A Decentralized Consensus Protocol for Preventing

Product from Counterfeiting

by

Examination Roll:
Md. Aminul Islam (210189)

A Research Project Proposal submitted to the

Institute of Information Technology
in partial fulfillment of the requirements for the degree of
Masters of Science (MSc) in
Information and Communication Technology

Supervisor: Prof. K M Akkas Ali

Institute of Information Technology

Jahangirnagar University
Savar, Dhaka-1342
November, 2022
 DECLARATION

We hereby declare that this thesis is based on the results found by myself. Ma-
terials of work found by other researchers are mentioned by reference. This thesis,
neither in whole nor in part, has been previously submitted for any degree.

Md. Aminul Islam

Roll:210189

ii
 CERTIFICATE

This is to certify that the thesis entitled A Decentralized Consensus Protocol

for Preventing Product from Counterfeiting has been prepared and submitted
by Md. Aminul Islam in partial fulfillment of the requirement for the degree of
Masters of Science (MSs) in Information Technology on November 2021.

Prof. K M Akkas Ali

Supervisor

iii
 ABSTRACT

In recent years, the prevalence of counterfeit goods in the industrial sector has
increased. The company’s reputation, sales, and profitability are impacted by this.
By giving customers false goods instead of real ones, it has an impact on their health
as well. Counterfeiters benefit by making products with lower-quality materials and
procedures. It takes a skilled specialist a lot of time and money, and it is frustrating
for the average consumer, to be able to tell if a product is fake or not. So, the fight
against counterfeiting is still a big challenge today. The majority of anti-counterfeiting
solutions in use today are centralized. Blockchain is gaining popularity, and several
applications have evolved as a result of this technology.Any application that uses
Blockchain technology as its fundamental architecture guarantees the integrity of its
data. Motivated by the advancement of blockchain technology, we introduce a de-
centralized anti-counterfeiting supply chain that integrates QR code and blockchain
technologies which ensure that customers don’t put all of their trust on retailers to
figure out whether or not things are authentic. In this article, we will provide a
technique for spotting fake products by quickly scanning the fast response code on
them. It is nearly impossible to fabricate these codes because each one is unique and
each one is implemented using a different algorithm. Additionally, the database’s use
of an encrypted peer-to-peer network makes it hard for hackers to tamper with the
database.

Keywords: Blockchain, Cryptocurrency, QR Code, Supply-Chain, Counterfeit.

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 TABLE OF CONTENTS

DECLARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

ABSTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

CHAPTER

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Problem statement . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Aim and Objectives . . . . . . . . . . . . . . . . . . . . . . . 2

II. Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Research Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. Methodology and Expected outcome . . . . . . . . . . . . . . . 6

3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 System Architecture . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Expected Outcome . . . . . . . . . . . . . . . . . . . . . . . . 7

IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.1 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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 CHAPTER I

Introduction

1.1 Overview

Counterfeiting product is one of the major problems in recent world of every sector
of business. According to statista, in 2020 the losses from counterfeit goods worldwide
by retail sector where clothing is 26.3, pharmaceuticals is 10.2, cosmetics and per-
sonal care is 4.7 (in billion euros). The economic impact from counterfeit electronic
parts is estimated to be approximately $169 billion (Havoscope Global Black-Market
Information 2016). The Organization for Economic Co-operation and Development
(OECD) estimates that counterfeit and pirated product trade accounts for around
3.5% of worldwide trade. Two different ways can counterfeiting happen. First, non-
deceptive counterfeiting occurs when a customer is aware that a product is a fake but
nonetheless purchases it. The final sort of counterfeit is called misleading counterfeit
since the client cannot determine whether the item is real or false. Each year, coun-
terfeit medications cost the US $200 billion, and they are responsible for up to 10
million fatalities[1].
Blockchain is a new way of thinking that has changed the way people share data
and information securely. This new technology is made up of a series of blocks
that allow all committed transactions to be stored safely on shared and distributed
networks[2][3].Several fundamental technologies are used to achieve this goal, includ-
ing the cryptographic hash function, distributed consensus techniques, and digital
signatures. Decentralized execution of all transactions eliminates the requirement for
intermediaries to confirm and validate them[4].Blockchain was made so that nodes
in different places could agree on a state without needing a third party to coordi-
nate. These nodes can’t be trusted and may have bad nodes in them (e.g., malicious,
crashed). To agree on a proposed block when some nodes are broken, a protocol called
a "consensus protocol" must be run by some nodes called "validators" or "miners."

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As a result, a lot of research has been done to come up with strong yet efficient
consensus protocols that will ensure agreement in the blockchain.

1.2 Problem statement

Essentially, we are concerned about counterfeiting items because it costs lives,

money, trust, and other resources. Some wicked people try to make a lot of money
by creating a fraudulent product that looks like the real thing but doesn’t have the
same worth. So there is a trust issue when we buy any thing, whether it is real
or fraudulent. So the challenges of making product safe from the fraud people are
following:

• Serial number security: Genuine serial numbers can be stolen and used to la-
bel counterfeit products. Thus, the uniqueness of a serial number should be
verifiable at any point in its supply chain life cycle.

• Secure Change of Custody: A few intimidating nodes can mess up a planned

change of custody of a product that is being sold. The person who buys the
product should be able to check that the planned change of custody was fol-
lowed.

• Control over the serial number—Perishable Food: The manufacturer should be

able to make sure that perishable food products with an expired shelf life are
thrown away.

1.3 Aim and Objectives

Our main is goal is to solve the problem discussed in the earlier section. The aim
and objectives are: Our main is goal is to solve the problem discussed in the earlier
section. The aim and objectives are:

• Use Blockchain, which will be a key technology to overcome those problems

• Find the solution for serial number security, secure change of custody.

• Eliminate the counterfeit product from the market.

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 CHAPTER II

Literature Review

2.1 Overview

Blockchain has become increasingly popular in the community because of its im-
plementation and research importance. There has been many research involving this
topic. Major features and research gap of these researches will be discussed in this
chapter.

2.2 Research Gap

In this section, we have summarized some researches gap on Counterfeiting.

1. In paper [5] the author solve the problem by using Electronic Product Code
(EPC) that track the physical locations of a product, which then stored in a
centralized database. This code appear at least twice in the database so it
detect the cloning attack easily.

• limitations: As it is a centralized system so it can easily tempered and for

this reason EPC can be altered.

2. In paper [6][7] the author uses Near-Field Communication (NFC) tags which
is based on public key cryptography. This approach doesn’t require to access
database while using cell phone customer can check the authenticity of the
product.

• limitations: However, this method is unable to recognize tag reapplication

attacks and calls for pricey NFC tags with processors, secure storage, and
encryption support..

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3. In paper [8] the author determine the connection between industry 4.0, advanced
tracking and tracing technologies, and big data analytic. This thesis is done in
supply chain to determine the risk in it. Blockchain, ERP, and RFID sensors
are distributedly implemented in sourcing, shipping, and production. Big data
analytics enables the utilization of these data by artificial intelligence systems.
In addition, current digital technologies boost capacity flexibility and demand
responsiveness, which can have a favorable influence on the lowering of risk
mitigation inventory in the proactive stage ripple effect.

• limitations: This paper doesn’ t exploring how the digital technologies and
Industry 4.0 affect ripple effect and performance of the supply chain.

4. In paper [9] the author examine the present state of blockchain technology
and its business applications in different sector. Blockchains can be used to
check the integrity of different things, like insurance, issues with counterfeiting,
and intellectual property rights. Big data and artificial intelligence can make
technologies like blockchain even more open. Interoperability problems with
how blockchain is used can help businesses grow.

• limitations: The author didn’t mention the scalability problem of the the
system.

5. In the paper [10] The author looked into how blockchain would affect the quality,
cost, time, risk reduction, flexibility, and reliability of the supply chain. Where
cases from different fields show how blockchain can be used to reach different
goals in a supply chain. The Internet of Things plays a unique role in blockchain-
based solutions, and the degree to which a blockchain is used depends on how
well assets and people are verified.

• limitations: In order to fully utilize the potential of blockchain, more re-

sources must be allocated to tackling issues like engagement of varied sup-
ply chain participants and enrichment of the current blockchain ecosystem.

6. In paper [11] The author shows that counterfeiting is a problem and a worry
in many different fields. So, along with adding a legal framework to blockchain
technology, it is very important for the success of any new technology to stop
counterfeiting that firms, the public, and consumers all work together.

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 • limitations: This paper only works with the fashion industries counterfeit-
ing. It can not consider the scenario of pharmaceutical, agriculture and
fields.

7. In the paper [12] The applications of blockchain and smart contracts to sup-
ply chain management are studied by the author. Barriers to using blockchain
technology for any company can be categorized as intra-organizational, inter-
organizational, external, and technological. Blockchains can facilitate transac-
tions between networked supply chain partners.

• limitations: This paper focuses on the various challenges associated with

implementing the blockchain in the supply chain, but it does not address
how to handle an attack that occurs there.

8. In the paper [13] the author is used Radio Frequency Identification to detect
the counterfeit products. For this method author proposed a system named
TagPrint. For this system three parties involve: a tag provider, a product
manufacturer and a customer.

• limitations: Tag reapplication attacks are not detectable by TagPrint. Tag-

Print is also based on RFID tags, which need specialized readers and make
this strategy inappropriate for regular consumers.

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 CHAPTER III

Methodology and Expected outcome

3.1 Introduction

Our system architecture and it’s working procedure is discussed in this chapter.
The overall system structure is discussed section 3.2 and the expected outcome is
discussed in section 3.3.

3.2 System Architecture

A Decentralize Consensus Protocol is Used to Prevent Product from Counterfeit-

ing in Blockchain is proposed for the supply chain system. A unique code is generated
by a code regulator company. This unique code is attached to the product by the
manufacturer. And this unique code is totally immutable because of blockchain has
the feature. This will give assurance the inter-mediator, retailer as well as the con-
sumer about the product.

Figure 3.1: A multi party supply chain

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 Figure 3.2: Sequence of events in a blockchain network.

1. Proposing (proposer): This is the node in our Block-Supply chain that executes
the local authentication mechanism. After successful authentication, the system gen-
erates, proposes, and broadcasts the new block for the product to the network.
2. Validation-leader (leader): This node is responsible for choosing the random col-
lection of validators for the proposing node.
3. Validator: This node validates the newly proposed block by executing the global
authentication method. In addition, validators communicate their votes on the block
in order to achieve consensus.

3.3 Expected Outcome

In this project we will propose a decentralize consensus protocol with the help of
blockchain techniques and compared them with the existing system to check if the
solution is more efficient than the others.

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 CHAPTER IV

Conclusion

4.1 Conclusion

In this work, we propose a decentralized supply chain system utilizing blockchain

technology. We brought out the challenges in existing supply chain management,
and explained how blockchain may be utilized to bring transparency and visibility
to supplies and overcome the issue of counterfeiting. It is described how the identity
mechanism of blockchain works and why it is advantageous to share consumer data
while maintaining customer privacy. We discuss the strategies, blockchain varieties,
and third-party solutions that can be used to construct a blockchain-based supply
chain. We concluded our explanation of the proposed system’s operation with an
illustration of how easy it will be for different participants to use.

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