Blockchain Is Coming for Counterfeit Collectibles

Once you pass through the prop-weapons security check, dodge the professional cosplayer, and skirt the dude in the head-to-toe Deadpool costume, there isn’t much that seems different about the ToyXpo than the collectibles shows that I occasionally dragged my parents to a generation ago. This one is being held at the Santa Clara Convention Center, an ‘80s-era suburban complex that’s perhaps most notable for being situated across the street from the San Francisco 49ers’ incongruously suburban football stadium. But given that the exhibition hall itself is a windowless bottom-floor annex, it might as well be Anywhere, USA.

ToyXpo bills itself as the Bay Area’s ultimate toy, comic, and collectibles convention, and I have no reason to believe it is anything else, particularly once I catch a glimpse of a signed photograph of the late Carrie Fisher. The man selling the Carrie Fisher photo is named Mike Ram, who—like many of the vendors here, and at the dozens of other events like this one—makes his living selling collectibles on eBay and at shows. His wares are piled high in a vendor’s space roughly the size of the garage in his Modesto house where he stores them. All around us are booths stacked with anime figures ranging from cute to undeniably creepy, plus handmade art, comic books, Pokemon figures, and tables for signings from celebrities like Erik Estrada and Alan Oppenheimer (the voice of Skeletor in He-Man). A single concession stand nearby specializes in teriyaki bowls.

In addition to the Carrie Fisher photo, Mike Ram—who himself has a name worthy of a superhero—is displaying an original Nightmare on Elm Street movie poster signed by Robert Englund (the actor who played Freddie Krueger) and Heather Langenkamp (who played Nancy), as well as a Boba Fett helmet signed by actor Jeremy Bulloch, who plays the remorseless bounty hunter in The Empire Strikes Back. I ask Ram if the autographs he’s selling are authenticated by any outside parties, and, thinking I’m a potential customer, he immediately responds that they all have been. He answers this question all the time, he tells me after I identify myself as a journalist. And because he’d grown up collecting sports memorabilia, where authentication is a more established process, he claims he knows a lot more about it than many of the dealers who specialize only in comic books or toys.

Flimflammery in the collectibles trade has been going on as long as the industry has existed.

Ram often pays to set up private signings with athletes and celebrities. He puts them up in a hotel room, gives them a set amount of money per signed item, and then waits for value to accumulate before selling them. If he can afford it, Ram will sometimes pay to fly an authentication expert to those signings with him. There are a handful of legitimate companies who specialize in these things, and a number of illegitimate ones, Ram says. There’s “a lot of bad stuff” that gets sold at shows like these, Ram tells me, mostly because people figure they can get away with it. If you’re seeking to authenticate an autograph, he says, you can find some fly-by-night company who will do it for you. It’s so bad that he’s seen autographed items where the celebrity’s name has literally been spelled wrong. And he’s not alone in his claims: In the wake of a recent dispute involving game-used gear signed by New York Giants quarterback Eli Manning, one New York attorney called the sports-collectibles business “an unchecked, unregulated industry filled with the worst degenerates.”

Indeed, flimflammery in the collectibles trade has been going on as long as the industry has existed: Witness the 1990s forgery scandal so huge that it spawned an ESPN 30 for 30 documentary, or the raid on a memorabilia dealer that sent O.J. Simpson to prison after he claimed items were stolen from him, or the introduction of devices like the autopen. And the Internet hasn’t really stemmed any of the major issues; it’s just created new types of criminality and shady behavior. And these markets are not small: entertainment memorabilia has grown into an estimated $200 million to $400 million industry; comic books sell more than $1 billion globally a year; and the sports memorabilia industry may be as big as $5 billion, by one estimate.

After 25 years of collecting autographs, Ram claims he can often tell a real from a fake just by eyeballing it. When it comes to athletes, he’s got enough expertise that can tell you how certain people autograph under different circumstances—whether it’s at a signing table, or after batting practice, or on a rope line. Every one of his autographs does have some sort of authentication sticker with a hologram from one of the three major companies that specialize in collectibles—with the exception of that Carrie Fisher poster, which Ram says he “knew was good” because he trusted the guy who owned it before him. And while authentication experts work with increasingly sophisticated databases to identify items like the autographed Babe Ruth baseball one collector brought to ToyXpo, even the authenticators themselves would admit that, unless they actually witnessed the signing, they can never be a hundred percent certain in their evaluations.

So it’s clear that the system has holes, that it is susceptible to counterfeiting and theft and price inflation. In addition, a number of authentication companies charge a considerable fee for their services. For instance, James Spence Authentication, one of the major players in the sports industry, charges $20 to $30 for basic certification of an item valued up to $200, with prices going up from there.

While the sports-collectibles business continues to attract high-end investors, the comics and toy collectibles business has boomed thanks in large part to the glut of superhero movies and the growth of trade shows like Comic-Con. Yet Ram tells me that while sports collectors are often savvy about authentication, many comics and toy collectors still aren’t, which is why shows like this—as well as online marketplaces like eBay—can be a minefield for counterfeiting and fraud.

After we’ve talked for a while, I ask Ram if he’s ever heard about blockchain technology. He shakes his head and says no. And when I walk over to a table being manned by one of the major authentication companies and ask the employee working there (who tells me he’s not allowed to give his name) the same question, he says the same thing. It would appear to be an industry ripe for the sort of disruption that blockchain enthusiasts savor, which is exactly what a man named Sang Truong is thinking as well.


Not long after Truong’s family emigrated from Vietnam and wound up in Kansas, his mother brought home a stack of comic books as a way of helping her children learn English. Truong gravitated to titles like Tarzan and Black Panther. In college, he started collecting coins before eventually returning to comics once he started making money as an adult. And while there are other companies focusing on how blockchain might apply to the collectibles business as a whole—including Codex Protocol, which has largely focused its public profile on art and other more highbrow rarities up to this point—Truong is, as far as he knows, the only blockchain entrepreneur focusing on the comics industry, with a business called Kapow Chain.

Four years ago, Truong and a few partners opened a shop called 5280 Comics in Denver. The rent was cheap, and they figured it would be a fun side hobby, but then the industry kept growing, and eventually it became a full-time business for Truong. Along the way, he began learning to identify what was valuable and what wasn’t; the most valuable comic books these days tend to hail from the so-called Golden and Silver Ages of comics, which spanned the 1930s through about 1970. Truong also learned the intricacies of the encapsulation market, in which companies like CGC and CBCS (the largest authenticators of comics) graded properties on a scale of 0.5 to 10 and then ensconced them in a plastic case marked with the grade, in order to preserve both their value and the authenticity of the grade itself.

But Truong saw there were obvious holes in the system, including false claims about product scarcity, inflated prices, and unverified proof of ownership. While he was away at college, Truong’s comics collection was stolen from his parents’ home, and he never recovered it, so he’s aware of how nebulous ownership claims can be, even in the internet era. Maybe now you can track down your stolen comics on eBay, but even then, what claim to ownership do you have?

Truong tells me he sometimes encounters shady characters at his shop, like the guy who showed up with three vintage Captain America books worth thousands of dollars and was “carrying them like they were just any other magazine,” Truong says. When Truong asked him if he could take some pictures and evaluate their worth in the next week, the guy said he needed an offer right away.  

These problems led Truong—who had invested in other startups, as well as in cryptocurrency—to blockchain, and to Kapow Chain. If it comes to fruition, Kapow Chain would create a unique tamper-proof identifier that could be attached to an encapsulated collectible as an additional layer of authentication, and an app with a database with access to that information that could be used by buyers and sellers, as well as store owners like Truong himself. (The Kapow identifier would initially pair with a grading service’s UPC code, Truong says, to help eliminate errors.) The cost of verifying and registering items would ideally be far smaller than what a company like CBCS would charge—Kapow Chain’s website claims it could eliminate “99 percent” of those fees.

To do this, of course, Kapow Chain will need to offer its own online currency. Eventually, Truong hopes, he can create an online marketplace of his own, and perhaps even partner with the publishers themselves to identify every comic produced, tracking each from its origin so that claims of scarcity—whether for a digital comic or a hard copy—can be independently verified. (Kapow Chain’s first partnerships are with indie publishing company Devil’s Due, which, not coincidentally, recently published The Bitcoin Comic Handbook, and with Florida store chain Coliseum of Comics.)

Scaling all of this would require serious disruption of a number of industry forces. It may eventually even mean taking on auctioning giants like eBay itself by creating a separate marketplace for comics enthusiasts. Kapow Chain’s current white paper includes plans for that marketplace,, which it says will feature “current price guides, inventory management, digital comics downloads, marketplace, and a directory of retailers accepting Kapow Coins.”


The possible blockchain solutions to problems are as nascent in the collectibles industry as the fraud is entrenched and longstanding. Truong says widespread adoption could be years in the making. But he believes the appetite for innovation by collectors means it will eventually catch on. “Collectors with valuable assets are more accepting to new technology to help protect their investments,” Truong says. “This is the main reason that we’re choosing to pursue the encapsulation market first.”

For now, as his company approaches the seed-funding stage, Truong says he’s hoping to prove his concept with a tiny percentage of that encapsulation market, roughly 0.1 percent (or about 100,000 items), after he launches his ICO sometime in 2019, with the hope of capturing nearly five percent of the market by 2024. But Truong also recognizes he’ll either have to partner with or go directly up against entrenched companies like CBCS (which was recently bought by Beckett, a venerable collectibles company that made it name in sports cards).

Whether those companies are interested in adopting blockchain themselves remains unclear. None of the companies I contacted—either those that specialize in sports collectibles or comic books, including PSA, James Spence, and Beckett—returned requests for interviews. And while Truong tells me he’s in talks with one major grading and authentication company, nothing has been finalized.

The notion of blockchain truly disrupting the collectibles industry remains dependent largely on whether the technology surrounding it becomes more user-friendly.

There are other companies that appear to be sniffing around the collectibles industry. One such company, Chronicled, has patented a “social record feature” for items like sneakers; I scheduled a pair of interviews with Chronicled’s cofounder, but she failed to answer her phone or return messages both times. In the meantime, Chronicled’s website says only that it is “in the process of exploring opportunities to support the luxury goods, sports memorabilia, and fashion markets.”

The notion of blockchain truly disrupting the collectibles industry remains dependent largely on whether the technology surrounding it becomes more user-friendly. Truong’s plan, in the meantime, is to ratchet up marketing by attending shows like the one I was at, and by appealing to vendors like Mike Ram and the others I spoke to during ToyXpo. “I think collectors are more open for this way to transact,” Truong says.

“All of these things are very hypothetical right now,” says Codex Protocol founder Jess Houlgrave. But the way Houlgrave sees it, the basic concept is essentially the same whether we’re talking about an Andy Warhol print or a near-mint first edition of Wonder Woman.

The public focus, for Codex, has largely been on art, but Houlgrave sees no reason why it couldn’t eventually extend to all kinds of collectibles, including comics.

“Everybody picks up on the art side because it’s a psychological thing—as soon as you say art and collectibles, the first thing that tends to come to people’s minds is fine art,” Houlgrave says. “But actually, the overall marketplace is that much bigger. It’s really about understanding where the item has come from and whether it’s authentic or not.”

Codex has dabbled in the sale of sports collectibles on the blockchain. They recently auctioned off several items related to this summer’s World Cup, including a World Cup trophy that had once belonged to a mascot. That’s where Houlgrave sees Codex fitting in: Not as much as a disruptor, but as a facilitator. They currently work with software providers for auction houses around the world, and could eventually partner with additional online sellers. The blockchain, Houlgrave says, can help appraise items so rare and unusual that it can be difficult to find an expert appraiser. And eventually, it may also be able to help a collector to appraise the appraisers, so that you know the rating you’re getting is legitimate. For instance, Codex is working with a company called Value My Stuff to help facilitate the relationship between buyers and appraisers.

“I think blockchain is great at making that connection, but also making sure the incentives are right for that appraiser,” Houlgrave says. “Imagine where that appraiser has a profile, with a reputation system…or they could stake a small amount of cryptocurrency to back up the appraisal they give.”

The hope for companies like Codex and Kapow Chain is that they can eventually connect more items to the blockchain at the point of production. If that isn’t the case, Houlgrave admits, blockchain will remain an imperfect solution. Yet compared to what exists today, it could prove a boon for memorabilia dealers like Mike Ram, who are merely seeking a way to be sure that both what they’re buying and what they’re selling is as real as the authenticators are telling him it is.

“For every good company in the market right now,” Ram says, as collectors amble past his booth at ToyXpo, “there’s probably five bad companies.”