Identification of Counterfeit Products Using Blockchain

Nitesh Kumar Singh Avi Chaurasia

Department of Computer Science and Engineering, Department of Computer Science and Engineering,

School of Engineering and Technology, School of Engineering and Technology,

Sharda University, Greater Noida Sharda University, Greater Noida

2019003147.nitesh@ug.sharda.ac.in 2019005597.avi@ug.sharda.ac.in

Adarsh Kumar Ambuj Kumar Agarwal

Department of Computer Science and Engineering Department of Computer Science and Engineering

School of Engineering and Technology, School of Engineering and Technology,

Sharda University, Greater Noida Sharda University, Greater Noida

2019005428.adarsh@ug.sharda.ac.in ambuj4u@gmail.com

Abstract: Since it can be challenging to distinguish between actual and fake items in today's society, phony products are a
major problem. In addition, many people manufacture these fake goods just for economic benefit, without taking into account
how they will impact clients or how they will affect a business's reputation, profits, or sales. A product's authenticity can be
checked using blockchain technology to determine whether it is real or fake. Given that a blockchain is a decentralized,
distributed, and digital ledger that keeps track of open transactional information, also called blocks, in a number of databases,
also called chains across several networks. This study uses QR codes to detect counterfeit goods, so any implicated block
cannot be changed without also changing all subsequent blocks. Connects a product's QR code to a Block Chain Based
Management (BCBM) system using a QR code reader. In order to record product information and its unique code as database
blocks, the suggested technique may be used. It gets the customer's special code and then compares it to records in the
blockchain database. If the code matches, the buyer is notified; if not, the purchaser is prompted to provide the location of the
product's purchase in order to determine the source of any counterfeit items.

Keywords: Blockchain; Counterfeit products; Ownership code; Supply chain.

1. Introduction:
Fake goods have a severe negative effect on both buyers and sellers in the market. Customers begin to question
the company's quality and standards when sellers fail to meet their expectations for a product, which ultimately
leads to unfavorable brand marketing for the company whose counterfeit goods are being sold in the market. The
most important aspect of counterfeit goods is their potential for serious harm to consumers. As a result, a designed
system must offer dependable protection for this data. The system must also offer extra features in addition to the
primary one, broadening its application and enhancing consumers' advantages. Last but not least, the verification
technique of choice should include numerous parts. To prevent the sale of counterfeit pharmaceuticals, the
pharmaceutical industry needs a strong supply chain management system. Blockchain technology is the best way
to build such a system. In recent years, distributed ledger technology known as blockchain has demonstrated a
high degree of adaptability, and a number of market sectors have been looking for ways to integrate it into their
operations. Blockchain was first introduced in 2008 [1] by a person using the pseudonym Satoshi Nakamoto.

1.1Motivation

The growing trade in fake goods is having an influence on the sales and profitability of firms affected by this
circumstance. This study is about an operational blockchain system that secures the identity and tracking of
authentic products along the supply chain in order to avoid product counterfeiting. Businesses only have to pay
very small transaction charges and are liberated from the worry that they might buy counterfeit goods. The
required anti-counterfeiting technology has been suggested before, however, it has not yet been fully built. One
such anti-counterfeiting strategy is presented in Maker chain- A blockchain for self-organizing processes in the
communal production of commodities using chemical signatures [2]. It uses chemical signatures to identify the
distinctive characteristics of customized goods. In this study, we suggest using a Blockchain to store product
ownership data. By employing blockchain untraceable ability, transparency features. Customers may reliably
know the provenance of the products they buy because of the Blockchain's immutability and the guarantee that
each record cannot be falsified. Small and medium-sized businesses can acquire safe and impenetrable anti-
counterfeit authentication using the anti-counterfeit application solution suggested in this article for a reasonably
cheap operational cost.

Company Name Year Description

MIMECAST 2021 To use their Microsoft 365 accounts, clients of Mimecast's email security services
must safely access Mimecast servers. In order to penetrate the access to their
certificates, the attackers found credentials. After the customer has confirmed and
trusted the certificate, they utilize it to access the customer's data.
SITA 2021 The business SITA focuses in information technology for the aviation and
transportation industries. Attackers had gained access to SITA servers and stolen
customer passenger data.
KASEYA 2021 Software service provider Kaseya specializes in technology for remote monitoring
and administration. The attackers used a software weakness to get access to
Kaseya's software. Attackers installed ransomware on customers' infrastructure
using this access.
APPLE XCODE 2021 Apple Xcode is a programming environment for creating OS X and iOS
applications. It just took one rogue xcode project to infect xcode developers with
a backdoor.
ABLE 2020 A Mongolian business called Able offers businesses and organizations in the area
of software solutions. Attackers inserted the malware into the "Able Desktop
application. Then, this malware was used to steal data from the customers' hacked
devices.
BIGNOX 2021 A supplier of emulator software is BigNox. their bestselling item. A popular
Android emulator for Windows and Mac computers is NoxPlayer. Hackers have
gained access to NoxPlayer's infrastructure. It might transmit malware instead of
updates by taking advantage of the tool's updating system.
VERKADA 2021 The server in production was compromised by hackers. This made it possible for
attackers who got hold of the privileged login information to view the security
cameras set up on customers' property.

Table 1: Recent attacks on the supply chain

1.2 Contribution

The current situation of Blockchain technology applications in a number of supply chain network domains is
examined in this article. We carefully looked at how blockchain could be used in networks of supply chains for
food and healthcare. This paper contributes in a number of important ways, but its advancements in supply chain
theory stand out. Businesses utilizing this system will only need to invest the necessary sum of money to create
and change their contract status because it is based on a Blockchain. Anyone may quickly demonstrate the
dependability of a business and a customer's purchase of items using fully disclosed smart contract information.
With the use of this anti-counterfeit Blockchain technology, stores can demonstrate that the products they sell are
authentic, eliminating their concern about having to compete with low-quality copies.

1.3 Organization

This is how the paper is organized: We discuss how our system works in practice and introduction to our system
design pattern, which takes process performance into account. We outline the time and resource requirements
involved in putting our strategy into operation. We provide a conclusion and discuss further research.
2. Background
2.1 Blockchain Overview

Blockchain is a distributed ledger that is maintained via a decentralized, distributed, peer-to-peer network. Satoshi
Nakamoto initially proposed the notion of blockchain in his 2009 article "Bitcoin: A Peer-to-Peer Electronic Cash
System [3]," which also established the idea of cryptocurrencies or, to put it another way, a digital cash system.
If a blockchain is to serve as a shared database, it is usually run via a peer-to-peer network that abides by rules
governing inter-node communication and confirming the genesis block. Even if community data can still be
altered, blockchain is an example of a distributed computing system with greater Byzantine fault tolerance.

Fig 1. Working System of Blockchain [2]

2.2 Blockchain Features

The development of trust through repeated encounters between two parties and a third party is the foundation of
a substantial chunk of an individual's economic behavior under the current social system. Because there is often
a lack of mutual trust between these two parties and because human transactions have long been founded on trust
guarantees offered by third parties, it is important to pay attention to the characteristics of Blockchain technology
that assist in eroding this foundation. A trustworthy, publicly accessible, and transaction-unmediated data record
system can be created using Blockchain technology. A thorough explanation of each attribute of blockchain
technology is provided below.

1) Security and Privacy

Blockchain utilizes public key cryptography to secure data. A private key and a public key are two key pairs that
users can create independently. Data is signed using a private key, and its authenticity is confirmed using a public
key. The data will remain secure as long as the user stops the private key from leaking. Each user in Blockchain
has access to a number of addresses while being anonymous. As long as the system is active, only one address
will be used for identification, and it will be difficult to link the anonymous address to a real person. The privacy
of the user shall be safeguarded.
2) Decentralization

Each Blockchain node completes the local administration, delivery, and information verification of data through
decentralized operations and storage. Blockchain technology control is independent and self-sufficient, not reliant
on any additional third parties.

3) Untraceability

A block on the blockchain cannot be modified after it has been identified. Any time a block on the blockchain is
altered for any of the following reasons, other nodes will immediately notice it and reject it.

4) Transparency

Anyone can enquire about the data on Blockchain because it is entirely public. In the information flow, it is simple
to identify who is passing data to whom because Blockchain keeps a continuous record of all transactions.

5) Flexibility

Anyone can use blockchain technology because it is open source and can be used to create their own version.
Users can even entirely redevelop a new Blockchain platform if they so like. There are already many adaptable
Blockchain platforms accessible. Blockchain technology is unrestricted, allowing users to build a wide variety of
apps on top of it.

3. Literature Survey
A blockchain, in its most basic form, is a digital ledger that has been encoded and is kept on many computers in
a public or private network. It consists of data blocks or records. Once these blocks are linked together into a
"chain," they are verified and maintained by shared governance procedures and cannot be altered or removed by
a single entity. Cryptocurrencies like Bitcoin and Ether are supported by blockchain, a common database that
automatically updates itself, processes and settles transactions using computer algorithms in seconds, and does
not require external verification, such as those typically carried out by a bank. Understanding the origins of
counterfeit goods and their effects on society were the main goals of the survey. There are numerous techniques
for spotting phony goods that make use of QR codes and blockchain. One of the strategies mentioned by Shaik
was to utilize QR codes to store items' public and private keys. To decrypt the QR code, the app used to scan it
needs to have cryptographic capabilities. Additionally, the manufacturer must maintain a server that accepts
queries and checks the buyer's name and item code. For the scanning app to be able to decrypt the item code's
ciphertext, it must have cryptographic capabilities [6]. By 2020, the loss to the worldwide market from counterfeit
goods had reached 1.75 trillion. While counterfeit goods represent 7% to 8% of global trade annually, this leads
to a loss of US$512 billion in global sales. Additionally, US businesses lose between $200 billion and $250 billion
annually [6-8]. The production of imitation items and the ensuing decline in sales for the original manufacturers
may have resulted in the loss of up to 2.5 million jobs. More gravely, a sizable number of accidents and fatalities
have been linked to fraudulent goods, like phony pharmaceuticals [9-10]. Consequently, anti-counterfeiting
methods or solutions, like barcodes. A novel decentralized traceability system built on the internet of things and
blockchain technology was presented in the system, which also looked at the challenges of scaling blockchains
generally. This technology will provide real-time information about the security of food products to all parties in
the supply chain. The technology also has the ability to significantly improve the efficiency and transparency of
the food supply chain, two factors that will undoubtedly improve food safety and re-establish consumer confidence
in the industry. The other Papers are reference Papers that help with various aspects of putting the suggested
method into practice [11]. It explained the information required for supply chain management and the technology
utilized in accordance with the security provided by a blockchain. Their system had an innovative manufacturer
authentication process that used an OTP to confirm that the manufacturer was the one who had enrolled in the
system. Additionally, they provided basic information regarding a blockchain system's type, algorithms, and
overall operation.
4. Related Work
A number of scholars have put out several strategies for setting up a supply chain management system based on
blockchain. One of them demonstrated a solution for identifying fake goods using an Android application that
allows users to search for goods on the Blockchain network [17]. A fraudulent product identification system
employing blockchain was demonstrated in another paper, where the SHA-256 algorithm was employed to
identify a product [18]. presented a blockchain-based smart contract-based solution for certificate issuance. For
students, certificates are valuable money.[19] Nowadays, it takes a lot of work to tell which credentials are
authentic because duplicates sometimes seem original. They created a smart contract that can issue certificates,
validate certificates, and revoke certificates in order to address the aforementioned issue. The administrator needs
the issuer, document number, and name of the person. To establish a new certificate, the administrator needs the
recipient's name, document ID, issuer name, and certificate type. A new certificate with a timestamp will be
produced after the necessary information has been entered, and the gas price will be applied for this procedure.
Students can check the blockchain network to see if their documents are indeed there. The document's details are
displayed by the revoke function.

5. Proposed Framework
We have created a blockchain-based management (BCBM) system to identify fake goods in the supply chain
under the framework that is being suggested.

5.1 Methodology for Proposed Work

The global improvement of a product or innovation typically comes with risk considerations like forging and
duplication. Forging can have an impact on both the company's reputation and the customer’s well-being. The
biggest test right now is finding fake things. The organization and the well-being of the client are both negatively
impacted by fake goods. As a result, product makers are facing severe hardship. India and other countries are
fighting against such phony and counterfeit goods. The suggested framework generates QR codes by employing
Blockchain technology. Blocks are used to hold exchange records in this innovation. Data stored in these squares
cannot easily be accessed or changed. A QR code can be used to identify bogus goods.

Basic Steps of The System

1)Company Enrolment on The System:

The business must register with the system if it wants the option of product tracking using blockchain. Following
manual company verification, the company will be provided with a special Company id and address to manage
its items on the system. A new smart contract will be issued for every newly registered manufacturer or company,
and it will have the power to handle the company's personal information and product data, ensuring that the
original manufacturer retains full control over the product.

2) Product Listing by Company:

Now that a company has registered on the network, it is possible to add its products. The business listing the
product will receive initial ownership of it. When listing a product on the network, a company must include all of
the product's details. Using cryptographic hashing algorithms, a unique product id will be created after the product
has been uploaded to the network. In order to create a special QR code for the product that can be used later to
identify it, this product id will be needed.

3) Shipping Product to Customer:

The seller must mail the item to the consumer during this phase. When a product is sold to a new buyer, the seller
must update the product's ownership status to reflect the new owner. After this transaction is completed, the former
owner of the product will no longer possess any ownership interest in it because the transfer of ownership is one-
to-one. The product is kept true to its originality and authenticity. Additionally, the smart contract is updated to
reflect the current ownership status of that product.

4) End User Detail Management:

Each user who registers with the network will be able to find the details of all the products they possess in a user
section designed for usability and accessibility. Additionally, if they decide to sell the item to another party, they
will have the power to transfer ownership. The user will have the option to scan a QR code or enter a product ID
to retrieve information on a specific product they plan to purchase in the future or want to check the product's
legitimacy and other details. This fosters the user's sense of trust and reliability.

6. System Architecture

With the help of the suggested system, users and manufacturers will be able to communicate with Ethereum-based
smart contracts and modify just the attributes to which they have access. Because the Ethereum blockchain is
decentralized and the suggested system is based on it.

Figure 2: Ethereum Architecture [23]

Blockchains serve as the client's backend in the Ethereum architecture since they control the backend-based data.
Users' requests and transactions are recorded on the blockchain, and they receive a response in return. The system's
centralized server can be used to manage frontend resources like HTML, CSS, and the user interface. Both the
manufacturer and the user will be able to conduct some sort of transaction in the smart contract under the suggested
system. Each company's smart contract will be unique, allowing them to add or edit product details, see things
that are offered, and transfer ownership to customers. All of the company's transactions will instantly update the
smart contract, and after they have been verified, the transaction record will be transferred to the blockchain.
Consumers and regular users will only be able to scan a QR code or enter a specific product id to retrieve
information about the products they already possess and transfer the ownership status of those products. When a
user scans a product, a request is sent to the blockchain, which then retrieves the manufacturer's smart contract
and returns information on the precise object. Due to the fact that these requests take the form of transactions,
they will also be added to the blockchain.
 Figure 3 Basic System Overview [23]

Ethereum

The blockchain is decentralized and uses the proof-over-work consensus algorithm. In proof-of-work, blocks are
added to the blockchain by resolving mathematical equations. The completion of the problem "proves" that nodes
used computational resources to complete the "job". It verifies the block's addition to and recording on the
blockchain. Mining is the procedure in question. Adding a block successfully is rewarded in Ethereum (ETH),
however, mining is mainly done by brute force trial and error [20-21].

Smart contract

Programs called smart contracts are kept in blocks. Third-party participants are no longer necessary thanks to
smart contracts. When the prerequisites are met, these fundamental protocols go into effect. They are constant;
thus, nobody can alter the contract [21].

Counterfeit

The term "counterfeit" refers to the imitation of anything real with the intention of robbing, destroying, or
modifying the real, for use in shady dealings, or in any other way to lead people to believe that the fake is equally
valuable or more valuable than the real thing. Counterfeit products are imitations or illicit reproductions of real
goods. Counterfeit products are regularly produced with the aim of making money from the higher value of the
imitated products. The term "counterfeit" is frequently used to describe fake money and official documents as
well as goods like jewellery, handbags, shoes, cosmetics, drugs, unapproved aircraft parts (which have been
implicated in numerous accidents), watches, electronics (both component and finished goods), software, works of
art, and others.
 Figure 4: System Flow [24]

Manufacturer

A block is added to the Ethereum blockchain using the manufacturer's Ethereum wallet after logging into the
manufacturer account to create a QR code for the product and add any further information that is necessary. If
both are present, a connection will be made between the wallet addresses of the entity and the user of our local
database. If just the block is published to the digital ledger, the manufacturer will enter data from his own account
and wallet.

Supplier

After entering into their account as a supplier, the product's QR code is scanned by the supplier. The
manufacturer's entered product information is available to the seller. It injects extra information about the item—
like the shop's location—into the Blockchain. These details are visible to the buyer.

Customer

Customers can scan a QR code that details the history of transactions and enables them to examine the integrity
of a product to confirm its authenticity. The client will be aware that the goods are not genuine if the final location
is different from the purchase location at the time of the customer's purchase following the QR scan in the supply
chain history. After learning about counterfeiting, the purchaser comes to the conclusion that the QR code was
stolen.

QR Code

A QR code is a two-dimensional, typically square-shaped matrix with a black data module within it and a white
background. A QR code can be used to encode many different forms of data, including bytes, numeric
alphanumeric, and characters. A handheld scanner or a smartphone app can read the data contained in a QR code.
Up to 2,953 or 7,089 alphanumeric or numeric characters can fit into a single QR code [24]. A QR code's backdrop
images are separated from it by a large white border known as the quiet zone. The main elements of a QR code
structure are a finder pattern, which enables decoding software to recognize the QR code and ascertain its
orientation, separators, which enhance finder pattern recognition, a timing pattern, which establishes the width of
a single module, a format information section, which provides details on the QR code error correction rate, and a
data section, which contains the actual data encoded in the QR code. [25]

QR codes are employed for a number of different things, such as business card encoding, file downloads, Google
Map links, YouTube video displays, mobile payment acceptance, social network connections, and links to
websites and app stores. [26]

6. SCM AND BLOCKCHAIN TECHNOLOGY

The supply chain and Blockchain Technology's past are the main topics of this section. There are three subsections
in this section. The topic of supply chain management will be covered first. The ideas and specifics of Blockchain
Technology's operations will next be covered. We concentrate on the application of blockchain technology in
supply chain management systems in the third section.

6.1 Supply Chain Management

Goods and services are moved from one location to another through a number of stakeholders using SCM, a key
business activity. By leveraging a range of individuals, groups, resources, behaviors, and organizations, supply
chains aim to transform raw materials into finished goods and fulfill customer orders. A manufactured good or
service is delivered by the seller to the purchaser and is delivered through a structured information flow, physical
distribution, and financial exchange. An extensive network of organizations, individuals, tasks, resources, and
information is used to accomplish this. It starts when the producer receives the raw materials and concludes when
the client receives the finished product or service. Supply chain management is used in a variety of industries,
including the pharmaceutical, textile industry, automobile industry, manufacturing industry, high-tech industry,
and service industry, and others. A product travels through a number of stages in a supply chain system throughout
its life cycle, including production, processing, storage, shipment, arrival, and consumption. There are issues with
the current supply chain management system, such as the requirement for simplicity (clarity), disruptions,
additional delays, data twisting, and instability, to name just a few. The current supply chain may suffer from a
lack of transparency and trust because data is often handled by a single entity, which causes difficulties. If the
information on the ledger is not advantageous to the growth of the company, it may be quietly falsified. The origin,
handling, and distribution of the product to final customers are all terribly poorly disclosed. A lack of product
knowledge might make it difficult to check a variety of a product's qualities. Many of the substances listed as
being in the company's goods may be challenging for consumers to verify. Consequently, there is a rise in
business-to-business mistrust, which boosts the cost of communication. The process of product traceability is also
vulnerable to disruption since, Given the significant risk of data manipulation to the organization, information
between supplier chains is unpredictable. When using a traditional supply chain, we may run into additional issues
like lost or delayed shipments, fraud, tampering, or fake goods. This means that the demand from customers for
an economical, high-quality product has not been met by traditional supply chains [27]. Improving supply chain
presentations that take into account external circumstances is the main objective and most difficult aspect of
effective Supply Chain Management. Optimizing supply chain presentation while taking into account external
elements like customer focus and internal efficiency is the major goal and difficulty of effective Supply Chain
Management. This requires investigating and eliminating all inefficiencies, issues, and waste. Within the
company, there is a convoluted supply chain. Embracing blockchain technology was necessary for supply chain
component integration, trust, decision-making cooperation, and the flow of accurate information.

6.2 Blockchain

The fundamental goal and challenge of supply chain management are to maximize supply chain visibility while
taking into consideration external elements like customer attention and internal effectiveness. A database or
storage system known as a blockchain employs blocks and chaining to store data. Every time a new piece of
information is received, a new block is created and connected to the previous Blockchain. Blocks of data are
organized, and each block has a designated storage limit. When a block is filled and linked to the block before it,
a "blockchain"—a chain of data—is formed. They planned to create a system that forbade changing the
timestamps on the documents. A mystery individual or group of individuals known only as Satoshi Nakamoto
developed the first iteration of the blockchain in 2008 and solved the double-spending issue at the same time. A
year later, the distributed ledger technology known as Blockchain was used to develop the cryptocurrency known
as Bitcoin. The fundamental idea behind Blockchain technology blocks. The underlying concept of Blockchain
technology blocks. The block is identified by its hash value, which is produced by the SHA256 hashing algorithm.
The hash value of the preceding block or parent block is stored in the header field of the most recent block. The
type and Structure of a Blockchain have an impact on a block's structure as well. The block header, which serves
as a link to the preceding block and contains the preceding block's hash value, date, nonce, and Merkle root, as
well as the block body, which contains transactions, are often some of the primary qualities that can be required
for a block. An exclusive, randomly generated number is referred to as a nonce.

6.3 Hashing in Blockchain

A method for transforming plaintext into ciphertext is hashing. A ciphertext is a piece of writing that can only be
read and created using lawful means. Algorithms, a group of instructions for carrying out a certain task in the
present with intended results, are the approaches that are used. Using hashing in the blockchain, a specific word,
phrase, sentence, paragraph, or even a large file can be transformed into a current string of bytes with a
predetermined length and structure. In this context, the word "structure" refers to a predefined sequence in which
the first four characters are letters in a random order and the next four characters are integers in a predefined
sequence generated using a hashing method.

6.4 SHA-256

The result value is generated by a 256-bit long cryptographic hash algorithm. It replaces SHA-1, SHA-2, and
other hashing algorithms since it is the most secure hashing algorithm overall. Padding bits are inserted to make
the text or data a multiple of 512 bits after it has been SHA-256 works by pre-processing and converting the data
to binary values. Eight hash values are generated, and each one is utilised to generate a 256-bit unique hash for
each piece of information entered, providing a unique hash value for each product's supplementary information.

Blockchain Technology: Structure

A blockchain is a collection of blocks that contains information. Each blockchain block is made up of the
following six elements:

1. Data

The information in the blockchain varies depending on the user and the type of transaction it may be a transfer of
money or a transfer of documents between nodes.

2. Timestamp

By indicating the date and time of events on the blockchain, timestamps serve as a representation of the time for
each transaction on a block. They also demonstrate how the blocks are related in chronological order.

3. Previous Hash

A hash value that is specific to each block is generated and broadcast to the network when a transaction is
carried out.

4. Nonce

The guarantee to transmit data is provided by a nonce, which guards against attacks on the blocks and is utilised
in the protocol.

5. Hash
The hash values are 64 characters or 256 bits long. The current block's block header contains a record of this
value, and the block's content is its body. Since blocks are typically limited in size, only a certain number of
transactions may be processed for each block.

7. Transaction List

The transactions that were performed on the specific block are saved here, and the user can access the
information by using their private key.

Figure 5: Dealing with Counterfeit Products [24].

8. Conclusion
Blockchain technology is renowned for its data processing through decentralized networks, which allows for easy
access to excellent information while maintaining privacy and security. Blockchain is a technology that has
experienced tremendous growth in the financial industry and is categorized as fintech, or finance and technology.
Due to its beneficial properties, businesses have begun to adopt it quickly [28].

Nowadays, the black market and internet sales of counterfeit goods are expanding rapidly. The main obstacle in
the supply chain is the market barrier. Despite its inability to prevent the sale of counterfeit goods, the government
has passed a number of rules and regulations. As a result, there is a need for a strategy for identifying fake goods
and for security tools to warn both manufacturers and consumers in the supply chain.

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