According to the Eonpass project founder, a publicly sponsored blockchain initiative to prevent the entry of counterfeit goods into the European Union is working to learn from past mistakes.
The most recent company to look for Web3 technology business uses that scale to actual size is Eonpass.
The founder of the company, inspired by the official support of the European Union, is confident that the business can thrive where others have failed because open-source technology enables anyone to work together to halt the influx of fake goods.
Distributed ledgers should be a reliable method for confirming supply chains because they, in theory, provide an immutable record of provenance that cannot be changed. But the leadership of Eonpass is well aware of the issues that have previously plagued the commercial blockchain market.
Eonpass provides a benefit. It won a contest held by the EUIPO, the intellectual property agency of the European Union, in March. According to EUIPO, a division of the EU’s administration in charge of trademarks and related matters, Eonpass had the best model for leveraging blockchain technology to detect phony goods arriving at the border, along with partners including consultancy company EY and freight forwarder Jet Air Service.
Thomas Rossi, the creator of Eonpass, is now more upbeat as a result.
In an online interview with CoinDesk, Rossi stated, “I have to remain hopeful as a business.” I spent a lot of time researching why prior enterprise blockchains, although not necessarily failing, did not scale.
The expense of counterfeiting is EUIPO’s primary concern.
According to a 2019 study by Boston Consulting Group (BCG) consultants, the cost of counterfeit medications and electrical components worldwide ranges from $75 billion to $200 billion. According to EUIPO, 6.8% of imports into the EU from the rest of the world are fraudulent, amounting to about $134 billion annually. Additionally, there are non-financial costs associated with selling dangerous medicines or kid-friendly toys.
Fighting this is difficult. Customs inspectors everywhere must make a difficult decision between relying on readily falsified paperwork and forcing individual pallets to be opened for inspection. Significant amounts of trade finance are at risk, according to banks.
According to Rossi, the trade of traditional goods, such as electronics or prescription pharmaceuticals, “is a very opaque market and there is no way to trace one shipment to the original brand owner that permits the content of the shipment and this destination.”
He cites the appearance of counterfeit Hermès NFTs on OpenSea as evidence that more cutting-edge assets like non-fungible tokens, blockchain-powered assets that are supposedly used to prove an item’s ownership and authenticity, can still be faked. He likens NFT platforms to a Wild West devoid of intellectual property rights.
Rossi, like BCG, is certain that blockchain may assist by giving customs officers a reliable attestation. Rossi’s offering will be flexible enough to operate with firms who may already have chosen to use Ethereum rather than an alternative blockchain like Polygon, he added, whereas IBM’s product works on the company’s own blockchain and cloud.
The creation of a shared clock is “the most crucial feature of blockchains,” according to Rossi. Therefore, you are unable to manipulate the timeline of occurrences.
Existing blockchain systems, such as TradeLens, a joint venture between shipping giant Maersk and computer giant IBM, may have worked effectively for a select group of large companies with ample resources, but not for what he refers to as the “long tail” of numerous, smaller subcontractors.
There is no way to launch a node and establish a network connection with IBM’s endeavor because it is “not really open source,” according to Rossi. “Perhaps everything is in order within their secure system… However, leaving the system or allowing someone from a different system to enter is quite challenging.
TradeLens is “based on open standards,” according to an IBM official who responded to CoinDesk’s inquiry, and it “allows supply chain parties to safely and transparently communicate data with one another.”
According to IBM, over 1,000 firms are involved in the program, and over 5,500 electronic bills of lading—the official documents used as receipts in international shipping—have already been exchanged. The spokesman stated that TradeLens is “a neutral solution” and that its platform can receive data from ocean carriers whether or not they are members, citing the engagement of ports, authorities in six continents, and customs officials in 16 countries.
Closed, exclusive systems do have benefits, most notably a tighter hold on revenues to recuperate investment. But it would be beneficial to seize even a small portion of the $10 trillion spent on international trade. Rossi has a strategy for it as well.
Rossi believes he can start out by consulting for large corporations and eventually by providing effective data services to trade financers. He aspires to expand from the three organizations currently conducting tests to 10 by the end of the following year and 100 within a few years.
“I’ve already had conversations with a few banks in Italy. They are eager to find a way to handle decisions they make on the financing of value shipments in a more effective manner, he said. “Monetization happens after the network is as big as it can be.”
According to Rossi, the EUIPO’s support is beneficial, not the least of which is the way it alerts potential customers of luxury brands. The EU agency continues to be an advocate for a system that it believes might benefit overburdened border guards.
A representative for the EUIPO told CoinDesk in a written interview that given the limited resources available to enforcement officials, technologies like blockchain “may prove to be game-changing instruments in the fight against trade in counterfeit products.” “Global stakeholders use a variety of often-disjointed systems, and criminal networks make use of this isolation to their advantage.”
Early in 2019, Eonpass’ proof of concept results will be released, and by the end of 2023, a basic product will be made available to the general public. In order for customs officers to verify that declarations signed on the blockchain are legitimate, the EU agency is building a database to link brands to public keys. Additionally, it collaborates with American colleagues and earlier in September gave a report to the World Intellectual Property Organization.
A leaked copy of the paper, whose authenticity EUIPO has since confirmed, stated that the vision is an infrastructure “where any interested party (producers, consumers, transport services, etc.) can easily check the authenticity of a product and alert right-holders when an infringing product is detected.”
All eyes will be on whether business-focused blockchain innovations can genuinely flourish in the wild with EU support.