Fake It Till You Blockchain It: How Tech is Taking on the Counterfeit Industry

Counterfeit goods are a global plague, infiltrating every industry from luxury fashion and electronics to pharmaceuticals and automotive parts. According to the OECD, with an estimated value of $500 billion annually, counterfeiting accounts for 2.5% of global trade, damaging economies, eroding trust, and, in some cases, putting lives at risk. 

Yet, for all the damage it does, counterfeiting thrives because of one simple truth—the supply chain is fragmented, opaque, and vulnerable. Some consumers willingly buy fake goods, but many more unknowingly purchase counterfeit products, believing them to be genuine. This is where blockchain comes in. The ability to track, verify, and authenticate goods in real-time could finally put counterfeiting on the back foot, benefiting brands, consumers, and even global trade infrastructure

Who Buys Counterfeits, and Why?

To understand how blockchain can help, we need to unpack the psychology of counterfeit purchases. There are two key types of buyers:

• The Willing Buyer: These consumers knowingly buy counterfeit goods. They’re looking for the status symbol, not authenticity. No amount of tracking, verification, or blockchain technology will change their behaviour—they don’t want authenticity, they want accessibility.
• The Unknowing Buyer: These are the consumers who genuinely believe they are buying legitimate goods. They fall victim to well-made counterfeits, often paying near-authentic prices, only to later realise they were misled. This is where blockchain solutions can make a tangible impact.

For businesses, this second group represents billions in lost revenue and a serious reputational risk. A counterfeit Gucci handbag may seem harmless (well to us, perhaps more so much for Gucci's  shareholders), but a counterfeit drug, aircraft component, or electrical device can have life-threatening consequences.

Four Ways Blockchain Can Cripple The Counterfeit Trade:

(a) End-to-End Product Authentication

Blockchain's greatest strength is its tamper-proof, immutable ledger, where every transaction or product movement can be recorded and verified. By embedding unique identifiers like RFID tags, QR codes or NFC chips onto products and linking them to a blockchain, suddenly companies can create an unbroken chain of custody from production to point of sale. 

Real-world applications:

• Luxury goods: The Aura Blockchain Consortium (backed by LVMH, Prada, and Cartier) provides digital certificates of authenticity, allowing customers to verify the legitimacy of a product before purchasing.
• Pharmaceuticals: The MediLedger Network, supported by Pfizer and other pharma giants, uses blockchain to track medicine batches, preventing fake drugs from entering legitimate supply chains. The WHO estimates that 10% of medicines in developing countries are counterfeit, making this a critical solution for global health.
• Automotive & electronics: Bosch and BMW use blockchain to track spare parts, ensuring genuine components enter the supply chain while blocking counterfeits that could lead to vehicle malfunctions.

By simply scanning a QR code or NFC tag, consumers, retailers, and customs officials can verify authenticity instantly, closing the information gap that allows counterfeits to flourish.

(b)  Eliminating counterfeits at the source 

Procurement fraud is a huge problem in industries where supply chains are long and complex—construction, government contracts, and manufacturing. Fake or substandard materials can easily slip through the cracks, leading to financial losses and safety risks.

Blockchain-based smart contracts can enforce procurement rules by:

• Only allowing verified suppliers to participate in bidding processes.
• Releasing payments only when products meet quality verification.
• Providing customs and regulators with real-time data on shipments before they reach distribution points.

The United Nations' World Food Programme (WFP) has already used blockchain to track aid supply chains, reducing fraud and misallocation. If applied to large-scale public and private procurement, blockchain could prevent billions in losses due to substandard or fake materials entering supply chains.

(c) Logistics & Trade: How Maersk & Others Stand to Benefit

One of the biggest enablers of counterfeits is the lack of traceability in global shipping and trade. A significant portion of fake goods enters legitimate markets through misdeclared shipments, falsified import documents, and weak oversight in cross-border trade.

This is where companies like Maersk and other global logistics players see blockchain as a game-changer. In collaboration with IBM, Maersk developed TradeLens, a blockchain-based shipping and supply chain platform that:

• Tracks goods from their point of origin to final delivery, preventing fraudulent shipments from being inserted into the supply chain.
• Reduces the risk of tampered documentation, making it harder for fake products to pass customs inspections undetected.
• Increases efficiency, allowing companies to quickly verify the legitimacy of goods in transit, reducing processing times by up to 40%.

The counterfeit trade thrives on weaknesses in global logistics systems. By using blockchain to log and verify every transaction in real-time, companies can shut down the supply routes that fakes rely on.

(d) Grey Market Goods & Parallel Imports: Blockchain as a Gatekeeper

Not all counterfeits are intentional fakes—many are unauthorised resales of genuine products. This is common in industries like luxury fashion, consumer electronics, and pharmaceuticals, where products intended for one market are illegally diverted and sold in another.

Blockchain can help brands:

• Ensure that products reach their intended market and prevent grey market sales.
• Authenticate goods at resale, allowing customers to verify the legitimacy of second-hand purchases.

Nike, for example, has patented CryptoKicks, a blockchain system linking physical sneakers to a digital token, allowing Nike to track and verify authenticity in secondary markets.

For pharmaceuticals and high-end consumer goods, a blockchain-enabled digital passport could mean buyers always know the source and history of their purchase, whether they’re buying it in-store or from a reseller.

Final Thoughts: Will Blockchain Eliminate Counterfeiting?

Not entirely. Those who knowingly buy counterfeits will continue doing so—but for industries struggling with unauthorised resales, fraudulent procurement, and misdeclared shipments, blockchain could offer the first real weapon against the counterfeit economy.

• For businesses, it provides a bulletproof record of authenticity, reducing revenue losses and improving customer trust.
• For consumers, it means instant verification of what they’re buying, reducing the risk of falling for fakes.
• For law enforcement and customs, it offers real-time tracking of counterfeit networks, making crackdowns more effective.

Counterfeiting thrives on supply chain blind spots, weak documentation, and uninformed consumers. Blockchain closes these gaps, bringing unprecedented transparency and accountability.

As adoption grows, the goal isn’t just reducing counterfeiting—it’s about setting a new global standard for trust in commerce. The next few years will determine whether blockchain remains an emerging solution or becomes the backbone of anti-counterfeiting efforts worldwide.