Bitmark + Chibitronics: Protecting against hardware warranty fraud.

Today Bitmark is pleased to announce a partnership with Chibitronics — together we are launching an anti-fraud protection system for hardware companies, built on the Bitmark blockchain.

Chibitronics will assign their Love to Code kits with labels which are linked to digital property titles, known as “bitmarks” recorded in the Bitmark blockchain. This application offers Chibitronics an automated warranty tracking system for their products, ultimately restoring security and trust to both Chibitronics and their customers.

The Backstory:

Warranty fraud is a rampant and costly epidemic for hardware and consumer electronics companies, large and small. It has been estimated that companies lose 5–10% of their product revenue to fraudulent product repairs and renewals, and even more to operational costs for customer support.

Chibitronics co-founder, bunnie huang came to Bitmark with the idea: In the same way that the Bitcoin blockchain can prevent double-spending digital currency, hardware products that are linked and viewable via the Bitmark blockchain will have a trackable provenance, thus cloning and warranty fraud are more easily detected and averted.

“Bitmark has provided us with a turn-key solution for serialization and front-line warranty support, thus streamlining our operational costs. Furthermore, the anti-fraud protection inherent in Bitmark serialization ensures that our operating margins are not eroded by external costs incurred by supporting hardware clones and fraudulent returns.”

— bunnie, Co-founder Chibitronics

How it works

Chibitronics kits will each come with a coded product label (a randomized set of words, similar to a secure passcode) which is then linked to a bitmark, recorded in the Bitmark blockchain. Each kit’s bitmark is a unique digital fingerprint that retains verified product information, and a viewable chain of ownership should the kit be passed or sold to other individuals. Ultimately, each kit has both a physical and a digital mark of authentication verifying it as a Chibitronics product.

How bitmarks are assigned

How bitmarks are used for customer support

This kind of digital warranty gives Chibitronics the following advantages for managing their products and customer support:

  • Bitmarks are permanently viewable on the Bitmark blockchain: Chibitronics’ customer support team, manufacturers, distributors, and the entire supply chain, will be able to view product information of any product codes they have issued.
  • Customer support is automated: the efficiency of reading a blockchain to verify a customer’s product code is greater than any other warranty system yet available.
  • Bitmarks are incorruptible: The tamper-evident label on each kit is linked to one, and only one bitmark. Any changes or alterations to the label or bitmark can be detected easily, and then dealt with appropriately.
  • Companies can reap the benefit of higher revenue: With this faster, more traceable, automated, secure and authenticated hardware warranty system, companies can invest in better products.
  • An automated system is better all around: Bitmarks make product ownership easily authenticated and trackable for both the company and customers (no need to keep proof-of-purchase files around!).

What this means

By enabling the Bitmark system, hardware companies large and small will be able to streamline and stabilize their customer support systems, thus opening up the possibility to invest in better products and provide greater value to their customers.

“This launch shows that our technology is getting mature enough that people outside of our company are coming to us to use it to solve their problems and pain points. This partnership reveals the multitude of ways Bitmark can help pave the way to a more trustable and free digital environment. ”

—Sean Moss-Pultz, Bitmark CEO

In the same way that we have rules about physical property, Bitmark establishes a framework of rules that authenticates digital property, by using a blockchain. Property titles lend clarity and freedom to the rules of our possessions. When clear property rules are established, you can rent, license, loan, resell, and share your belongings because your things are now part of a system of trust and reliability. Linking your hardware property to the Bitmark blockchain with an unforgeable digital title, re-establishes trust in a sector fraught with fear, misuse, and dishonesty.

More about Chibitronics

Chibitronics is a company that makes electronic stickers, which let you create, craft and code technology through arts and crafts. Co-founder, bunnie huang approached Bitmark with the idea to launch this anti-fraud protection for their products.

More about bitmarks for fraud-proof serialization

To read more specifics about the ways in which Bitmark can help companies alleviate warranty fraud issues, and help restore trust to a broken business model, read our recent blog post “Hardware companies can use Bitmark to solve warranty fraud.

If you are interested in using the Bitmark blockchain to authenticate hardware or inquire about a business partnership, we would love to hear from you. Please email

By Bitmark Inc. on October 16, 2017.

Hardware companies can use Bitmark to solve warranty fraud.

The bitmark can contain relevant data and metadata to authenticate the physical item. It’s also unforgeable, and can be authenticated without relying on a third-party.

Online fraud takes many forms, but one of the more insidious is warranty fraud. A warranty is a promise from the seller of a product that the product will meet certain expectations. When this promise is exploited it becomes a major pain point for hardware manufacturers and this affects consumers in non-obvious ways.

Products, sold globally, must be supported locally by an ecosystem of staff, distributors, and developers. The supply chain complexity of modern hardware devices, like your phone or computer, is staggering. As the complexity grows the need for trust increases. Small startups struggle to deal with this complexity, and often fail before they can reach scale. Large companies are willing to accept a certain percentage of fraud as an unavoidable cost to doing business. To make matters worse, companies are reluctant to share their experiences and best practices. They fear being more transparent about the problem will lead to even more exploitation. What is needed is a different approach. The Bitmark blockchain can help restore trust in the hardware industry. This post explains how.

Digital titles, or “bitmarks” that secure physical products.
Bitmarks are digital property titles that prove the origin, authenticity, and history of ownership for digital property. (Learn more about what’s in a bitmark). A bitmark works well as a serial number or warranty code. One possible method to fight warranty fraud is to give each product a warranty code and then have customers “claim” the corresponding bitmark. Only one customer can hold a bitmark at a time. (The blockchain enforces this scarcity.) Once the manufacturer transfers ownership of the bitmark to their customer they can rest assured that it cannot be forged, swapped, or cloned.

The warranty code can be a simple label. For higher-value items, it can be etched onto the hardware directly. It should have enough length to represent a bitmark which is 32 bytes. A QR code works well for this. In the few markets, like North America, where people still don’t use QR codes, we suggest using a passphrase — dictionary words not commonly found together in literature. Here’s a good one.

Here’s a claim as a QR code:

Here is that same claim as a passphrase:

middle atom wife rigid pyramid garlic fine badge
hour exotic ordinary change display artwork hand exile
verb size nest mirror wrong ankle float appear

That code represents the rights to claim a bitmark that was issued by the manufacturer.

The bitmark can contain relevant data and metadata to authenticate the physical item. It’s also unforgeable, and can be authenticated without relying on a third-party. This makes it possible to radically lower costs for common after-sales support issues like customer support, warranty, RMA, and much more.

Hardware startups, here’s your fraud-proof serialization solution.
Bitmarks provide the foundation for a robust hardware serialization. To really flush out the value of this fraud-proof serialization, imagine a hardware startup that recently pushed a Kickstarter project into mass production and has begun shipping. If each board is fraud-proof serialized, when a customer has a problem the startup knows exactly which production run the board came from, what firmware was installed, and when it was received, without even having to ask the customer a single question!

But it gets better. Not only can the startup have this information but any distributor can authenticate customers, as well. This means lower distribution costs (with higher margins). And it also means more local, higher-quality support for customers.

“Trust” is automated, basic annoyances like asking for proof-of-purchase can be skipped, and more time can be spent making the customer happy.

Large consumer electronics companies can benefit with Bitmark as well.
Fraud problems are definitely not exclusive to small business. For example, Apple, Cisco, and Fitbit have been known to suffer massive warranty fraud (don’t quote us on this, but it’s likely in the billions of dollars per year!). To make matters worse it hits their most expensive product lineup. Large companies that bitmark their physical products can automate customer support checks across their distributor network, just like the startups. Being able to track conversion rates is valuable data for inventory management and future product planning. In addition, they would be able to offer rewards and discounts on future sales, which is good for their customers and their bottom line.

Enabling hardware business models of the future.
When a product has an unforgeable serial number linked to the cloud, you can do remarkable things, and with great ease. Here’s a list of our top 5 favorites:

  1. Solve the open hardware support conundrum. When you ship open-source hardware anyone can also make clones. Yes, it’s great to have a vibrant community contributing bugs fixes and feature ideas. But it’s also expensive to support clones from other manufacturers. A new model could be to sell a bitmark as “rights for support.” This could transform a cost-sink into an additional revenue stream.
  2. Manage “closed betas.” Special (serialized) hardware could run beta software and the entire distribution of that software could be automated and authenticated and tracked within the confines of a specific group of users.
  3. Make warranties transferable. Being able to transfer a warranty with full transparency and security, would hugely benefit customers and could substantiate secondary markets. . That grows the pie for everyone. Combined with conversation tracking, it’s a great way to bring new customers into the market.
  4. Authorized playback. Bitmarks can protect data in the way that access control software such as Digital rights management (DRM) promised data protection, without the nasty side-effects for end-users. Software can verify ownership by checking the blockchain itself to make sure the current holder is the recorded owner. This can happen behind the scenes, and it doesn’t require a third-party to enforce.
  5. Firmware upgrades. IoT has terrible security. Device manufacturers could transfer bitmarks for security updates to device IDs. This way each device could authenticate the software without having to worry about malware. The blockchain is distributed so that if any one specific server is compromised the overall security can still be maintained.

Join us in our efforts to democratize the digital economy. Sign up for our beta and try our IFTTT service. If you have any questions, we’re @BitmarkInc on Twitter.

By Bitmark Inc. on September 22, 2017.