two recurring problems in the fashion value chain are transparency and trust. The complex, multi-part nature of the fashion value chain results in a lack of transparency about, for example, the origin of materials and a lack of trust among actors, including consumers.
You’ve probably heard of blockchain technology. But did you know that blockchain technology is ledger technology and therefore a blockchain is a ledger?
If you’re now thinking, what does this even mean and why on earth should I care about ledgers while studying circular fashion?
what is a ledger?
A ledger is nothing more than a tool we use to record transactions. This recording of so-called economic activities basically means that we record the transfer of value between each other, like money, services or goods. It is important to realise that we record many different forms of value So for example, your digital money, your social media profile, the use of energy, water and even a pair of jeans. So why care and very first key point: because almost everything we humans deem valuable gets recorded in these ledgers So ledgers like books or digital variants of books are therefore the very backbone of our current society. and are therefore extremely important. And here also the problem arises, which is the second important key thing to note:we always need to rely on and trust in intermediaries to maintain these ledgers and their data.And they come with three main risks: exclusion, dishonesty and loss off records.
These centralised ledgers are used to operate in closed-off environments,so, but the practical global digitalisation is painfully uncovering these three risks. Just think about the power of rising data giants and data breach scandals like Cambridge Analytica. So regarding circular fashion, this causes the lack of transparency in supply chains creating for example, uncertainty and sometimes even inability to track used materials or even the origin of a product.
Fortunately though, in 2008 the pseudonymous Satoshi Nakamoto found a practical solution to create the worlds very first ledger without intermediary, also known as the Bitcoin-infrastructure. In this decentralised ledger the validation and registration of transactions is done by all of us simultaneously and in a fully open environment.
rearranged trust in decentralised ledgers
means there is now transparent and open environments to record our transactions in. A blockchain is therefore also called a trust machine, where the blockchain provides trust instead of the intermediary, giving us a digital infrastructure to build applications on which automatically have a built-in trust. And because a blockchain ledger contains digitally programmable data, you can also transfer other values like stocks, votes, materials and much much more. Because everything that can be digitalised can be recorded. Combined with the open character of the transactions this enables us to track goods for example through the entire supply chain all the way back to the origin. So this is useful for example for disabling fake products, but also to track and re-use materials after the product life cycle has ended. This time though in a fully transparent environment where end-users and producing parties check each other instead of relying on one or a few single entities. This of course asks for a fundamental change in thinking and in society, because companies currently aren’t accustomed to full transparency. But this time, or in this time, do you truly truly think that it’s that farfetched that consumers, born in the information age,won't demand full transparency from companies? How long do you think that companies can hide information while the technical possibilities for transparency are already available? And do they even want to hide it Already companies like Louis Vuitton and BMW are experimenting on partly open blockchains
fourth key point: blockchains allow us to build the next generation of applications and perhaps these apps will be here sooner than you imagine. We can use these applications to not only verify transactions but also verify the inputs in the blockchain. When we talk about fashion for example, this would be using the RFID the Radio-Frequency Identification chips, that track materials combined this time with multiple independent and automated entities that verify the input. Lost you there. To simplify, we already see this happening in the coffee sector: the beans from farmers are measured by a machine, like RFID is used in fashion, but also combined this time with an algorithm that runs on a blockchain automatically checking and recording the quality, quantity, location, etc. of the beans. This time enabling tracking goods and materials in honesty. So imagine an app on your phone that keeps track of your data and forms your reputation, not only based on your online behaviour but also on the type of coffee you drink or perhaps the circular clothes that you bought. The increased need to express ourselves online, combined with the need for transparent information, can lead to brands displaying multiple values in their price to attract or bind customers.This technology finally enables us to be rewarded for good behaviour. Because it is transparent, you also incentivize producers to produce products in an environmental, animal-, human friendly way. Simultaneously, participants in the entire chain own their own data instead of commercial data giants, and based upon their activities they themselves can determine what information to reveal and hide.
the fifth key point is that because everything is interconnected and transparent in these open ledgers, behaviour and data becomes verifiable and trustworthy, enabling new types of economies with new types of value. This time we can record and quantify new values in our ledgers, such as circularity or even child labour. Because of peer-to-peer transactions, we can now actually start building a sustainable global infrastructure that tackles global problems. For the very very first time in history we are witnessing new forms of open trust and distributed power on a global scale. So think sharing economies, think circular economies to reduce consumption for example.
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