Reducing Automotive Counterfeiting Using Blockchain: Benefits and Challenges

Abstract

Counterfeiting constitutes a major challenge in current supply chains leading to millions of dollars of lost revenue for the involved parties every year. Hardware-based authentication solutions built upon Physically Unclonable Functions (PUF) and RFID tags prevent counterfeiting in a multiparty supply chain context. Unfortunately, these solutions cannot prevent counterfeiting and duplication attacks by supply chain parties themselves, as they can simply equivocate by duplicating products in their local and unique activity ledger. In this work, we study the benefits and challenges of using distributed ledger technology (or blockchain) to prevent counterfeiting even in the presence of malicious supply chain parties. In particular, we show that the provision of a distributed and append-only ledger jointly governed by supply chain parties themselves, by means of a distributed consensus algorithm, makes permissioned blockchains such as Hyperledger Fabric a promising approach towards mitigating counterfeiting. At the same time, the distributed nature of the ledger also possesses a privacy challenge as competing supply chain parties strive to protect their businesses from the prying eyes of competitors. Additionally, we show our efforts to build a blockchain-based counterfeiting prevention system for automotive supply chains, albeit the lessons learned are seamlessly applied to other supply chains. From our experience, we highlight two lessons: (i) the requirement of adding identities other than supply chain entities themselves to facilitate the tracking of goods; and (ii) the challenges derived from privacy enforcement in such a permissioned scenario. We thus finalize this work with a set of challenges that need to be overcome to achieve the best of both worlds: a solution to the counterfeiting problem using distributed ledger technology while providing the privacy notions of interest for supply chain parties.