If you’ve ever shopped in midtown Manhattan, you know that you can buy a Louis Vuitton bag for $2,000 in Neiman Marcus or $20 from the guy across the street with a blanket full of “Louis Vuitton” bags. And without a close inspection, they often look basically the same.
That’s why Louis Vuitton’s owner, the LVMH Moët Hennessy Louis Vuitton luxury goods group is a founding member of the Aura Blockchain Consortium, a private, permissioned blockchain piggybacked on Ethereum that is designed to provide proof of provenance, allowing consumers to trace the history of their LV-logoed bag — or Hublot watch, Prada gown and Bulgari perfume — from the design studio to the French tannery producing the leather to the artisans who sew it together to the warehouses, shipping lines and distribution centers that deliver it to Neiman Marcus.
Announced in April, the blockchain went live Thursday (Jan. 13), with founding members LVMH, Prada Group, Cartier, part of Richemont, and OTB Group working together in a “private permission-based blockchain platform which offers both up-stream and down-stream traceability in the supply chain,” the consortium said. “Aura helps luxury brands to address the following topics: authenticity, ownership, warranty, transparency and traceability” as well as raw materials souring data.
Built on the public, open-source Ethereum blockchain but requiring permission to join, Aura is a “single solution to address the shared challenges of communicating authenticity, responsible sourcing and sustainability in a secure digital format,” the consortium said.
What’s unusual about Aura is that it is an industry consortium, with competitors LVMH, Prada Group, Cartier, part of Richemont, and OTB Group working together.
Lorenzo Bertelli, Prada Group’s head of Marketing and Corporate Social Responsibility made that point in April, when the Aura project was announced.
Aura is “an incredible journey together with our luxury partners and in a trustful collaboration never seen before in our sector,” Bertelli said at the time. “We have created an exceptional and innovative project aiming to put our customers at the very center creating major values to them through a sustainable authentication system which will unlock future possibilities.”
Why Blockchain?
Outside of cryptocurrency, banking and finance, the main use of blockchain technology is supply chain management. Provenance was one of the first commercial uses of this aspect of blockchain, with upscale French supermarket chain Carrefour using it to allow buyers to use a QR code to trace the particular organic chicken they picked up off the shelf all the way back to the particular farmer that raised it — providing proof of its organic credentials, a rich marketing channel for the product, and a greater sense of trust and loyalty to Carrefour.
But Ford, VW, Tesla and others have used it to show that their Congo-sourced cobalt is ethically mined, and DeBeers Group uses the Tracr blockchain as a way of removing — and publicly proving it had removed — blood diamonds from the supply chain, as well tracing the stone through cutting and polishing, to the jewelry manufacturer and retailer.
Safety is another big use. IBM Blockchain has built platforms to prove that Norwegian seafood was sustainably harvested — a use recommended by the Food and Agriculture Organization of the United Nations in a 2020 report titled “Blockchain Application in Seafood Value Chains” — and that Chinese pork was safely raised, butchered and transported after a string of safety incidents spooked consumers. Walmart is requiring that suppliers of leafy greens get on its blockchain platform after 2018’s string of romaine lettuce salmonella recalls, with other produce following suit.
But these private — or enterprise — blockchain platforms, which require permission to join, are not just used for food safety or handbag provenance. The Maersk-developed TradeLens blockchain platform is one of the most successful uses, with more than half of the world’s container shipping tracked on the blockchain platform, which includes the top competing shipping lines, port management forms and even customs agencies. In this case, the point is not showing end-buyers where goods came from but tracking them more effectively.
Easy to Use
This blockchain use case offers better logistical support, allows shippers to identify problems — and implement fixes — as soon as they happen. It also makes it far quicker to trace problems to their source. Those romaine lettuce outbreaks forced all of the produce in the country to be destroyed, left to rot for weeks as authorities traced the contagion back to a single region’s farms — searching every step of the distribution chain in sequence. On a blockchain platform, it would take seconds.
Aura is being sold as a Software-as-a-Service (SaaS) system hosted on Microsoft Azure, with the Aura Blockchain Consortium promising lower upfront costs, as well as low licensing and onboarding costs.
“Aura SaaS provides a game-changing toolbox for the luxury industry with an easy onboarding, minimum costs and without the need to manage any cloud infrastructure and deploying any instance, thus reducing the time-to-market,” said Daniela Ott, secretary general of Aura Blockchain Consortium. “It is a solution suitable for luxury brands of any size, for most product categories within the luxury sphere.”
The service will offer white-label interfaces that are customized to each brand’s front end and a simple-to-manage input system. This ranges from a smart contract generator to easy-to-write webpages and product history management. This will cover features, including authenticity, ownership, warranty, transparency and traceability targeting both upstream use cases (e.g. raw material sourcing) and downstream use cases (e.g. digital certificates of ownership and authenticity certified on the Aura Blockchain, eWarranty, transfer of ownership, etc.)
One of the biggest benefits of enterprise blockchain is that every supplier can add their information to a single system but ensure it is only readable to specific members — or even that specific parts are readable by specific members.
That’s why one of the earliest uses that enterprise blockchain providers pitched back in 2018 was to the health insurance industry. A single blockchain could hold members’ health records on an immutable (unchangeable) blockchain with other members like hospitals only able to see the parts of the records they need — for example, if someone has been vaccinated — when they need them. Equally, the technology could be used to allow an employer to see what percentage of their employees have been vaccinated without telling them who is and isn’t.
That failed to catch on, however, as the corporate executives were unwilling to work with competitors, even with non-private information like a single database of easily updatable healthcare providers’ addresses — something that can bring fines under the federal Affordable Care Act if not accurate. It is time-consuming work repeated by all insurance companies, yet they couldn’t work together on even that.
Then there’s the use of smart contracts. In the car insurance industry, a blockchain could automate payment of claims between industry partners. Once adjusters determine a crash was one person’s fault, the system could send payment to the other’s company to cover what it paid out.
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