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Procedia Computer Science 216 (2023) 86–95

7th International Conference on Computer Science and Computational Intelligence 2022

Developing an anti-counterfeit system using blockchain technology

a a, a a
Anthonya, Michael Christian Leea,*, Rafaelle Richel Pearla, Ivan Sebastian Edberta,
Derwin Suhartono aa

aaSchool
School of
of Computer
Computer Science,
Science, Bina
Bina Nusantara
Nusantara University,
University, Jl.
Jl. Kebon
Kebon Jeruk
Jeruk Raya
Raya No.
No. 27,
27, Jakarta,
Jakarta, 11530,
11530, Indonesia
Indonesia

Abstract
Abstract

Blockchain is
Blockchain is an
an up-and-coming
up-and-coming technology
technology designed
designed toto ease
ease the
the process
process of
of verifying
verifying legitimate
legitimate products
products without
without the
the need
need of
of aa
centralized
centralized system.
system. An
An example
example of of aa well-known
well-known technology
technology using
using Blockchain
Blockchain is
is Bitcoin
Bitcoin and
and Ethereum
Ethereum cryptocurrency.
cryptocurrency. Blockchain
Blockchain
technology will ensure
technology will ensure that
that data
data residing
residing within
within each
each block
block cannot
cannot be
be tampered
tampered with
with by
by anyone
anyone other
other than
than the
the owner.
owner. This
This paper
paper
uses
uses Blockchain technology to develop a system where customers can validate a product legitimacy without the need of
Blockchain technology to develop a system where customers can validate a product legitimacy without the need of aa
corresponding merchant.
corresponding This system
merchant. This system will
will be
be able
able to
to be
be used
used by
by manufacturers
manufacturers and
and companies
companies toto ensure
ensure that
that their
their products
products will
will be
be
harder
harder to
to counterfeit,
counterfeit, therefore
therefore they
they will
will gain
gain more
more trust
trust from
from customers.
customers. The
The Ethereum
Ethereum blockchain
blockchain isis used
used to
to build
build the
the proposed
proposed
model
model that
that is
is capable
capable of
of tracing
tracing every
every item’s
item’s creation
creation and
and transactions,
transactions, ensuring
ensuring the
the credibility
credibility of
of an
an item’s
item’s genuineness.
genuineness. Our
Our
simulation
simulation results in an effective model and a cost analysis that shows that the model uses an average gas amount of
results in an effective model and a cost analysis that shows that the model uses an average gas amount of 715,046.3
715,046.3
gwei.
gwei.
©
© 2022
© 2022 The
2023 The Authors.
The Authors. Published
Authors. Published by
Published by ELSEVIER
by ELSEVIER B.V. This
Elsevier B.V.B.V. This is
is an
an open
open access
access article
article under
under the
the CC
CC BY-NC-ND
BY-NC-ND license
license
(https://creativecommons.org/licenses/by-nc-nd/4.0)
(https://creativecommons.org/licenses/by-nc-nd/4.0)
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review
Peer-review under
Peer-review underresponsibility
under responsibilityof
responsibility the
ofof scientific
thethe
scientific committee
committee
scientific committeeof
of the
of 7th
the the International
7th International Conference
Conference
7th International on
on Computer
Computer
Conference Science and
ScienceScience
on Computer and and
Computational
Computational Intelligence
ComputationalIntelligence 2022
Intelligence2022
2022
Keywords: blockchain
Keywords: blockchain technology;
technology; anti-counterfeit
anti-counterfeit system;
system; ethereum;
ethereum; smart
smart contract;
contract; gas
gas fee
fee

1.
1. Introduction
Introduction

Fake
Fake handbags,
handbags, fake
fake clothes,
clothes, and
and fake
fake footwear
footwear are
are the
the three
three most
most counterfeited
counterfeited items
items that
that have
have been
been seized
seized by
by the
the
United States Customs and Border Protection. In 2020, the manufacturer's suggested retail price of the seized products
United States Customs and Border Protection. In 2020, the manufacturer's suggested retail price of the seized products
almost reached
almost reached one
one and
and aa half-billion
half-billion dollars
dollars [1].
[1]. The
The trend
trend of
of counterfeiting
counterfeiting and
and pirated
pirated products
products is
is on
on the
the rise,
rise, as
as

* Corresponding
* Corresponding author.
author. Tel.:
Tel.: +62-896-0258-8812.
+62-896-0258-8812.
E-mail address: michael.lee001@binus.ac.id
E-mail address: michael.lee001@binus.ac.id

1877-0509 ©
1877-0509 © 2022
2022 The
The Authors.
Authors. Published
Published by
by ELSEVIER
ELSEVIER B.V.
B.V. This
This is
is an
an open
open access
access article
article under
under the
the CC
CC BY-NC-ND
BY-NC-ND license
license
(https://creativecommons.org/licenses/by-nc-nd/4.0)
(https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under
Peer-review under responsibility
responsibility of
of the
the scientific
scientific committee
committee of
of the
the 7th
7th International
International Conference
Conference on
on Computer
Computer Science
Science and
and
Computational
Computational Intelligence
Intelligence 2022
2022

1877-0509 © 2023 The Authors. Published by Elsevier B.V.

This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under responsibility of the scientific committee of the 7th International Conference on Computer Science and Computational
Intelligence 2022
10.1016/j.procs.2022.12.114
 Anthony et al. / Procedia Computer Science 216 (2023) 86–95 87
Anthony et al. / Procedia Computer Science 00 (2022) 000–000 81

imports of counterfeit and fake products into the European Union amount to around one hundred and twenty-one
billion Euros. Poor governance and loopholes in the system are exploited by counterfeiters to thrive [2]. Another factor
that incentivizes customers to purchase counterfeit products is compulsive internet usage [3]. The internet reinforces
the assumed prestige that comes with luxurious brands, and internet users that chase the prestige but don’t have enough
money will purchase counterfeits. Even though there is no direct correlation between counterfeited products and sales
loss, research has shown that companies that are targeted by counterfeiters incur larger operating costs to combat
counterfeits [4].

Fig. 1. Counterfeited items seized by the U.S. Customs in 2020 [1]

Many stakeholders have tried many methods to slow the tide of phony items. One possible solution to this never-
ending problem is the adoption of a blockchain based anti-counterfeit system. Due to the nature of blockchains that
make them decentralized and virtually impenetrable by making transactions secure and tamper-proof using features
such as immutability, transparency, and auditability [5], this technology is the best fit for creating an anti-counterfeit
system that will make it as hard as possible for malicious actors to gain accreditation for their counterfeit items.
Blockchain Technology is a decentralized system that stores all transactions and data in a way that is heavily
encrypted [6]. Blockchains work by generating blocks that each contain different hashes to prove their identity. The
blocks that have been generated would contain the data that the creator wishes to retain. Each block is connected to
one another and there is a lengthy proof-of-work process before a new block can be added to the chain. Each block
has a dynamic hash that changes when the data within the block is changed, and this change snowballs into changing
every block that is connected to this changed block. Blocks that have been tampered with would be rejected by other
nodes in the blockchain network, therefore making it very hard to modify
Blockchain technology promotes traceability and transparency, providing comfort and ease for the customers. The
utilization of blockchain can benefit a lot of industries such as manufacturing, education, finance, food, and healthcare.
Generally, developers can create a blockchain-based application system, and the blockchain can be Bitcoin-based or
Ethereum-based [7]. The main goal of implementing blockchain is to make sure that the items are authentic and
traceable.
There are many ways to implement the blockchain for combating counterfeits, such as creating a system with NFC
and blockchain [8], [9], creating a blockchain-based POMS [10], creating a system with blockchain and QR codes
[11], [12], creating a blockchain that utilizes RFID [10], [13], creating a blockchain with IoT [14], [15]. Blockchain
provides illimitable potential and has the potential to be one of the most versatile systems. The medicine industry can
utilize blockchain technology to produce traceable drugs [16], [17], [18] and traceable vaccine vials [19]. The
education industry can utilize blockchain technology to create authentic and traceable certificates [11], [20]. Lastly,
the online retail industry can make use of blockchain to create a traceable system [21].
There is already quite a few similar research as ours, by utilizing blockchain, people can easily create a system
that is decentralized with maximum transparency. In the medicine sector, this technology has been used to create a
88 Anthony et al. / Procedia Computer Science 216 (2023) 86–95
82 Anthony et al. / Procedia Computer Science 00 (2022) 000–000

practical anti-counterfeit medicine management system [22]. A supply chain with anti-counterfeiting measures using
blockchain with NFC technology was also created [8]. Finally, in the education sector, a disruption was created due
to the creation of a system for digital certificates by utilizing blockchain and smart contracts [23].

2. Methodology

In this project, an Ethereum blockchain will be used as the back-end platform to develop an anti-counterfeit system
that can be accessed by sellers and consumers. The Ethereum blockchain was chosen because an anti-counterfeit
system needs to be fast, and Ethereum is notably faster than its predecessor, the Bitcoin blockchain [24]. Contracts on
the anti-counterfeit Ethereum blockchain will be written in the object-oriented language Solidity. The blocks on the
blockchain are accessible through a user interface that will be used by all parties, including the manufacturers, sellers,
and consumers.

2.1. Theoretical Background

Blockchain is inherently a data ledger with unmodifiable properties that is able to record transactions and help
with the traceability of assets within a business network. Anything of value can be exchanged and traced on a
blockchain network, with advantages of risk minimizing and cost reduction for the party involved [25]. Blockchain
works by generating blocks that contain different hashes that prove its identity. Each block contains information that
the creator wants and is tightly linked with the previous block, forming a chronologically ordered connected chain of
data that is immutable. To insert a new block, each block would be processed and verified by every single node in the
chain in order to ensure the validity of the data inside the new block. If the new block is eligible, then every node will
add the new block to its blockchain, and they will create a consensus that the new block is valid and is a part of the
blockchain. If the other blocks decide that the new block is invalid or that the chain has been tampered with, the chain
will reject the block and create a new hash and reject anything that doesn’t match the stored hash, creating a system
that seems immutable.
This project will design a blockchain that will work effectively as an anti-counterfeiting measure. This project will
utilize the Ethereum blockchain, along with the smart contract language Solidity. Ethereum is a blockchain which
utilizes a Turing-complete programming language that allows developers to create arbitrary consensus-based
applications using smart contracts [26] due to its Turing-complete nature that supports a large set of computational
instructions. Smart contracts are programs that execute automatically when the prerequisites contained in the program
are met. Smart contracts are mainly written in high-level programming languages such as Solidity and then compiled
into bytecode, which will then run on the blockchain when a transaction and all its requirements have been completed
by all parties [27]. With the data that the blockchain gets when the contracts have been executed, the system will store
it and use the data to prevent counterfeiting activities.
To test out the smart contracts and examine the inner workings of the Ethereum blockchain, a tool called Ganache
will be used. Ganache is part of the Truffle Suite web3 ecosystem that helps develop, deploy, and test decentralized
apps in a safe and controlled environment by creating a personal Ethereum blockchain that have advanced controls
and can be easily examined using an extensive log output and built-in block explorer [28]. Ganache can be connected
to an IDE that is specialized for writing smart contracts in Solidity called Remix IDE that fosters a fast development
cycle using an abundance of plug-ins and an intuitive GUI which can help with the development progression of this
anti-counterfeit program [29].

2.2. System Model

We propose a solution in the form of an anti-counterfeiting product distribution system using blockchain
technology. In this system, manufacturers can store their product data in the blockchain. This guarantees no tampering
will be done with the data and each product will have a unique ID. This ID will be available to use by anyone to view
and trace relevant information about the product and its sales for verification purposes. Users will only be able to
perform sales if the current owner address and product id is the same as the ones recorded on the blockchain.
 Anthony et al. / Procedia Computer Science 216 (2023) 86–95 89
Anthony et al. / Procedia Computer Science 00 (2022) 000–000 83

In this system, besides the blockchain, there are three main entities participating as shown in Fig. 2. They are the
manufacturers, distributors or sellers, and consumers. Each user has their own access privileges in our system granted
using the RBAC-SC (Role-Based Access Control with Smart Contract) model [30]. By using smart contracts and
RBAC, we can ensure data security by granting access and restrictions to users divided by roles automatically, without
a third-party.
2.2.1 Manufacturers
Manufacturers have the privilege to create the genesis block in the blockchain and also new blocks to input the
product's original data and shipping information. Manufacturers will be able to query every piece of information
regarding their products, even the current owner’s address. But after the product has left the manufacturer, they cannot
update the stored data, they can only query and trace.
2.2.2 Distributors or Sellers (Intermediaries)
Intermediaries have the privilege of inputting transaction data into the product block every time they sell a product.
They can record necessary transaction data inside the blockchain, such as seller information, selling date, and
consumer information. Intermediaries can query and trace the product information and whole transaction history using
its product ID but cannot see the current owner’s address in order to minimize the risk of a cloning attack.
2.2.3 Consumers
Consumers can query and trace the product information and whole transaction history using its product ID, but
they cannot input transaction data. They also cannot see the current owner’s address in order to minimize the risk of
a cloning attack, but they can still verify the current owner using our verification function.

Fig. 2. System model diagram

2.3. Operation Workflow

In this system, every time a transaction occurs, besides authentication from the users, our system will also perform
its own authentication. In order to protect the system from modification attacks, the receiving node will authenticate
the value of the data stored by comparing it with the previous chained block hash value. If there is a mismatch, then
the data has been modified and will be rejected.
90 Anthony et al. / Procedia Computer Science 216 (2023) 86–95
84 Anthony et al. / Procedia Computer Science 00 (2022) 000–000

The full workflow of the system is shown in Fig. 3. First, the manufacturer creates a genesis block to signify that
the private blockchain network is initialized and stores the manufacturer or factory data. They can then input data
regarding a new product into the blockchain, such as the product ID, product name, product batch number, production
date, shipment batch, shipment date, date received, receiver ID and the manufacturer information. This data will be
recorded and stored into a product block inside the blockchain. When the product is sent to the distributors or sellers
to be sold, a transaction contract will be added into the product block. The source address will be the manufacturer’s
address, and the destination address will be the distributors or sellers’ address.
Before buying the product from the distributors or sellers, consumers will be able to verify the product integrity
by querying the product ID in our system. Our system will return information regarding the product such as its name,
batch number, production date, shipment batch, and shipment date. Consumers can also check the history of the
product and every transaction it has been through with the current owner's information. For further security, the
consumer can ask for the seller address and verify it with our verification function. Our system will compare the
address with the current owner address which is not available to view by unauthorized users. If the function returns
true, then the seller is verified as the current product owner. This will guarantee that the consumer is buying the
product from its previous owner and not a cloned product. After everything is verified, a new transaction contract
between distributors or sellers and consumers will be made. This will change the current owner address (destination)
to the consumer’s address.

Fig. 3. Workflow Diagram

2.4. Anti-Counterfeiting and Traceability

Our system works by applying blockchain in the supply chain. The blockchain will span from the manufacturer to
the end customer or even resellers. Each step of the transaction will be recorded and registered in the blockchain
allowing no traceability gaps. The anti-counterfeiting system is highly dependent on the blockchain's features.
Features such as non-modifiability, consensus mechanism, and traceability are the foundation of our anti-
counterfeiting system. The non-modifiability of the blockchain comes from the fact that each block contains the hash
of the previous block, and if there is a change, the other blocks will reject the change because the new hash doesn't
match the stored hash in the other blocks. Forgery or counterfeits wouldn’t exist because of this feature.
The consensus mechanism is a mechanism that is used in a blockchain to reach an agreement over which state of
the blockchain is the current state. This mechanism makes sure that all nodes are synchronized and agrees upon which
 Anthony et al. / Procedia Computer Science 216 (2023) 86–95 91
Anthony et al. / Procedia Computer Science 00 (2022) 000–000 85

transactions are legitimate, making sure that only legitimate transactions are done [31]. Traceability is the last
foundation of our anti-counterfeiting system. Good traceability minimizes the potential of forgery and acts as an
assurance for product authenticity and quality [32]. Our system promotes good traceability by recording and
registering every step of the transaction allowing no gaps to occur. The combination of non-modifiable data, consensus
mechanism, and good traceability tackles the counterfeiting problem that currently exists.

2.5. Dataset

For our experiments, we used a set of dummy data for our users and products, shown in Table 1 and Table 2. The
addresses for our users are provided by Remix with 100 ETH injected into them for transaction purposes [29].

Table 1. User dummy data.

Name ID Address
Manufacturer Address Balenciaga Limited 0x5B38Da6a701c568545dCfcB03FcB875f56beddC4
Seller 1 Address Seller 1 0xAb8483F64d9C6d1EcF9b849Ae677dD3315835cb2
Seller 2 Address Seller 2 0x78731D3Ca6b7E34aC0F824c42a7cC18A495cabaB

Table 2. Product dummy data.

Product ID Product Name Product Production Product Product Product Date Receiver Manufacturer
Batch Date Shipment Shipment Date Received ID
Batch
3421SAfeW0 Balenciaga 23 14 January 15 16 January 20 January Seller 1 Balenciaga
Triple S 2020 2020 2020 Limited
54211sT12d Balenciaga 32 26 June 2020 18 28 June 2020 4 July 2020 Seller 2 Balenciaga
Speed Trainer Limited

3. Results and Discussion

In this section, we will explain the main function outputs of our anti-counterfeiting system including the expenses
needed for operating these transactions. The functions are written in Solidity version 0.8.15 and deployed in the Remix
IDE’s built in JavaScript VM. The blockchain network we use is a private Ethereum network provided by Remix [29].
The performance and future implications of the anti-counterfeit model will then be analysed, building on the functions
of the model.

3.1. Transactions

Table 3 shows the output when manufacturers created a new product to be shipped to a seller. Manufacturers must
input their product information such as the product ID, product name, batch number, production date, shipment batch,
received date, receiver ID, and manufacturer name and our system will record the transaction into the blockchain.
This step has the highest execution cost because it creates a new product block inside the blockchain.
Whenever the product switches owners, such as when the manufacturer ships it to the seller or when the seller
sells the product to the customer, the transaction must be recorded in the blockchain as shown in Table 4 and Table 5.
For product transfer from manufacturer to seller, the manufacturer needs to input the product ID and the seller ID as
shown in Table 4, but for the product transfer from seller to consumer, the seller needs to input the product ID, the
seller ID, and the customer ID as shown in Table 5. If there are any errors when recording the transaction, it will not
be stored in the blockchain, and our system will display an error message.
92 Anthony et al. / Procedia Computer Science 216 (2023) 86–95
86 Anthony et al. / Procedia Computer Science 00 (2022) 000–000

Table 3. Product registration.

Transaction Cost Execution Cost Input Decoded Input Decoded Output
308771 308771 0x448...00000 "3421SAfewe", "Balenciaga Triple S", "23", "14 “Product Registration
January 2020", "15", "16 January 2020", "20 Successful”
January 2020", "seller 1", "Balenciaga Limited "
Table 4. Product transfer from manufacturer to seller.
Transaction Cost Execution Cost Input Decoded Input Decoded Output
175284 175284 0x934...00000 "3421SAfeW0”, "Seller 1” “Transfer from Manufacturer to Seller
Successful”

Table 5. Product transfer from seller to consumer.

Transaction Cost Execution Cost Input Decoded Input Decoded Output
74536 74536 0x97c...00000 "3421SAfeW0”, "Seller 1”, “Transfer from Seller to Consumer
"Consumer” Successful”

3.2. Product Traceability

Our system provides functions mainly for consumers to check the authenticity of products they want to buy by
comparing the seller address with the current product owner’s address recorded in the blockchain. The customer must
input the product ID, seller ID, and the seller’s Address to verify the authenticity of the product. As shown in Table
6, the seller address given to the customer does not match the current product owner’s address, therefore making the
product the seller offers invalid and questionable.
Table 7 shows the consumer can also receive a product’s detailed information by querying its ID into our system.
This will ensure no product switching. While Table 8 shows that the consumer can also view the entire ownership
history of the product using its ID. Another thing to note is that the consumer cannot see the ownership addresses,
only their IDs. This guarantees nobody can impersonate the current owner by giving false addresses.

Table 6. Verifying a seller’s product using their address.

Decoded Input Decoded Output
“3421SAfeW0”, “Seller 1”, “0xc0ffee254729296a45a3885639AC7E10F9d54979” “This Seller Does Not Own The Product”

Table 7. Querying a product’s information using its ID.

Decoded Input Decoded Output
“3421SAfeW0” “Balenciaga Triple S”, “23”, “14 January 2020”, “15”, “16 January 2020”

Table 8. Querying a product’s ownership history using its ID.

Decoded Input Decoded Output
“3421SAfeW0” “Seller 1, Consumer”

3.3. Cost Analysis

As the Ethereum blockchain uses up energy to process every transaction, it needs money as compensation for the
work that has been done, and they call it gas fees. In the Ethereum blockchain, gas fees are also called gwei. 1 gwei
has a value of 0.000000001 ETH [33]. In this model, the gas fees will be paid by the manufacturer. The price of a
single gwei is tied to the Ethereum currency and is constantly changing.
 Anthony et al. / Procedia Computer Science 216 (2023) 86–95 93
Anthony et al. / Procedia Computer Science 00 (2022) 000–000 87

Fig. 4a shows how much gwei is needed when creating the first block of a product, averaging around 354,989.5
gwei for one product. While Fig. 4b shows how much gwei is needed for executing an ownership exchange smart
contract. The average gwei needed to change the ownership of an item is 180,028.4 gwei, with the gas fee being
different for every transaction and every item. These graphs are created using data from 10 transactions. Therefore,
making the total average cost needed to counterfeit-proof a product undergoing 2 transfers of ownerships using our
system be around 715,046.3 gwei or 0.0007150463 ETH, which is worth 0.92 USD based on the closing price of
Ethereum on October 1, 2022 [34].

Fig. 4. (a) Line chart of gas fees per creation of a new product; (b) Line chart of gas fees per change of ownership transactions.

4. Conclusion and Future Works

In this paper, we have proposed a blockchain-based anti-counterfeiting distribution system. This system would
ensure that every product that exists within the system is an authentic one. In the end, we successfully developed this
system using Remix IDE and Solidity. We have calculated that the average cost needed to operate this system is only
715,046.3 gwei or 0.92 USD per product with 2 ownership transfers. Manufacturers can calculate whether this system
is eligible or not to use for their product by subtracting the cost from their profit margin. Because the cost is relatively
low, medium-priced products should still be able to use this system. Therefore, we have proven that it is possible and
viable to develop a system detecting counterfeits with minimal costs using blockchain.
In the future, upscaling and improving our system will be possible, as our system is still a small-scale system and
still relies on manual inputs. Automation can also be applied to ease the manual input process and reduce human errors
that may occur. Another factor that limits our system is the price of Ethereum. Our system is dependent on the price
of Ethereum and if it fluctuates too high, the cost of using our system will automatically be more expensive. Therefore,
in the future, developers can fork and create a specialized blockchain architecture from current open-source
blockchains, in order to reduce the dependencies towards Ethereum.
Despite its shortcomings, the blockchain is still underutilized heedless of its amount of unrealized potential. This
model has shown that an anti-counterfeit system can be built using blockchain, and that opens a whole world of
possibilities for the utilization of blockchain technologies that can truly advance technology. Blockchain has proven
to be effective in building a system that deters counterfeiting activities and there are so many fields that are still
untouched by blockchain that can adopt this technology to make systems that would benefit them.

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