Many business models have been tried to unlock profits from buying and selling new and used watches, but none has succeeded for long without the most essential commodity in trading: trust.
A British start-up business, OpenChrono, has a business model that puts trust at the core of its offer, with all watches authenticated and assigned an incorruptible blockchain-based passport before being securely stored in a vault.
Only after all of these security procedures are completed are the watches listed for sale.
OpenChrono is in a beta testing phase, with just a handful of watches listed for sale from the start of February, but it aims to have stock worth upwards of $400 million onboarded in the coming weeks.
OpenChrono will not own any watches. They are all consigned by individuals or professional traders.
Customers buying watches may not ever see the products because they have the option to leave them in OpenChrono’s secure vault.
Ownership will be recorded on the blockchain and digital passport of each watch, which means they can be bought and sold like stocks and commodities as long as they remain in the vault.
Collectors of fine wine will already be familiar with the business model because bottles are often kept on behalf of owners for decades in secure storage. They can be bought and sold without physically being moved.
OpenChrono was founded by CEO Kevin Bradford, a former digital asset consultant, and Graham Forster, who set up eBay UK’s watch authentication programme.
Quickfire Q&A with OpenChrono CEO Kevin Bradford
WatchPro: You talk about onboarding $400k in watches. Are these on consignment or do you buy them?
Kevin Bradford: We’re currently onboarding $400,000 in watches ahead of launch. These are a mix of early client assets and self funded stock.
WatchPro: When and how do you authenticate watches at scale?
Kevin Bradford: We are launching with a network of three professional authenticators onboarded, they are Century Watch Repairs Ltd, Swissmade Ltd and Time4Service. All are vetted and fully staffed, and we expect to add more to the network to increase capacity as needed.
OpenChrono isn’t a marketplace for flippers. Watches must be authenticated, digitised and vaulted before they can be listed, which is a minimum three day process.
WatchPro: There have been many attempts to introduce this sort of protection and tracking using Blockchain. What makes you think this will be any more successful than those that have come before?
Kevin Bradford: OpenChrono is a Web3 ecosystem, it’s not a register and isn’t designed to facilitate tracking. We use The Watch Register to check the lost and stolen status of every watch as part of our authentication process.Â
All watches that pass the authentication process are digitised and issued a Timepiece Passport (TPP) that is linked to a digital twin. The digital twin and TPP act as a record of the watch’s condition and are only valid while the watch is vaulted. Once a watch is redeemed from the vault, we cannot guarantee its quality and the digital twin is burned. The Timepiece Passport remains available for all users to view.
If the same asset is then resubmitted to OpenChrono, either for collateralisation, sale or storage, it will need to be reassessed and a new digital twin will be issued that represents its current condition.
A new Timepiece Passport will also be issued and attached to any previous ones. For example, a watch that has been sold three times through OpenChrono would have one digital twin that represents its present day condition, and users would be able to access all three past Timepiece Passports to see if and how its condition has changed over time.
Digital twins are linked to legally enforceable contracts which, in the case of a sale, offer protection to both the buyer and seller. Buyers are committed to buying the watch in the condition it was vaulted in and at the price specified, and they can be sure of exactly what they’re going to receive and have the choice to redeem their asset, leave it vaulted, sell it on or collateralise it.
WatchPro: What happens if manufacturers start to sell watches with all the details on the blockchain?
Kevin Bradford: It’s likely that when they do, they’ll do so in a closed, proprietary system. This means they’ll effectively be issuing an ownership receipt, rather than a token linked to a physical asset.Â
OpenChrono’s passports are designed to integrate with manufacturer tokens, these can be attached to our passports to ensure ownership and asset history remains clear for future owners and potentially increases the value of that specific asset.
WatchPro: Is there a premium for customers to pay when buying a watch that has been authenticated and protected in this way?
Kevin Bradford: There will be a premium on the asset for going through the process, but it’s competitive with other legacy systems. Buyers will be charged a fee of 2% of the asset’s value, this is made of the authenticity warranty (1%) and contract fee (1%).Â
Our fees for watch sellers (both private and professional) are fixed at 2.5% of the asset’s value. Storage fees for vaulting start from 0.5% and vary depending on the storage partners used and whether the new owner decides to redeem their watch or leave it vaulted.
This split fee structure is disruptive, essentially buyers are purchasing a set of legally binding warranties rather than paying excessive platform fees. Sellers are protected from comebacks and customer service is automated, so they are more likely to absorb the 2.5% fee than pass fees in excess of 6% on to customers (as per legacy marketplaces).
WatchPro: How can you be certain that no fraudulent watches get through the checks?
Kevin Bradford: Our Head of Authentication, Graham Forster, has designed robust standards that all of our authenticators must meet. Our authenticators are all professionals vetted by Graham, and highly incentivised to meet those standards. In the unlikely event that a fraudulent watch did make it onto the platform, the authentication expert is held accountable and will need to compensate or resolve the issue.
For example, in the event of an additional scratch or mark on the watch, they will offer services to rectify. In the event of an outright fake, they are fully liable. With this approach we ensure that assessments are carried out correctly and the correct attention is given to each asset.
WatchPro: Most secondary market players have had a challenging two years. Is this a problem or an opportunity?
Kevin Bradford: Even with the market in decline and looking for certainty, collectors are still hungry to purchase luxury timepieces. We’ve observed a slow down in total transaction volume from a dollar amount but still a steady interest in acquiring high quality items. For example, marketplaces like eBay still show strong volumes.
We know that this sector is ripe for disruption, collectors and enthusiasts are looking for change due to countless scams, and we see a massive opportunity. We believe there is huge value to be captured through this type of architecture, since it offers protection to both buyers and sellers, as well as the opportunity to unlock value from a collection without selling your watches.
