The cosmetics industry is constantly seeking new ways to innovate and differentiate itself in a crowded market, and one technology that has the potential to transform the industry is blockchain, and in particular non-fungible tokens (NFTs). Blockchain is more than just a system for recording information – by its very nature, it provides an audit trail and protects information from tampering. Information is recorded on a digital ledger that is duplicated and distributed across an entire network rather than held in one central location. These multiple, distributed copies are then verified against each other making tampering virtually impossible.
NFTs are typically created using smart contracts on a blockchain platform, such as Ethereum. A smart contract is a self-executing contract where the terms of the agreement between buyer and seller are directly written into lines of code. When an NFT is created, it is assigned a unique digital identifier, or “token ID,” which can be used to verify the authenticity and ownership of the NFT.
One of the newest and most exciting developments in NFT technology is the ability to incorporate physical assets. This means that, in addition to representing digital assets like art or music, a token ID can now be used to authenticate and track the ownership of physical goods like collectibles, luxury items, or even everyday products like cosmetics. At the forefront of physical NFT technology, is a company called LITH Token. LITH has developed a system, called the NOANE protocol, that is able to make physical objects known on the blockchain through a patent-pending asymmetric key exchange.
NOANE, which stands for NFC Oraclized Asymmetric NFT Encryption, allows an NFC chip or other radio communication device, embedded in a physical item to function as a secondary private key to unlock encrypted data stored within a digital asset. The encryption and decryption mechanism then proves ownership and authenticity of both the physical and digital aspects and the association between the two.
By leveraging the unique capabilities of physical NFTs and more specifically the NOANE protocol, cosmetics brands can authenticate and track the provenance of their products, promote sustainability, and reward customer loyalty in ways that were previously not possible. In this blog post, we’ll delve into the ways that physical NFTs and blockchain can be used by the cosmetics industry, and explore the potential benefits and challenges of this exciting new technology.
Beauty You Can Trust: How Blockchain and NFTs Keep Counterfeits at Bay
One of the primary benefits of using blockchain and NFTs in the cosmetics industry is to help to combat counterfeiting. Counterfeit cosmetics are fake or imitation products that are produced and sold without the permission or knowledge of the original brand. These products are often made with low-quality ingredients and may not meet the same safety and quality standards as legitimate products. With the growing popularity of online retail it has become easier than ever to pass counterfeit products off to unsuspecting consumers as authentic, sometimes with dangerous consequences.
Counterfeit beauty products are usually of inferior quality, and do not deliver the promised results. More importantly, these fake products often contain a wide range of harmful ingredients. These ingredients may be toxic, contaminated, or not adequately tested for safety, and can pose serious health risks to consumers.
In addition to the potential health risks, purchasing counterfeit cosmetics also supports illegal and unethical practices, such as trademark infringement. Black market sales of cheap, counterfeit beauty products have a significant financial impact on legitimate cosmetics and beauty brands. In 2020, it was estimated that sale of counterfeit beauty products was responsible for $5.5 billion in lost revenue.
Revolutionizing Authentication: How NFTs and NFC Chips Enhance Transparency
Historically, consumers have relied on trusted retailers or purchasing directly from brands to ensure they receive authentic products. With the advent of online retail and the prevalence of unknown third party suppliers, authenticating products becomes a more serious concern. Current methods of identifying genuine makeup and skincare products typically revolve around a visual assessment by identifying features such as the brand logo and packaging or checking serial numbers against a database.
The incorporation of NFTs into cosmetic products through the use of NFC chips and LITH Token’s NOANE protocol can provide a new level of transparency and security for consumers. By embedding an NFC chip into the packaging or directly into the product, consumers can easily verify the authenticity of their purchases and ensure that they are getting what they paid just by scanning the chip with a smartphone.
With NFT-enabled products, consumers can also access a wealth of information about the product, including its production and distribution history, the ingredients used, and any certifications or safety standards that have been met. This can help build consumer trust and confidence in the authenticity and quality of the products they are buying, and be a strong player in preventing counterfeiting.
From Farm to Face: Transparency and Accountability in the Supply Chain
In addition to combating counterfeiting, blockchain can also be used to track the provenance of cosmetics products and provide consumers with greater transparency around the supply chain how ingredients are sourced. This can be particularly important for consumers who are looking for products that are environmentally-friendly and socially responsible.
When it comes to sustainability in the cosmetics industry, a lot of focus has been placed on labels such as “cruelty free”, “vegan” and “all-natural”, however, information is continuously surfacing that these labels do little to address the true origin of unethical practices. To truly calculate the environmental and social impact of a product, it is necessary to trace each ingredient to its source and look at all aspects of how it is produced, processed and transported.
The Dark Side of Beauty: The Environmental and Social Impact of Common Cosmetics Ingredients
Research done by Maplecroft into the sustainability of commonly used ingredients in five best-selling cosmetics products found that each product contained at least one ingredient with links to serious environmental or social risks. Some ingredients, found in a wide variety of cosmetics products, that are particularly concerning, are mica and palm oil.
Mica is a mineral that is widely used in the cosmetics industry, particularly in makeup products, due to its ability to add shimmer and shine to formulations. The production of mica can be associated with a number of issues particularly child labor and poor working conditions. A study conducted by SOMO found over 22,000 children, as young as five years old, working in mica mines in India, where the majority of the world’s mica is sourced.
Palm oil is also an extremely common ingredient in a wide range of cosmetics products. The production of palm oil is a leading cause of deforestation in tropical countries, as large areas of forest are cleared to make way for palm oil plantations. This can have significant impact on the environment, including habitat destruction and loss of biodiversity. On the island of Borneo, as much as 50% of all deforestation between 2005 and 2015 was driven by cultivation of oil palms. In addition to the devastating environmental offenses, palm oil production has also been linked to social issues such as exploitation of workers and child labor.
Ensuring Sustainability in Cosmetics
Many cosmetics companies use third party certification to ensure that they are sourcing ingredients from ethical suppliers; however, there are often concerns about the reliability of these certifications. The supply chain for many common cosmetics ingredients, including mica and palm oil, can be complex and opaque. Due to corruption and numerous middlemen, the true origin of these resources is difficult to track. This can make it challenging for companies to ensure that they are sourcing from responsible producers and not contributing to these pressing social and environmental issues.
Information stored on the blockchain is immutable meaning, once it is recorded, it cannot be altered. This makes it an ideal technology for creating transparency and trust in supply chains. Blockchian allows for a tamper-proof record of information to be created and shared among all parties involved. Additionally, because blockchain records can be easily accessed and reviewed by all parties, it can help companies identify and address any sustainability issues in their supply chain that they may have been previously unaware of.
Using blockchain along with LITH Token’s NOANE protocol would make it possible to ensure that the physical items, which could include batches of a particular ingredient, are truly associated with corresponding documents stored on-chain and the documents are truly representing that item. With information recorded every time an ingredient changes hands, companies, third party certification agencies, and consumers would all gain a clearer view of where ingredients originated and ensure that they are being sourced ethically and sustainably.
Enhancing Consumer Loyalty
Another way that physical NFTs could be used to impact the cosmetics industry is through consumer loyalty programs. These programs help create a sense of exclusivity and community around a particular brand. By attaching a digital NFT to each product, brands could create a token-gating system where consumers access membership benefits directly through the products they hold.
For example, a brand could create a membership program where consumers earn rewards or access to exclusive events by collecting NFTs attached to different products. The more NFTs a consumer holds, the more rewards and access they can earn. Brands could also create a sense of scarcity and exclusivity, through the release of limited edition products.
This approach could also help incentivize consumers to collect and purchase multiple products from the same brand. Additionally, consumers could share their collections and rewards through the digital NFTs on social media, enhancing the community around the brand.
The Future of Cosmetics
The potential of blockchain technology and physical NFTs utilizing the NOANE protocol to revolutionize the cosmetics industry is vast. The integration of these technologies can provide a new level of transparency and security in the supply chain through product authentication, supply chain tracking and brand awareness. The use of NFC technology in physical NFTs enables easy access to sourcing information and product authentication, which can help to build consumer trust and create a more engaging and interactive consumer experience.
It is important to note that these technologies are relatively new, and the full extent of how they can be used to benefit the cosmetics industry is yet to be fully understood. As these technologies continue to evolve, it is likely that new and innovative ways of leveraging them will be discovered. Companies in the cosmetics industry should be aware of the potential of physical NFTs and be ready to adopt them in order to stay ahead of the curve and take advantage of the benefits they can provide.
Overall, the potential of blockchain technology and physical NFTs utilizing the NOANE protocol to revolutionize the cosmetics industry is huge and the possibilities are endless. It will be exciting to see how companies in the cosmetics industry will use these technologies to create new and innovative ways to engage with their customers, increase trust, and improve the overall supply chain process.