How NFTs for Physical Items Help Fashion Brands Fight Counterfeiting
Ben Plomion
Sep 4, 2023
7 min read

How NFTs for Physical Items Help Fashion Brands Fight Counterfeiting

A photo showing knockoffs of original products

Explore the transformative role of NFTs in combating counterfeiting within the fashion industry

Counterfeiting, often dubbed the "shadow economy," is a multi-billion-dollar industry that poses significant threats to genuine brands worldwide. As of 2020, fashion labels have faced a staggering loss of 26.3 billion euros in revenue due to this issue. But the financial hit is only the tip of the iceberg. The proliferation and distribution of counterfeit goods undermines the perceived quality and integrity of the original brands, causing them to lose customers. 

Even in cases where the brand offers compensation or redress to consumers who inadvertently acquire a counterfeit item, the consumer would hesitate to purchase a product from the brand again due to the likelihood of it being fake. 

But creating physical NFTs, i.e. NFT for physical items, effectively addresses the issue of counterfeiting. So, in this article, we’ll look at how physical NFTs safeguard trust and brand value, and prevent potential loss of customers.

Key Takeaways
- Through tokenization, brands can offer undeniable proof of authenticity, ensuring consumers receive genuine products.
- NFTs provide a robust mechanism for brands to safeguard their unique designs and creations.
- However, the integration of NFTs presents challenges, from scalability to regulatory nuances.

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How NFTs Prevent Counterfeiting

NFTs are unique digital tokens that cannot be replicated or replaced with another token. Physical NFTs are simply blockchain-based digital assets that are immutably linked to physical items. Let’s see how they deter and eliminate counterfeiting.


Proof of Authenticity

Physical NFTs NFTs offer a streamlined method for verifying the authenticity of luxury items. Let’s say a consumer acquires a bag from a prestigious brand like Louis Vuitton. This bag isn't just a physical item; it's also tokenized as an NFT on the blockchain. 

To confirm its authenticity of the physical asset, the buyer can use a specialized app or a partnered marketplace to scan the bag's embedded NFC chip or QR code. This action will pull up the bag's NFT and its metadata will contain a unique identifier and information on its design, materials used, and manufacturing date. 

Since all of the information is stored on the blockchain, which is immutable in nature, once the NFT is created, its details can’t be altered. This guarantees that the customers possess a genuine Louis Vuitton bag. 

Counterfeit items might attempt to mimic this by incorporating their own NFTs. However, when a buyer scans the QR code or NFC chip of a counterfeit, it will lead to a different smart contract address that’s not affiliated with the original brand. Moreover, the metadata of this NFT won't align with the official specifications provided by Louis Vuitton. These discrepancies will make it easy to distinguish genuine products from imitations.


Enforceable IP

Intellectual Property (IP) is more than just a logo or a brand name. It encompasses the unique designs, patterns, and even the specific cut of a garment. It’s crucial for fashion brands as it sets them apart in a highly competitive market and grants exclusive rights to creators, inventors, and brand owners over their creations. This ensures that only the rightful IP holder can produce, distribute, or sell the protected item. 

Let’s say Burberry, a brand known for its iconic check pattern, decides to tokenize its assets with IP rights encoded in them. If a counterfeiter produces a lookalike and a corresponding fake NFT, Burberry can take legal action against the manufacturers and distributors for the counterfeit physical product and unauthorized digital representation (fake NFTs). 

In addition to this, the blockchain’s immutable record can act as evidence in court and show that neither the NFT nor the product originated from their official smart contract. This will deter counterfeiters as the risk of being caught is higher.



Traceability refers to the ability to track and verify the origin and journey of a product. It ensures that consumers and brands can verify the authenticity of a product and makes it difficult for counterfeiters to introduce fake products into the market. 

If a customer purchases a Chanel perfume, they can scan a QR code or use a specific platform to check the NFT associated with it. This NFT shows the perfume's entire history, from when and where it was made to its arrival at the store. Counterfeit products won't have the same detailed history, so it's easier to spot and avoid them.


How Brands Link Real-World Items to NFTs

Let's look at a detailed step-by-step guide on how brands transform their assets into tokens and establish a robust anti-counterfeiting framework using NFTs. 

  1. Creation of a digital twin: A digital twin is essentially a digital representation of a physical product. It’s created using a 3D modeling software and integrated with IOT to mimic the real-time performance of the product.
  2. Integration with tokenization platform: Once the digital twin is ready, it's integrated into a tokenization platform. This platform is responsible for minting the NFT associated with the digital twin. The platform ensures that the digital representation is securely linked to the blockchain, making it immutable and tamper-proof.
  3. Linking NFT to a product: The NFT is then linked to the physical product using a QR code or NFC (Near Field Communication) chip.
  4. Verification by consumers: Consumers can scan the QR code or NFC chip using their smartphones. This allows them to access the NFT and verify the authenticity of the product.
  5. Transfer of ownership: When the product is sold or transferred, the ownership of the NFT is transferred to the new owner and they can view the product lineage to verify authenticity.


Eliminate Counterfeiting with Dibbs

While NFTs effectively solve the counterfeiting problem, implementing them comes with its own set of hurdles. For starters, it’s difficult to integrate NFTs with current systems and get buy-in from senior management to make the shift to NFTs. And for big brands with vast product ranges, generating individual NFTs for every item could strain the infrastructure. 

On the legal front, the regulatory landscape for NFTs and digital assets is still evolving. The guidelines vary across countries, making it imperative for brands to tread cautiously and ensure they adhere to the respective regulations. 

Dibbs is a tokenization service that takes care of everything from creating a digital twin to tokenizing your assets while staying legally compliant. To learn more about how Dibbs can help you maintain your trustworthiness and eliminate counterfeit goods, schedule a demo.

Image of Ben Plomion
Ben Plomion

Ben Plomion is Dibbs' Chief Marketing Officer. As a child, Ben collected comic books and Panini Football stickers. Now, Ben's PC consists of physical-backed NFTs.

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