We have all heard about blockchain or crossed the road of the words cryptocurrency, NFT or metaverse. If not, do not worry; you found the right page.
Those terms make sense for some and are completely outrageous for others. Believing in the blockchain system and fintech is based on knowledge from what flows trust. To fund its critical sense of it, people needed to understand it, so let’s have a little return to the high school benches.
The blockchain system is the answer to a transactional issue encountered on an everyday basis. The trust issue. While doing a transaction, one’s can’t be completely sure the other party has the necessary funds available. Related to this issue, ones can’t be completely sure of the non-reversibility of a transaction, leading therefore to trust issues. Those disputes lead to an increase in the transaction price as well as a limit in the transaction maximum.
Establishing third parties helped fight asymmetric information within the financial system but could not eradicate it, therefore it needs a solution.
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party”, said Nakamoto. One sentence was enough to explain how bitcoin answers to the most ambiguous subject: trust.
In his paper, he explains how his blockchain system can reward people in exchange for computational capacity while creating a new means of exchange: bitcoin, as well as the use of a network and a fully trustful and truthful transaction process.
Mathematics and coding won’t be found in this chapter, however, some definitions may be slid. To keep it factual and much straight forward blockchain is a decentralized network, also called web3. It means a single entity is not controlling the information on a system. Instead, the information is spread all over the network. But how is it related to transactions and bitcoin?
To keep it easy, let’s use an example.
A sends money to B, however, we want to ensure A has enough money and that B receives the amount to avoid the double spending issue and the trust issue. By sending money to B, A issues a new block. Each block contains a hash, it acts as a fingerprint. A block’s composition englobes the fingerprint of the previous block and its data marked by its hash hence a block is unique.
The hashing of a block requires computational power to solve complex mathematical equations and algorithms. Therefore, as soon as the transaction is over, the first miner to find the mathematical solution gets a bitcoin and can officially add the new block to the blockchain. That’s what is called the Proof of Work (PoW). It is the protocol of the bitcoin blockchain.
A blockchain is a chain of a block. It is also really safe as changing a block would mean having the computational power to calculate all the hashes done before tracking down and changing one block.
The solution is easy. We can be sure that A can’t double spend the money since no one can change the proof that it has left the account. On the other hand, B can be sure they’ll get the money since a block has a trace of the transaction.
The building of a new era
While the news is all about how unstable cryptos are, and how scary the metaverse is, we can’t forget that blockchain is not only about that. Blockchain technology itself is answering a lot of business issues. Starting with the use of decentralized finance (DeFI) for a better transaction, decentralized app (dApp) which is the development of applications on a blockchain, decentralized autonomous organization (DAO) bringing people together, and a lot more… blockchain is about improvement.
Its possibility and application are infinite, it doesn’t stop at the only idea of new money created and its fluctuation. Cryptocurrencies and NFTs are just one part of an endless world.
The link between fashion & blockchain
Besides the fact that blockchain could resolve issues within the fashion industry, we could consider the different reasons one can explore this relationship.
Fashion is unique, of course depending on the brand a piece won’t be an original one, but everyone would wear it differently. As we said before, blockchain is also about making a difference between each block. The DNA of each new information is similar to the DNA of a garment worn by individuals.
Creating a new piece or a new block is also giving value to the brand or the blockchain. Just like in fashion, rewards come on proof of work. You pay to buy something that will be your own, it works for the most thing in life of course.
At many points during the production, the agents involved do exchanges. It could be from the raw material that goes to the factory as well as a client buying a product. Every step goes to the record for the sake of the brand. Blockchain is about that too, exchanging and performing transactional recorded action.
Fashion and blockchain have been built in parallel. Therefore, they could use one another to grow even bigger.
The application of blockchain in the fashion industry
Nowadays, one of the biggest challenges in fashion is transparency. Maintaining a high profile in the fashion business includes trying to be as transparent and honest with customers as possible. Scandals around the industry are numerous. From the factory to the sale, many steps and people are involved. Therefore, brands try to show their social and economic commitment by taking care of their employees and respecting the environment.
Sustainability as well is one of the biggest challenges of the next 10 years. With a planet in literal distress and a rise in social movements, brands try to meet the requirements as quickly as possible to keep their public figure.
The brands need to show people they care about them but also that they care about their business environment. The public figure they will develop will be the image customers want to have while wearing their clothes. People, in general, are getting mentally attracted to brands that focus more on the environment.
Summing it up
Blockchain can offer solutions and implementations for this industry. Using traceability for the chain of production could provide a way to fight waste, energy utilization and many other components of the chain.
Another dimension is also that a blockchain could help the brand keep track of the product it sold. It could mean being able to stop counterfeit products.
As a quick review, blockchain and fashion could be combined for the common good. Their connection could bring solutions to the environment if the efforts are multiplied. Blockchains are not only related to cryptos and can indeed be applied to a larger scale such as our planet.