The Beginner's Guide to How Blockchain Could Change the Ethical Fashion Game

Your cheatsheet for understanding the revolutionary technology's potential impact on fashion.
Photo: Dan Kitwood/Getty Images

Photo: Dan Kitwood/Getty Images

Blockchain technology was first released to the public almost a decade ago, but it's only entered the public consciousness in earnest within the last year or so. With that heightened awareness has come an increased dialogue about blockchain's applications in the fashion industry, and the ethical fashion community in particular has taken notice. Everyone from sustainability podcaster Kestrel Jenkins to the Business of Fashion have delved into what the emerging technology could offer fair fashion advocates.

And yet, if you ask the average fashion person — even a smart, well-read, ethics-concerned one! — about blockchain, you're likely to encounter a good amount of confusion. 

With that in mind, we decided to dive in, talk to some experts and see if we could reduce blockchain, and the opportunity it offers in the realm of ethical fashion, to the most understandable terms possible. Behold, your blockchain vis-à-vis ethical fashion cheatsheet.

First of all, what is blockchain?

While some would argue that "blockchain" has become too broad a term to easily define, it's generally understood to be a decentralized, tamper-proof ledger. The ledger part denotes that it's like a digital document that keeps track of transactions; the decentralized part essentially means that multiple parties control the ledger. As a result, each transaction that's added to the ledger becomes locked in, so no other party can edit or alter someone else's entry without everyone knowing it. It's also transparent, so everyone can see who entered what.

To use a familiar example, blockchain functions in many ways like a Google Document: Every time someone edits the document, those edits are automatically reflected for everyone else on the doc to see. But blockchain differs in a few key ways.

"Rather than having one central record of information or one central ledger like Google Docs has, you would have many of those," explains Laura Burnett via phone. Burnett is the community manager at Provenance, a software company in London that relies heavily on blockchain. "Google docs are owned by Google, obviously, so Google could in theory go in and change everything…and no one would be any the wiser."

Blockchain, on the other hand, is operated by many people but isn't owned by anyone — and that decentralized ownership is what makes it tamper-proof in the sense that no one can alter it and then cover their tracks.

How does it work?

Blockchains log transactions like the transfer of money, goods or services. Records of each blockchain transaction is then stored in the over 200,000 computers around the world that make up the blockchain network. 

How is it related to cryptocurrency?

A big part of the reason that blockchain's made headlines lately comes from its connection to cryptocurrencies like bitcoin, which have been exploding in value. Cryptocurrencies are digital currencies that can be used to buy real things, and they're favored for the way they can speed up money transfer by cutting out middlemen (like big banks). Blockchain and bitcoin are so often mentioned in the same breath because bitcoin and other cryptocurrencies are powered by blockchain. 

Like blockchain, bitcoin is special because it's not controlled by a single entity. Unlike normal currencies, which are controlled by one nation's government, bitcoin is supervised by a global network of people who maintain computers that run the bitcoin software. (As an aside, if you're wondering why people would volunteer to do this, it's because they have the opportunity to get paid for their efforts — in bitcoin, of course.)

What does any of this have to do with fashion?

Two significant applications for blockchain technology have emerged when it comes to ethical fashion. The first has to do with supply chain transparency, and the second has to do with creating economic systems that keep money concentrated in ethical fashion ecosystems.

Provenance and SourceMap are two software companies that are using blockchain to do the former. They envision a world in which every fashion or beauty product has traceable, transparent origins — and they're using blockchain's tamper-resistant record-keeping to push that agenda forward.

"Fashion supply chains are way too complicated to be traced using any person-to-person traditional communication," says SourceMap founder Leonardo Bonanni over the phone. "You need some really advanced technology to actually track fashion, especially in a world of fast fashion and global brands."

SourceMap has developed a sort of social network that allows everyone from the farmer to the textile mill to the cut-and-sew factory to communicate directly with the brand that buys from them, and it's using Provenance's blockchain technology to verify those communications. The benefit arises from the fact that organic or Fair Trade certifications can't be faked, brands can't deny having worked with factories after news of human rights abuses at those factories surface and auditors can essentially trace any claim about a product back to the entity who first made that claim. And it can do all of this while keeping certain sensitive details — like someone's salary — private, which is a major concern for those looking to create radically transparent supply chains without violating individuals' privacy.

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"Tremendous leaps in accountability have come about because of this new technology," Bonanni says. "It basically allows brands to be in touch with their suppliers, and their suppliers' suppliers, and their suppliers' suppliers' suppliers."

The second application for blockchain technology in the context of ethical fashion has to do with cryptocurrencies. Canadian firm Impak Finance provides a perfect example of this. Its business model involves curating a marketplace of social impact-focused companies, then rewarding customers with "cash back" in the form of its own digital currency, Impak coin, every time they shop from those companies. Impak coins can be used to purchase things from any other company in Impak's marketplace — so your purchase at Patagonia could give you a discount at Whole Foods, for instance.

Why use a cryptocurrency rather than traditional currency to create what is essentially a multi-brand loyalty program? Impak's CEO Paul Allard points out that a traditional loyalty program asks brands to swallow the cost of discounts they pass on to customers. But since cryptocurrency transactions are much cheaper to process than credit card transactions, a loyalty program that uses a cryptocurrency is actually free for brands while still passing along savings to customers, incentivizing them to spend with brands that are actively seeking to do good.

"Essentially, the blockchain revolution is a huge opportunity for communities to write the rules for how they create value and share it," Allard says in a phone interview.

What are the obstacles?

While blockchain represents a great opportunity for supply chain transparency, it will only really work for brands that are genuinely seeking that out. This is because it requires brands to voluntarily invite their suppliers (who will need to in turn invite their own suppliers, and so on down the chain), to adopt the technology. In short: for brands that prefer to look the other way when opaque supply chains lead to human rights abuses, blockchain won't change anything. 

But for brands that have been looking for ways to get a better handle on what's really happening in their production processes — and Bonnani argues that's actually the majority — the tech could relieve a big logistical headache by streamlining the record-keeping and verification processes.

The challenge for blockchain applications like Impak's is simply that of achieving critical mass: If the company can get enough brands and users to sign on, everyone involved will reap the benefits. But if not enough people adopt it, cryptocurrencies like the "Impak coin" will never become that valuable as it won't be possible to use them across a wide range of products and services.

When will consumers start seeing the effects?

While some companies like Eileen Fisher and L'Oreal have already adopted blockchain technology internally to monitor their own supply chains, the average consumer may still not have witnessed these effects in a concrete way. The goal, as far as companies like Provenance are concerned, is for consumers to be be able to walk into their favorite retailers, pull out their phones and scan the tag on a garment or makeup product to be able to pull up full supply chain information — a goal that's already been reached with specialized brands, but not in the mass market.

Still, the growing opportunities for what brands can do with blockchain mean it may only be a matter of time.

"You're going to see all of these second-tier suppliers being published for some very big brands in Europe and the US for the first time in 2018," says Bonanni. "I think it's not a far cry to think that in 2019 you'll start to have mass-produced garments being traceable to the individual batch. And that's only going to be possible through blockchain."
