**1. Introduction**

The problem of counterfeit product trading, including luxurious goods or pharmaceutical products, has been one of the major challenges the supply chain industry has been facing in an innovation-driven global economy. The situation has been alarming with an exponential growth of counterfeit and pirated goods worldwide, for which it has also plagued companies with multinational supply chain networks.

The analytical study [1] published by the Organization for Economic Cooperation and Development (OECD) and European Union Intellectual Property Office (EUIPO) in 2019 regarding the global trading activities of counterfeit and pirated products has suggested the volume of international trade of counterfeit and pirated products increased from \$250 billion in 2007, to up to \$461 billion in 2013, representing approximately 2.5% of world imports. The imports of counterfeit and pirated products into EU amounted to nearly \$116 billion, representing 5% of EU imports approximately. The results have been alarming according to the latest statistics published in 2016, suggested that the volume has already further amounted to as much as \$509 billion representing 3.3% of world trade and 6.8% of imports from non-EU countries.

The battle against counterfeit product trading remains a significant challenge; it is simultaneously of significant and growing concern to the globalized economy not to mention all the affected industries, such as the markets included in [2] and innumerable branded product companies. Trading activities in counterfeit goods not only infringe on trademarks and copyrights, and negatively impact on sales and profits of industries, but also generate profits for organized crime at the expense of the affected companies and governments. Counterfeit trading activities also pose broader adverse effects to the economy, public health, safety, and security of the wider community. Counterfeit product trading activities are operated swiftly in the globalized economy, misusing free trade zones according to the authors of [3], taking advantage of many legitimate trade facilitation mechanisms and thriving in economies with weak governance standard and limited innovative options to combat product counterfeits. In response to the growing concern in product counterfeit, innovative, fully functional, integrable, and affordable product anti-counterfeiting solutions with traceability functionalities have been widely and urgently demanded. These solutions are expected to utilize cutting-edge technologies so as to ensure the provenance and traceability of genuine products throughout the supply chain counterfeiting, and these suggested solutions should be widely adopted regardless of industries, size of the companies, and its supply chain systems.

Given the growing concern in counterfeit trading activities, though there have already been a variety of innovative product anti-counterfeiting solutions introduced in supply chain industry, the main research question is as follows:

"Why would existing anti-counterfeiting and traceability systems benefit from decentralization enabled by blockchain technology to better combat the rampant counterfeiting attacks?"

The main question could further be addressed via answering the following subquestions throughout the research:


Given the main research question and the set of sub-questions derived from it, it is common to follow an organized way of exploring them stepwise in this research. An exploratory research method, as depicted in [4], will be adopted in this research in computing. Contrary to existing conceptual blockchain implementations applied in different industries with less explanation on why decentralization is needed for these use cases, this research is taking a rather different approach to have a thorough process involving a series of security analyses on an existing product anti-counterfeiting and traceability system—NFC-Enabled Anti-Counterfeiting System (NAS). The insightful findings from the security analyses will further elaborate why these solutions could benefit from decentralization, on which a decentralized version of these supply chain software solutions could be developed and implemented.

The fundamental ideas and use cases of blockchain technology, categorized into different phases, are explained in the research. The reasons why implementations of Blockchain 2.0 should be adopted to decentralize the existing product anti-counterfeiting and traceability systems are also elaborated, before stepping into the overview on one of the existing product anti-counterfeiting and traceability system—NAS. This research will focus on explaining the reasons why these existing supply chain software solutions, including NAS, would benefit from decentralization enabled by blockchain technology.

Based on the findings and opportunities identified from these analyses, a set of fundamental system requirements of developing a decentralized product anti-counterfeiting and traceability system is also defined. The decentralized solutions, such as the Decentralized NFC-Enabled Anti-Counterfeiting System (dNAS), are aimed at delivering a more secure and higher quality approach to verify authenticity and provenance of luxurious products, such as bottled wine. With the use of peer-to-peer blockchain networks and distributed storage technologies, it will be possible to eliminate an absurd amount of cost for on-chain storage and provide a much higher level of privacy, reliability, and quality

of service compared with existing anti-counterfeiting and traceability solutions with centralized architecture. The decentralized version of the existing solutions, such as dNAS, could also define a framework and practice for different nodes along the supply chain to integrate the low-cost, real-time, and immutable blockchain technology into their daily supply chain workflows.
