You refuse to service the serial number and blacklist it. Maybe you allow folks to send them in for inspection/authentication and re/serializing if they think it’s legit.

With even say 3 serialized parts at 6#s you have 10^18 possible combos. That’s probably not enough to secure a non rate limited system but if you charge 1$ check you will be fine as long as the database isn’t compromised. My understanding of cryptography is limited but it may be possible to encrypt the entries as well such that even compromise database keys can’t be guessed.

Rolex is the DMV of Rolexes. If they don’t like your serial number they can cancel you at any time and that’s it short of suing them. Thats why if there is ever any doubt they can simply refuse to authenticate or force you to send the watch in for authentication. Moreover they can work with insurance companies and provide an authentication service that allows fake watches to be canceled for insurability as well if they wanted that. Though I think in general insuring fake Rolexes is probably pretty profitable and not paying out on fakes might not be worthwhile.

I’m not skeptical of the trade, there is after all a trade in Nike shoes and they are worth significantly less but it’s more that I wonder how much premium they loose on the black market due to lack of traceability. Without a very skilled authentication it’s hard to validate you get the real thing and markets tend to discount accordingly. Even the real thing if it’s possibly blacklisted by the vendor without a good way to verify would get discounted. So you should end up getting prices for the real thing that are close to that off high quality knock offs.

People in the 3rd world but stolen cars all the time for example but I suspect they are quite a bit cheaper then the legit ones or at least efforts are made to launder them.