While exclusivity has always been a feature of the fashion industry, the uniqueness of objects can now be owned and transferred to the virtual world using blockchain technology.
“A key advantage of blockchain technology is that it allows uniqueness and ownership to be made visible and executable on a decentralized basis. As creators of culture, it is the next logical step for the fashion and design industry to enable their brands and creations to live in the digital world,” Marjorie Hernandez, LUKSO CEO, told me.
Hernandez, a trained architect and brand expert by trade, has already developed many ideas and concepts for established artists throughout the world. Now, Hernandez is eyeing blockchain technology as the next big wave of innovation to hit the fashion and lifestyle industry.
Accompanying Hernandez is Fabian Vogelsteller, famous Ethereum developer responsible for co-creating the ERC-20 Token Standard, which is the most used smart contract standard world-wide that initiated the ICO wave of 2017. The 34-year-old is also responsible for well-known open source projects such as the Ethereum’s first decentralized Browser called “Mist,” the Ethereum Wallet and the web3.js library.
Together, Hernandez and Vogelsteller are creating a blockchain network for the fashion and lifestyle industry. Known as “LUKSO,” it is an industry specific blockchain-based ecosystem aiming to create a global new standard for the fashion, lifestyle and luxury goods sector. The LUKSO Blockchain invites the fashion and lifestyle industry to extend their online presence beyond social media, by creating a unified experience for businesses and consumers that live both online and offline.
We are building a whole new blockchain ecosystem for the fashion and lifestyle industry. This isn’t an app with a token, but rather a foundation layer, based on the Ethereum Virtual Machine (EVM). On top of this foundation, many use cases can be deployed, which are relevant for the fashion and lifestyle industry. Authenticity is the first use case we are looking at, as we see it as the fundamental first step,” Hernandez explained.
According to Hernandez, in order to ensure authenticity of fine luxury goods across the LUKSO blockchain, “digital twins” of physical items are created. These digital copies are equipped with chips that track and register items on the LUKSO blockchain network. Brands and designers that are part of the LUKSO ecosystem will be able to register items themselves after the goods have been manufactured. In turn, this technology will greatly benefits consumers.
Users who purchase items from the LUKSO ecosystem will have the certification number of where the goods were made. They will also be able to see the serial number, track where the materials came from and much more. What’s really unique about LUKSO though is that items can also be sold or traded within the ecosystem. Designers can also provide incentives to consumers. This was something we couldn’t do before, but the blockchain enables dynamics between brands and consumers, creating a whole new economy,” Hernandez said.
In other words, customization, authenticity and tokenization will shape landscapes that will not be controlled by one entity or geography, but by an entirely new community.
A Context Specific Blockchain In The Works
While both Hernandez and Vogelsteller understand that the concept of creating digital twins can be applied to many industries, the duo points out the importance of a “context specific blockchain,” built specifically for the fashion and lifestyle industry.
Technically speaking, the same concept can be applied to many industries, but we are giving the LUKSO blockchain network a specific context because it allows a particular group of people to have their own blockchain. In turn, you have resources available only to that group of people, rather than offering it to the whole the world. For example, the problem of having overly full blockchains can be seen with Ethereum and Bitcoin. However, if you want to have anything in production today, it’s necessary to start Blockchains for specific industries, user groups or use cases. This is what I call a “context based blockchain,” Vogelsteller told me.
Furthermore, a key focus for Vogelsteller has been the advantages of decentralized networks benefitting all participants. Research will be done to enhance and perfect the on-chain governance of this industry specific network in the coming months. And while the LUKSO infrastructure doesn’t exist just yet, an internal test network is running, and according to Vogelsteller, a public test network is expected to launch soon.
The blockchain technology is not the challenge here, but rather launching the network at the right time is. Blockchain just came into fashion a year ago and the big topic now is supply chain, but people haven’t started to think about all the benefits of owning things on the blockchain, or the customer engagement possibilities. This is the next big topic for the fashion industry and we will start when the time is right for startups and brands. In the tech industry, you can either launch too early or too late, and right now we are a bit too early. The plan is to start the main net in 2019,” Vogelsteller said.
Moreover, a reversible ICO (RICO) is in the works for LUKSO, a concept that Vogelsteller proposed during this year’s Devcon4, Ethereum’s annual developer conference. Specifically, the concept involves the creation of a special-purpose smart contract that allows investors to “reverse their committed funding.”
A reversible ICO is a simple concept. Rather than sending money to a smart contract where the project has immediate access to those funds, participants will send money to a smart contract and commit that money for a certain time period. Let’s say a participant commits $10k, which flows to the project ownership over a period of 2 years. Investors can withdraw their money at any given time, minus the percentage that already went to the project. This gives power back to investors, as they can basically take their money back if the project is a scam. It’s also important to show that we can regulate ourselves on-chain with our own policies,” Vogelsteller said.
Moving Fashion Forward On The Blockchain
While LUKSO appears to be a promising blockchain project, Hernandez and Vogelsteller are not the only one’s bringing blockchain technology to the fashion and lifestyle industry.
For example, Rare Carat, an online retailer for diamond rings, recently announced a partnership with the independent emerging technology enterprise, Everledger, to launch the Rare Carat Report. This free tool leverages blockchain technology and Artificial Intelligence (AI) to let consumers intelligently evaluate diamonds for sale anywhere in the world, both online and offline.
And according to Dr. Sharon Raneri, Co-Founder and Business Development Manager of MB8 Coin, a cryptocurrency created specifically for luxury items and booking travel accommodations, blockchain technology is the future of Fashion-Tech.
“Blockchain is an immutable, distributed digital ledger that can be used in many ways, in a number of different industries. Moving the fashion industry supply chain to a blockchain solution could have benefits for transparency, traceability, sustainability, authenticity, increased efficiency and compliance,” Dr. Raneri told me.
Echoing Hernandez, Raneri also notes,
The use of blockchain combined with RFID chipped smart labels would make it possible to record and track the supply chain all the way from the raw materials, the manufacturing processes, shipping, to the retailers and the customers. Labels could include other details as well, such as product images, precise sizing data, Designer details, pricing and customer feedback ratings. For retailer’s, applications could include stock level monitoring and automatic reordering. Authenticity of products in the fashion industry is key and would be easily verifiable when using a blockchain reducing counterfeiting and fraud. There are many benefits to a Blockchain based solution for the fashion industry.”