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Atala SCAN: Blockchain-based product authentication

How a smart microchip can work with an advanced blockchain to defeat product counterfeiters

4 May 2022 Neil Burgess 6 mins read

Atala SCAN: Blockchain-based product authentication

You’ve paid a premium price for that collectible bottle of premium spirits, but there’s that nagging doubt. Do you trust the retailer and all the actors in the supply chain to act with complete integrity?

You buy an expensive drug from an online pharmacy. Are you sure you are getting what you paid for? Atala SCAN – IOG’s product authentication system – can answer your questions without the need to trust the retailer or anyone in the supply chain.

Part of the solution for bottles of spirits is a smart seal that knows if it has been tampered with. Atala adds to this an encrypted, auditable link between the seal and the full manufacturing history of the specific bottle to which the seal is attached. You can check the history using a free app on your phone that can instantly verify a product’s authenticity.

Atala SCAN is built on the third-generation blockchain technology of Cardano. Blockchain software combined with ‘touch-chip’ technology offers real advantages over traditional security methods like cap seals, holograms, and fancy packaging – the history of a product can be checked instantly by the customer.

The problem and solution

The need for improved security on products such as premium spirits, cosmetics, fashion goods, and prescription medication is being driven by the battle against ever-more sophisticated counterfeiters. The United Nations agency that is coordinating the fight against transnational organized crime groups describes the problem: ‘The production and sale of counterfeit goods is a global, multi-billion dollar problem and one that has serious economic and health ramifications for governments, businesses and consumers.’

The size of the international counterfeit market doubled from US$200bn in 2008 to US$509bn in 2019 – equivalent to 2.5% of world trade, according to the US Patent and Trademark Office. Counterfeiting at such a scale costs jobs in manufacturing, endangers the lives of food and pharmacy customers, and deprives innovators of due rewards for their efforts.

IOG’s solution to counterfeiting crime is an integrated system comprising a smart seal based on a ‘chip with wings’ that can be linked at the touch of a smartphone to the production records of the item. The records are held in secure storage that cannot be changed. Purchasers can check the provenance quickly, easily, and at no charge.

The smart seal

The smart seal is at the heart of the system. It is a wafer-thin label incorporating a near-field communication (NFC) chip. It is small enough to be glued to a product, incorporated in a card, or embedded in a product or its packaging. For example, it can be part of a special bottle cap or stitched into a handbag. You may have seen the NFC logo on a bank card. The technology allows devices to exchange information simply by touching or placing them next to one another. Like the microchips used for pet dogs, the smart seal consumes no power and silently waits for a signal from a reader. The signal induces an electric current in the chip’s antenna, and that is enough power for the chip to transmit its stored data.

Modern smartphones incorporate a bi-directional NFC device as a standard feature so that a phone can operate both as a reader and a tag. The Nexus S was the first Android device to include it. That was in 2010. Apple added NFC to the iPhone in 2014 – it has been built into every iPhone since the 6.

Most tamper-evident NFC tags are designed to stop working if disturbed. All NFC tags need an antenna to work, and if the antenna is fragile enough, any tampering will stop the tag from working. The NTAG product used in Atala SCAN applications takes this one step further. The chip in the tag has two antennas, only one of which is designed to break. If the tag is disturbed, it continues to work but transmits a modified signal as evidence of the tampering.

Atala SCAN is implemented at the first point in the supply chain that delivers the finished product to the brand owner. The brand owner’s records can include product images and a full history, including tracing each component back to its point of origin. The brand owner decides what information is disclosed to the end customer through the embedded smart chip. It might be basic tracking data or part of a global consumer marketing campaign. This information is linked to the unique identifier of each tag. Atala SCAN engineers can help with setting up this linkage. The tag is then attached to, or associated in some way with, each product item.

The blockchain

Cardano is a blockchain platform for changemakers, innovators, and visionaries. It uses the Ouroboros proof of stake protocol to achieve consensus so that it is provably secure while consuming only a fraction of the resources required by older blockchains. With Atala, every item is associated with a unique entry on Cardano. That entry cannot be altered, but can be read easily, and can be used as part of an auditing system. Each entry comprises the cryptographic hash of the tag’s identifier and links to the product metadata. The metadata, including images, is stored off-chain.

Juan Ignacio Sierra, the Atala SCAN project manager, says: ‘Working with blockchain ensures the immutability of the product information, but if there’s no mechanism in place to securely link the information to the product itself, fake products can take advantage of the same blockchain information as the originals do. In Atala SCAN we use high security cryptographic hardware in the seal to ensure the security of the link between the blockchain information and the physical product.’

Scan on your smartphone

If you have a smartphone, you will be able to download the free Atala SCAN app from the relevant online store. This application uses a phone’s NFC reader to read the chip and look up the product information on Cardano. Simply touch the phone to the product, and know at once if the product is genuine and learn about its history.

IOG is talking to several companies about launching the system.

‘Atala SCAN has been in gestation for some time and it’s exciting now that we can start to bring the proposition to market’, says Juan Sierra. ‘We’re in discussions with a number of potential clients. We will have more to share soon!’

If you are interested in product authentication for any reason, please get in touch with IOG through the Atala SCAN website, and we will be delighted to answer your questions.

Thanks to Anthony Quinn and Rachel Epstein for their indispensable contributions to this post.

Neil Burgess

Neil Burgess

Technical Writer

Marketing & Communications