Bringing new levels of authenticity and traceability to luxury brands with Blockchain technology

Blockchain technology is becoming the key for luxury fashion brands to authenticate and trace their products, driven by recent European Union (EU) legislation.

The Ecodesign for Sustainable Products Regulation (ESPR) mandates that most products sold in the EU must meet sustainability and ethical standards. A key requirement is the Digital Product Passport (DPP), which ensures traceability.

A Digital Product Passport (DPP) acts as a digital tag linked to a product, providing consumers with detailed information on the item’s authenticity, supply chain, and sustainability.

Megan Kaspar, Managing Director at digital asset investment firm FirstLight, highlighted that the urgency for DPP adoption is increasing. This urgency stems from France’s Anti-Waste for a Circular Economy Law (AGEC) and new EU proposals requiring each product to have its own DPP by 2026.

Mass adoption of Blockchain-Based DPPs among notable brands

According to Kaspar, luxury brands like Prada are already utilizing blockchain technology through DPPs for product authentication. “This technology offers secure, transparent, and traceable records of origin, ownership, and authenticity,” Kaspar explained. “Blockchain ensures full supply chain traceability while reducing counterfeiting and boosting consumer confidence.”

Kaspar noted that organizations like the Aura Blockchain Consortium are advancing this technology by linking physical products to blockchain-based smart contracts via embedded NFC chips or QR-coded smart tags.

Founded in 2021 by LVMH, OTB Group, Prada Group, and Cartier, the Aura Blockchain Consortium has created DPPs for over 40 million products from brands including Prada, Loro Piana, Maison Margiela, Rimowa, and Louis Vuitton. Romain Carrere, CEO of Aura, emphasized that with the upcoming EU regulations, accelerating DPP adoption is crucial.

Since then, the initiative has expanded, creating DPPs for over 40 million products for brands including Prada, Loro Piana, Maison Margiela, Rimowa, and Louis Vuitton. Romain Carrere, the CEO of Aura Blockchain Consortium told Cryptonews that Aura predominately focuses on applying blockchain-based DPP in the luxury industry.

Carrere said: "with incoming EU regulations mandating the widespread use of DPPs from 2026 onwards, accelerating adoption is more pressing than ever,".

DPPs provide vital information and traceability of products

Carrere explained that brands joining Aura receive a digital identity for their luxury products, often embedded with NFC chips or QR codes. Scanning these tags provides consumers with transparent product information, including details on the product’s lifecycle, supply chain, and authenticity, enhancing traceability and reducing counterfeiting.

Blockchain ensures that data is secure and immutable, further protecting product authenticity. Consumers can easily verify a product’s authenticity using their smartphones on NFC-enabled items, which display an authenticity certificate and origin details.

More Than Compliance: The Future of DPPs

Blockchain-based DPPs offer more than just regulatory compliance. They allow consumers to take digital ownership of a product’s records as NFTs, opening new avenues for brand engagement. Carrere noted that these DPPs offer benefits like product lifecycle traceability, rewards, and enhanced brand storytelling.

Tal Tchwella, Head of Product at Solana Labs, explained how Bond uses the Solana blockchain to embed NFC chips into products, providing detailed information and creating unique consumer experiences through NFTs. Tchwella added that the NFT’s blockchain address can verify the product’s authenticity and offer added features like sustainability info and e-warranties.

Kaspar pointed out that widespread use of DPPs could significantly reduce counterfeiting, which currently represents 2.5% of global trade, worth an estimated $464 billion annually. If companies were to implement DPPs more widely, identifying counterfeits would become easier, making it harder to import and export counterfeit goods.

Despite its effectiveness, Kaspar noted that counterfeiters will continue to find ways to work around the frictions intended to prevent their actions.

The Challenges DPPs face and its Future Prospects

Despite the benefits, adopting blockchain-based DPPs may face hurdles ahead. Carrere mentioned that some brands might find blockchain technology complex but noted that Aura’s user-friendly onboarding system helps ease this transition.

Another issue that brands might face is privacy. Brands might be reluctant to reveal their sales information to competitors and don't want to make themselves vulnerable to scammers with their private information out in the open, but technologies like zero-knowledge proofs and private NFTs could be some plausible solutions to these concerns.

Looking ahead, Kaspar envisions that integrating features such as 3D augmented reality and in-wallet rewards could make DPPs even more engaging and valuable for consumers and brands alike.