exactly what and from where they are purchasing. Moreover, this allows consumers to make ethical choices and refuse to purchase diamonds and other goods whose sale may benefit unethical or immoral institutions and trades, like blood diamonds.

Diamonds are not the only good utilizing Blockchain technology to benefit consumers. Using similar methodology, the Chai Wine Vault (partners with Everledger), has been created to ensure the authenticity of fine Italian wines and to undermine the fake fine wine industry. According to Maureen Downey, the Founder of Chai Wine Vault, the counterfeit fine wine industry not only deceives consumers, but counterfeiters like Rudy Kurniawan impact the wine market with over $500 million worth of fake fine wine.

Blockchain technologies continue to be used to help solve problems in the marketplace and help vendors and consumers feel more secure with engaging each other. Blockchain is an extremely promising technological development, but it must be remembered that it is still in its infancy and should not be stifled by regulations. The number of applications of Blockchain are yet to be discovered. Businesses able to verify the origin and movement of products will by default increase confidence between buyers and sellers. This technology could also be a breakthrough in how Americans engage with their government. Congress should promote the use of new technologies, such as Blockchain, to bring government into the 21st century and promote transparency for and confidence with constituents.

 

For more on Blockchain Technologies please see the following:

Blockchain: A Free Market Solution to Government Burden

Blockchain and Creative Destruction  


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