Blockchain Technology in Fashion Industry: Challenges and Opportunities

Blockchain Technology in Fashion Industry

Shubham Anil Jain
Department of Textiles (Fashion Technology)
DKTE’S Textile and Engineering Institute, Ichalkaranji, India
Intern at Textile Learner


1. Introduction
Blockchain is a kind of distributed digital system which is useful to maintain the records of events across a public or private computing network. It is like a kind of distributed ledger technology (DLT). It is made up of a series of blocks which are linked together. Generally, a block is a collection of various data. Here, each and every block contains the information about the transactions, who is participating in the transactions and a unique code which is called a “hash” that allows one to tell it apart from every other block. In this technology, every piece of information is automatically encrypted and a new block is added to the chain of historical records. This type of record-keeping technology is being used in fashion industry to bringing transparency in the supply chains, tracking the welfare of factory employees, and transferring the ownership of digital fashion also among many other areas which are the industry’s constant irrespective of what is in trend.

BlockChain technology in fashion
Figure 1: Blockchain Technology

Blockchain, like the apparel industry, has evolved greatly ever since it was conceived. It was, introduced in the fashion world for the first time in the Shanghai Fashion Week 2016 and today the technology has expanded its use cases in the direction of making the sector highly efficient and transparent.

2. Ways in Which Blockchain is Reshaping the Fashion Industry

2.1 Solves issues regarding surrounding fraud
It has been seen that, according to the Global Brand Counterfeiting Report 2018, the calculation of offline and online counterfeiting of various sectors such as, textiles, cosmetics, clothing, and footwear have reached a $98 Billion mark.

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Blockchain, by being spread throughout the supply chain, it helps the customers to obtain information regarding the product origin and the journey it has taken through the help of an integrated chip. So the customers can check the necessary information required to reject fake products or the ones that come from ethically questionable production units.

2.2 Supports sustainability practices
The potential of Blockchain in fashion industry and retail sector comes with the capability to trace the physical or digital products throughout the lifecycle. This transparency system in the supply chain tracking process offers producers insights into their value chain, giving them the satisfaction  of a proper third-party goods handover and final product labelling.

Blockchain development companies, by tracking the assets progression, come with the solution to expand ethical and sustainable creation and consumption of a commodity on a global level.

2.3 Improves efficiency in the apparel industry
Currently, the number of stakeholders which are involved in a production and distribution line is equal to the number of individual records. When the blockchain is considered in fashion industry, it brings the entire supply chain on a centralized digital platform. This helps to save the weeks to identify the material origin and supply line. Another advantage of it is that, Blockchain for entrepreneur guide is how no one can lose, modify or, destroy a record once it has been added in the Blockchain.

Benefits of Blockchain Technology
Figure 2: Benefits of Blockchain Technology

2.4 Flexible royalty tracking
This technology makes it more convenient to track royalty payments. It not only   allows the designers to develop an unchangeable proof of creation but also be used in various aspects such as, for creating and tracking trademarks, license designs in addition to royalty programs or sales originating through these designs.

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The convenience is what makes Blockchain not just a key part of the changing fashion industry but also a prime technology and trends of the media and entertainment industry.

2.5 Transfer the ownership of digital clothing 
Nowadays, the demand of digital clothing is very high. Designers can give their customers the variety of options to buy digital garments with the option to be digitally fitted in it. A trend initiated by CryptoKitties, the procurement of digital goods have today become one of the most popular areas of making money from apps. The ownership of the digital garment gets transferred through Blockchain technology, where it is not possible to counterfeit the design. Blockchain allows one to create digital one-offs. It provides a way to create uniqueness and desirability in the design.

3. Blockchain Applications in the Fashion Industry

👉In today’s scenario, the fashion industry has experienced many applications of blockchain in various aspects such as to track the origin of products, prove their authenticity and quality and assert ethical claims and fair trade practices.

👉In 2015 Greats x BEASTMODE 2.0 Royale Chukka produced sneakers with the help of smart labels that are recorded on blockchain, which was accommodate by Chronicaled. The smart label provides the digital information and each item’s limited edition number.

👉Another application of this technology in fashion is seen by the collaboration between London designer Martin Jarlgaard and Provenance. At Copenhagen Fashion Summit 2017, they manufactured the garments that have smart tags embedded with blockchain, so that each step of the production process is recorded and all persons who are involved in the process from designer, manufacturer until customers can register and track each step on blockchain via Provenance website or application.

👉Similarly, Babyghost in collaboration with VeChain provided immutable ledger which is paired with either an NFC (Near-Field Communication) chip or QR code on each Babyghost product. Using the VeChain app consumers have access to all the information about the product and verify its authenticity by easily scan it.

👉Recently, the Sneakers are implanted with NFC chips that are linked to the Nike x VeChain application, which is accessible by smartphone, where consumers can see the certificate of authenticity, detailed information about the product, the journey of the sneakers, and exclusive Nike content, all stored on the VeChain blockchain.

4. Blockchain Opportunities for the Fashion Industry

👉Discernibility and Straightforwardness of the store network and assurance of licensed innovation Blockchain is characterized as “an ethical advanced record of monetary exchanges that can be customized to record monetary exchanges as well as practically everything of significant worth” and truth be told it has exceptionally immense extension and openings in various fields like money, protection, installments, medical care and some more.

👉In the design business this innovation can possibly change the manner by which store network and protected innovation work. Discernibility and straightforwardness of the store network Blockchain offer numerous chances to ensure detectability and straightforwardness along the whole production network. With the utilization of this innovation to the creation and conveyance chain of an organization is feasible to recognize the various entertainers planned as parts of the organization.

👉The section of an item starting with one entertainer then onto the next is recorded in the organization where every exchange is apparent to all. Blockchain permits buyers to know the beginning of an item and possibly upstream the crude materials of which it is made of, to screen and to control spills from particular dispersion organizations, to help with upholding such arrangements, to forestall unapproved equal imports and to demonstrate nation of beginning for all pieces of an item.

👉The discernibility of an item additionally implies that it very well may be securely followed back to a creation totally made in a region, fit for expanding the standing of the brand and its worth available in light of the fact that buyers can check the historical backdrop of the item prior to getting it. Also, the detectability of the creation and appropriation chain could lessen the expense and season of the review exercises because of a framework that promptly reports and can give a photo of the condition of consistence.

👉Today, the detectability and straightforwardness of the assembling and conveying measure with the recognizable proof of the relative multitude of entertainers included is especially significant for every one of the organizations that expect to keep the guidelines of natural and social manageability and show feasible driven practices to buyers.

👉Supportability, gains as diminished ecological effect and better affirmation of common liberties and reasonable work rehearses, appear to be encouraging results of blockchain applications.

5. Challenges with Blockchain Technology

5.1 Lack of adoption
Blockchains are systems that require broad adoption to work smoothly. For example, track-and-trace capabilities in supply chains not only requires the organization to adopt a blockchain network, but also for its suppliers to do so as well. Yet APQC has estimated that only 29% of organizations are using blockchain or have fully utlized it. Without widespread recognition and adoption, the effectiveness and scalability of blockchains will remain limited. Yet there are good reasons to be confident that adoption of blockchain will grow in future. Organizations are increasingly coming together and forming collaborative blockchain working groups to find out common problems and develop solutions that can benefit everyone without revealing occupancy information.

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5.2 Skills gap
Blockchain is still a growing technology, and currently the skills needed to develop and use it are in short supply. In one of the research it has been estimated that 49% of participants indicate that this skills gap is a top challenge. The marketplace for blockchain skills is considered as highly competitive and has been for some time. In the report of Blockchain Council is stated that demand for blockchain engineers come up in 2019 by more than 500% over the previous year, with base salaries for blockchain developers surging in kind. The expense and difficulty of talent addition in this area only adds to the concerns that organizations have about adopting blockchain and integrating it with legacy systems.

5.3 Trust among users
Lack of trust among blockchain users is the third major drawback to widespread utilization of this technology. This challenge cuts in two directions: Organizations may not be in a position to trust the security of the technology itself, and they may not trust on other parties for blockchain network. It is true that, every transaction in the blockchain is considered to be secure, private and verified. Though it is true, there is no central authority present to validate and check the transactions, since the network is decentralized. A core part of any blockchain network is the concurrent algorithms that drive common agreement about the present state of the distributed records for the entire network. It secures that every new block added is the one and only version of the truth agreed upon by all the nodes in the blockchain users.

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5.4 Financial resources
The fourth obstacle to widespread adoption of blockchain, according to research, is the lack of financial resources. Implementing blockchain technology is not free, and for many organizations the pandemic situation of 2020 have left budgets tight. However, one other lesson learned from the pandemic is that organizations and IT departments in particular, can change faster than previously thought possible. A closer examination of this drawback shows that it is connected to an underlying lack of organizational awareness and understanding of blockchain.

5.5 Blockchain connectivity
As many organizations begin adopting blockchain, there is a mentality for many organizations to develop their own systems with different characteristics (governance rules, blockchain technology versions, consensus models, etc.). These separate blockchains do not work together, and there is currently no universal standard to enable different networks to communicate with each other. Blockchain connectivity includes the ability to share, see and access information across different blockchain networks without the need for an intermediary medium or central authority. The lack of interoperability can make mass adoption an almost impossible task.

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6. Conclusion
At the point when cross-line installments are less expensive for organizations, these reserve funds could be given to buyers. The less a business needs to spending plan for discounts, returns b-stock, and wastage, the lower the working expenses are. By killing a significant number of the weaknesses of web based shopping by making things recognizable on the blockchain, industry can lessen contamination and fossil fuel by products, while helping independent companies in decreasing wastage and pointless expenses related with returns and reviews. There are such countless motivations to anticipate the execution of blockchain in the style business. Web based shopping encounters will be simpler than at any other time, the government assistance of laborers in the stockpile chains of enormous enterprises will increment – evidently, and the quantity of fake things will decrease. Organizations can set aside cash, and improve approaches to lessen their carbon impression as it turns out to be progressively straightforward. At last, it seems the innovation is setting out a freedom for closer and more straightforward connections among brands and buyers. Blockchain in the style business will be a positive development for shoppers, retailers, providers, laborers, and investors the same.

7. References

  1. Zheng, Z., Xie, S., Dai, H.N., Chen, X., Wang, H.: Blockchain challenges and opportunities: a survey. Int. J. Web Grid Serv. 14(4), 352–375 (2018).
  2. Bhardwaj, V., Fairhurst, A.: Fast fashion: response to changes in the fashion industry. Int. Rev. Retail, Distrib. Consum. Res. 20(1), 165–173 (2010).
  3. Blockchain Technology and Applications, Edited by Pethuru Raj Kavita Saini Chellammal Surianarayanan.
  4. Blockchain technology in the fashion industry: opportunities, applications and challenges by Scritto da Claudia di Bernardino.

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