Luxury Brands Are Testing the Tech That Powers CryptoKitties

Sure the cypherpunks love CryptoKitties, but turns out luxury fashion brands are also taking a shine to the digital fluffballs.

Or at least, they're into the technology behind the ethereum-based decentralized application that captured the hearts and minds of crypto enthusiasts in December of last year.

According to French startup Arianee, which boasts former employees and advisors from luxury brands such as Tiffany's, Omega, Balenciaga and the Richemont group, the same technology can be used to help these firms create unique identities for bespoke handbags and expensive watches.

What Arianee did to test that theory was create a new blockchain – a copy of ethereum which combines both permissioned and permissionless elements through its use of a consensus mechanism it's calling "proof-of-authority." It's permissionless in the sense that users who want to sell products to one another can interact with the blockchain, but the verifying of the ledger and issuance of new tokens is controlled by the participating businesses.

"The consensus that seals blocks and adds blocks is not fully accessible. You have to register your identity within our governance to become one of those nodes, and in our case, that's really the brands or third-party experts," explained Luc Jodet, head of business architecture at Arianee.

The crypto tokens running over the blockchain are based on ethereum's ERC-721 standard for non-fungible tokens.

The ERC-721 standard is all about scarcity (non-fungible tokens are unique and distinguishable entities) and that makes for a logical solution to import from the gaming and digital collectible world to use for tokenizing luxury goods.

Jodet could not talk openly at this stage about which brands might be running nodes on the Arianee blockchain, but pointed to the startup's advisors at Richemont – a Switzerland-based holding company that owns Cartier, Dunhill, Jaeger-LeCoultre, Montblanc, Purdey, Vacheron Constantin, and Van Cleef & Arpels – as logical candidates.

Commenting on the appropriation of these types of tokens for luxury goods tracking, Courtney Brock, co-founder and COO at Blockade Games, who's been an advocate for the use of ERC-721 tokens for multiple business verticals, said one of the benefits of this token type is that a single contract could work for all goods and include all the information for each product line, season, production number, etc.

"The thing that 721s are really good for is tracking a unique asset," she said, adding:

"If you were to use an ERC-20 or just a regular blockchain, you would actually have to create a new protocol for each line, like if you wanted to distinguish between lines."

Handbags and glad rags
And with that, Arianee's team sees two main benefits to high-end businesses from its smart assets technology.

First, there's what it calls "post-production traceability," which provides a readily verifiable authenticity stamp for each item. This can also carry details about the item's provenance or its service history (expensive watches have to be serviced every two years) and this information can then easily be transferred if the item is resold.

The second, more subtle application is how the token connects the owner with the brand itself, as opposed to the intermediate retailer (again, useful for reselling luxury goods).

"Because it's a token it can be transferred from one owner to another and can record information about the item's history, with the smart asset there remains a connection, a communication channel, that is always open between the current owner and the brand," Jodet said.

Arianee has built three prototypes: one for watches, one for handbags and high fashion items, and a third for champagne bottles.

In the case of champagne, post-production traceability becomes extremely important to track the bottle once it leaves the vineyard, making sure it was kept in a cellar and which shop actually sold or resold it, said Jodet.

And these three tests aren't the only ones on Jodet's mind.

He told CoinDesk:

"This works for any luxury products you could imagine, such as jewelry. We have something with musical instruments we are exploring, and art as well."

Lavish users
All blockchain technology needs a network effect and certainly one of Arianee's strengths is its heavyweight advisory board which could help create the adoption.

One of those advisors is Guillaume Boilot, chief operating officer at Vacheron Constantin, which has been creating paper "passports" for the last 260 years to go with its rather high-end watches (owners of Vacheron Constantin watches have included Napoleon Bonapart, Pope Pius XI and Harry Truman).

These watch passports pertain to three individual numbers: one on the case; another buried inside the watch; and a third issued by third party, Hallmark of Geneva, which would be a potential candidate to run a node on the Arianee blockchain should Vacheron Constantin decide to tokenize their products.

Boilot stressed that his company is presently at the testing stage with this technology, but added, as a brand under the Richemont holding company, that his parent company would be the most likely to run a node for all the brands under its umbrella.

Anything that enhances authenticity in a transparent and verifiable way is a win for luxury products, Boilot told CoinDesk, adding:

"All our watches have alligator straps, for example, and we think that in the coming years our clients would like to know where does the skin come from."

Interestingly, he said, much of the demand for his company's rare and collectible watches comes from the Chinese market, and this realization has also has been a motivation to explore blockchain, since China is one of the countries where people are taking a significant interest in the nascent technology.

"We really think our clients, many of whom are Asian, will want to have the digital asset [representing their watch] in their wallet," Boilot said. "We see that many of them know about bitcoin mining and trading and are familiar with blockchain."