Digital Twins, DPPs and Connected Products

The world of digital twins and connected products is exponentially growing with blockchain, and specifically NFTs presenting an immutable and tamperproof vehicle to create, present and store vital supply chain, authentication and chain of custody data.

Last week, NFT.NYC came to London for the first ever NFT.London conference and I presented a talk which demonstrates the use of NFC chips in sneakers to create a Digital Product Passport, or DPP. I’ve had many discussions since around whether DPPs are appropriate for the majority of consumer goods or whether the principle applies exclusively to luxury assets, and it’s fair to say that when we talk about establishing provenance, authenticity and chain of custody, the principle sits well within the luxury sector, a sector which has already taken great strides into testing and activating this type of twinned asset.

The Ecodesign for Sustainable Products Regulation (ESPR) tender announcement released in October this year, sets out to commission a feasibility study on Digital Product Passports in order to identify the ideal solution for the registry, including technical architecture, operational procedures, the governance of the registry and future updates. The EU Strategy for Sustainable and Circular Textiles which is due to be mandated by Spring 2024, calls for DPPs as a key regulatory element to enhance traceability. By 2030, it could be the case that all textiles in the EU require some form of digital identification to demonstrate supply chain data from material sourcing, manufacturing through to retail distribution.

The enhanced transparency provided by this form of DPP has long reaching benefits from engaging with a more environmentally aware and considered consumer conscious GenZ by forcing brands to publish details of material sourcing and manufacturing techniques, through to increasing the availability of data on grades of components further down the value chain for recycling. Demonstrating authenticity also removes the resale friction within circular models by providing reassurance to both buyers and sellers.

NFTs coupled with metaverse applications are creating a shift in consumer behaviour, the most important being the concept of ownership prior to manufacturing. Providing consumers with the ability to curate customised outfits virtually and in-turn placing a committed order with a brand allows the fashion sector to operate an efficient manufacture-to-order model, reducing waste and carbon miles.

As I stressed during my presentation however, creating the DPP is the easy part, but maintaining the link between the physical and the digital throughout the product lifecycle requires a lot more creativity, and can only be successful if consumers are engaged, something which each brand is considering and executing true to the principles of their unique DNA and heritage.

The Hardware

There are three main contenders currently being used to create the all important physical / digital link, and based on recent discussions, it would be useful to highlight these and explain them in more detail.

NFC – Near Field Communication.

Most people reading this article will have a passive NFC chip on them right now as they are used in credit/debit cards. Active NFC chips are used in mobile phones allowing the device to act as both the tag and a scanner at the same time.

Passive tags do not require their own power source and are only activated when a radio frequency has been detected, making them extremely small, around the size of a SIM card and as thin as a sheet of paper.

The earlier ISO 14443 standards for transactions limit the read range of NFC chips to a few inches however the newer ISO 15693 standards offer a maximum read range of around 3 feet, and importantly, because they can be read with most mobile phones, consumer engagement is easily facilitated.

The chip does not require a line of sight per se, as it can be read through a thin layer of fabric, but metal surfaces require the chip to have an insulated base to prevent contact with the surface material and magnetic fields can irreparably damage NFC chips which have a typical life-span of 10 years.

NFC chips can be encrypted but decryption generally requires real-time internet or database access for authenticity verification. A new type of encrypted data string allows for secure data matrix barcodes to be authenticated without real-time internet or database connectivity.

RFID – Radio Frequency Identification.

Again, you’ve more than likely already interacted with an RFID chip today due to their use in vehicle remote key fobs and travel cards. The chip in your pets neck is also RFID.

RFIDs are the obvious choice for brands and retailers wanting to unlock consumer or community engagement and rewards. Using existing radio frequency scanners located at the doors of most physical retail outlets which have been used for security purposes for many years, the existing infrastructure can take advantage of token gating on public blockchains to unlock new retail experiences to holders of specific NFTs using activations such as attendance tokens or POAPs (proof of attendance protocols), and due to the longer read range and ability to mass-scan, RFID technology is the perfect solution for unlocking event experiences.

With the requirement for often costly specialist readers, consumer may lose the flexibility of being able to engage with their digital asset on their own terms. RFID has raised some privacy issues due to the potential for ongoing surveillance with anti-RFID activists expressing concern and forcing retailers to scale back plans for deploying smart tag technology in loyalty cards.

The passive tags can be extremely small with the smallest version I’ve seen being around 4mm wide, and their robust nature gives them a lifespan of around 20 years under normal conditions.

QR – Quick Response.

QR codes are possibly the most accessible of all three technologies discussed here. Anyone with an internet connection can create a QR code for free and direct it towards a URL of their choice and its for this reason alone that the adoption and development of NFC and RFID technologies has been hampered over the years. Up to now, the benefits have not been enough to justify the higher price in comparison to QR technology.

Most smartphones are able to detect and read QR codes and many applications rely on the phone’s camera as a scanner. The NHS Test and Trace application during the COVID pandemic is an example but also highlights the definite need for line of sight which means that the application of the code, whether it be on a sticker or label, needs to be kept clean, and in-tact. Ink technology with longevity in mind has been developed for use in garments as well as QR codes being woven into the fabric to mitigate the issue of detached labels.

Summary

Supply chain transparency is coming under increasing pressure to ensure that brands follow through with their promises around sustainable and carbon reducing strategies.

Based on the nature of activation, all three technologies highlighted above will be applicable across a range of goods, and ultimately, a hybrid approach will most likely offer the greatest flexibility and engagement to future consumers. The PBT or physical backed token developed by Chiru Labs and Azuki also introduces a new piece of hardware called the Bean Chip which offers a decentralised 'scan-to-own' model, making strides into the authentication aspect of digital ownership, and the Arx Research HaLo, or Hardware Locked smart contract NFC chip, both pieces of hardware that I'll be digging deeper into over the next week.

DPPs setting out the underlying data behind digital twins, will be commonplace by 2030 and as discussed during my presentation last week, standardisation of data architecture will be vital for providing consumers with the flexibility to migrate and store their digital assets across various platforms, list to various marketplaces and use whichever consolidation tool (or wallet) emerges as the market leader.

SNIB is one such consolidation tool which is being developed to provide ongoing engagement for the consumer, providing an agnostic approach to managing, consolidating and price tracking valuable assets using standardised data sets which offer the flexibility to buy and dispose as ease on various existing marketplace platforms.

If you would like to sign up to our beta test group please join here or you can track our progress on LinkedIn by following the SNIB company page.