The blockchain is a type of database that logs transactions or any other kind of information. What makes this ledger unique is that its shared, with no one individual or body with complete control over it. Every addition to the ledger must be acknowledged and accepted by every user.
Perhaps the most famous application of blockchain technology is bitcoin. Bitcoin has, in recent years, entered the financial and cultural mainstream. Its value has risen sharply (along with periodic declines). All of this has been underpinned by the bitcoin blockchain.
Blockchain records the history of a bitcoin, giving each transaction detailed fingerprints, telling the life story of that bitcoin – where it came from and what transactions occurred prior to it arriving at its destination This creates an open and honest way of dealing with online transactions. But blockchain technology has applications far beyond bitcoin.
Blockchain explained
In day-to-day life, we use middlemen to approve our transactions e.g. banks, governments and other third parties. Blockchain, however, is hosted by millions of computers around the world and therefore is not controlled by any single entity. Each step (node) in the blockchain network owns a full copy of every transaction or movement of the data on the blockchain. This means that the details and history of the transaction are 100% traceable.
Despite historically being used to handle financial transactions, the security and reliability of blockchain technology mean that it can be applied to other areas and industries. Three benefits that blockchain technology can provide are:
- The increase in security and trust
- Reduced costs
- Accelerated transactions
Distributed ledger technology
By using a blockchain, the settlement and clearing time of transactions is reduced to seconds. The ledger is replicated on computers throughout the world, maintaining its security by encryption algorithms.
After a transaction is verified, each node is updated in real-time, reflecting the same information on each other. If someone tries to corrupt one node, the other nodes will instantly notice that one stage is being tampered with and will refuse to integrate the transaction. In the blockchain, all nodes must agree that a transaction has occurred for it to be processed. Making this automatic saves companies time and money.
Blockchain market
Blockchain is certainly here to stay, with Microsoft and IBM offering Blockchain as a service (BaaS). The IBM blockchain empowers businesses to build secure blockchain networks, digitalising workflow through a secure and transparent platform. Microsoft Azure offers BaaS to enable organisations to collaborate and to develop, test and deploy blockchain applications.
How is blockchain being used?
And now there are many companies using blockchain in innovative and disruptive ways. This is proving that it is not exclusive to currency transactions and can enhance human interactions in all kinds of exciting ways.
Examples of how blockchain is being applied to new sectors include:
- Using blockchain to share medical data quickly and effectively across health institutions.
- Combining blockchain with artificial intelligence and machine learning to increase data security.
- Using blockchain to gather data from the Internet of Things.
- Protecting intellectual property and preventing music piracy.
Find out more about what qualifies for R&D tax relief in blockchain.
Blockchain in healthcare
The transparency and security of blockchain mean that it is very well suited to handle private patient data for healthcare providers. Blockchain in healthcare can keep data in an encrypted record, rather than having one centralised administrator.
Blockchain has great potential to facilitate health information exchanges and assist with the records of a patient’s entire health history, providing secure access records for medical professionals. The data does not have to be sent back and forth between hospitals and pharmacies, as they can all work from the same common ledger, saving time and money.
Blockchain and medical records
The patient’s transactions can be recorded by a doctor in blockchain medical records, simultaneously adding the data to all the other nodes in the blockchain. This means that other doctors don’t have to trawl through the history of the patient’s medical records.
Global collaboration project Hyperledger has developed the Hyperledger Healthcare Working Group (HLHC Working Group), working alongside companies such as Accenture, Gem, Hashed Health and IBM.
The HLHC Working Group uses blockchain to decentralise health data without compromising its security. It’s enabling doctors and professionals instant access to real-time information about their clients. This allows them to provide a faster and more effective service, spending more time with their patients than attempting to locate information.
Protecting patient data using blockchain
MIT’s MedRec Lab has identified the need for innovative technology for electronic medical records (EMRs). Currently, the technology being used is cumbersome, inefficient and is slowed down by strict regulation. MedRec, however, is a system that uses blockchain to manage privacy, authentication, and the sharing of patient data. This works by seamlessly merging with healthcare providers’ current databases, providing a convenient, adaptable and secure system.
MedRec was applied to the Beth Israel Deaconess Medical Centre in Boston, USA. It tracked six months of patient data, logging blood work records, prescriptions, vaccines and other treatments between two different databases. The trial was highly successful in demonstrating the benefits of blockchain in healthcare, with MedRec now preparing to roll out across larger networks of hospitals in the near future. This indicates how blockchain technology can also help pharmaceutical companies stay on top of regulatory requirements and help with compliance.
Protecting genomic testing data with blockchain
As genome data reveals a large amount of information about a person e.g. intelligence level, ethnic ancestry, predisposition to mental health disorders etc, it is highly sensitive.
A blockchain can keep genome information genuinely secure. But providing the donor gives permission, still allows scientists to gather large scale, anonymous information.
Blockchain and AI
Artificial intelligence (AI) has great potential to be used in blockchain technology due to its ability to analyse large amounts of data in a very short period of time.
Predicting that blockchain will be an essential tool for financial services, supply chain and global logistics, IBM is merging AI with blockchain through the Watson IOT group.
Blockchain and machine learning
MindBridge Analytics Inc is working alongside the Bank of England to explore the benefits of using machine learning technology and blockchain within the banking sector. They are aiming to improve the efficiency of cross-border payments and speed up the movement of currency.
Using AI, MindBridge will spot abnormalities in financial transactions whilst simultaneously exploring the advantages of applying machine learning to the banking sector, enabling the analysis of regulatory data input. The benefits of using AI in blockchain include it rapidly speeding up the time it takes to make transactions, whilst identifying anomalies and potential threats in the finance industry.
LendingRobot, an online investment service, is launching a hedge fund that is administrated without human interaction through using a combination of machine learning and blockchain technology.
Launched in 2012, LendingRobot provides returns delivered through blockchain technology, offering security and transparency. LendingRobot’s algorithm analyses the factors involved in an investment, giving it the information it needs to assess the potential venture. It then uses blockchain technology to provide transparency, publishing a thorough ledger of its assets, which are all embedded with a code signature.
Used well and combined with blockchain, machine learning and AI present a great opportunity to improve security, productivity and efficiency in a variety of sectors.
Blockchain and the IoT
The Internet of Things (IoT) is ingrained in our daily lives. From a self-ordering fridge or accessing your emails via your wristwatch, the IoT is growing all the time.
The IoT poses complex security issues, but many experts believe that blockchain technology is the key to resolving these. This is down to a blockchain’s ability to eliminate points of failure, improve security and enable the operation of smart devices without needing a central body.
Blockchain and driverless cars
The use of blockchain in the development of driverless cars could be integral to building safe and reliable driverless vehicles. The information shared via blockchain will also help set insurance rates. A vehicle’s sensors gather data concerning how the car is moving and operating, which is then stored in a blockchain. Owing to the transparent nature of blockchain, this increases trust between the customer and insurance company, drastically reducing the potential for fraud.
Blockchain and Intellectual Property
Blockchain can be used as a tool to track the rights and transactions attached to a wide range of digital creative work – including fashion and music.
This is can be facilitated using smart contracts – self-executing contracts that contain the agreement terms written directly into lines of code. They permit trusted transactions between anonymous parties without the need for an official government or legal system
Blockchain and the fashion industry
Blockchain is being used to change the fashion industry by companies such as faizod. Using electronic tracking technology, blockchain can be used to speed up supply chains.
Faizod is prototyping a blockchain-based tracking system, combining blockchain with radio frequency identification (RFID). With RFID already being employed to identify bank notes, payment cards and animals, faizod is aiming to combine RFID with blockchain to track the footsteps of a product in a supply chain. As a result, this will help determine whether a product is genuine or counterfeit.
UK company Provenance are using a blockchain to construct a traceability data system to store information. This enables them to tell the backstory of every product using blockchain technology, locating certifications and other information.
Block chain art
Verifying the authenticity of an art piece is often a challenge, but blockchain has the potential to transform this arduous process. Verisart is blockchain technology that helps artists verify their work, thereby proving its authenticity and providing immediate, real-time value for artists and collectors.
The blockchain means that buyers no longer have to rely on one single transaction to verify the work, as they can verify the whole chain. In turn, this builds a decentralised, reliable and honest ledger for works of art and collectables all around the world.
The recent trend of non-fungible tokens (NFTs) is another example of blockchain’s usage in art. Buyers can now buy digital art (or even memes) and are able to prove original ownership via an incorruptible, decentralised ledger.
Blockchain technology in watches
Blockchain technology has been introduced to Raketa watches, through collaborating with Blockchain Engine, in a bid to combat counterfeit watches and fraud.
Using blockchain, confirmation of a watch’s authenticity can be established, reducing the possibility of forgery. Each watch is assigned a serial number at the production stage, removing the need for paper certificates, which are easily forged.
With the creation of these unique keys, each product is guaranteed to be genuine, giving the customer confidence that their product has come directly from the manufacturer.
How is Blockchain used in the music industry?
Founded by Imogen Heap, Mycelia for music is injecting an element of fair trade into the music industry by using a blockchain model. Music published using blockchain technology can have an ID and timestamp, meaning that content can no longer be downloaded, copied or modified. The content can also store metadata about the ownership and rights of the record, ensuring that the creator gets paid for its use.
The blockchain also removes the intermediary of purchasing platforms, which usually take a portion of the revenue. This way the creator can be paid directly by the consumer, stimulating the growth of a developing artist without a record label.
Despite the music industry’s rocky relationship with digital technology, it appears blockchain is opening up new horizons for it. By transforming the publishing, monetisation side of the industry, a blockchain can also create a more direct relationship between the creator and consumer.
3D printing and blockchain
Creators often do not want their work anywhere near the internet. If a 3D printing file is distributed online, it can instantly be copied and printed innumerable times. Blockchain, however, can secure these files and protect their ownership on the secure ledger. Blockchain makes sure these files can stay protected, giving each printed product its own unique ID and digital product memory.
Blockchain for good causes
Blockchain’s ability to trace the authenticity of an item makes it well-placed to reduce the harm of blood diamonds and other major problems caused by organised crime.
Blockverify can verify and authenticate a range of products such as diamonds and mobile phones. Blockverify operates by tracking products to see if they have been diverted from their intended destination and to verify if a product is genuine. Companies simply register their products with Blockverify and use the blockchain platform to analyse and monitor their products.
Blockchain to reduce blood diamonds
Blockchain is also being used to prevent the spread of conflict diamonds. London-based company Everledger, a global digital registry for diamonds powered by blockchain, uses the distributed ledger to track individual diamonds – directly from the point when they are mined to when they are in the customer’s hands. Through a combination of blockchain, smart contracts and machine vision, it is ensuring that conflict diamonds are not on the market, simultaneously reducing fraud for banks, insurers and open marketplaces.
Since Everledger’s launch in 2015, 980,000 diamonds have been registered. This success has resulted in Everledger gearing up to expand into the wine and art market, having invested in Ascribe and Vastari.
Using blockchain to prevent human trafficking
Blockchain is being used to help end human trafficking and slavery. In an unregulated supply chain, there is no simple way to determine the identity of a person working in it. This means that they might have been forced into labour. With no legal identification, these individuals are hidden from society, making them vulnerable to human trafficking and slavery.
Microsoft is working alongside Blockstack and Consensys in order to develop a blockchain identity system for people, products, apps and services. This works through a person registering their identity. The self-governing nature of a blockchain then assigns them an identity on a digital ledger that transcends borders, businesses and companies, making their history and background visible and transparent.
Blockchain R&D
Blockchain is a dynamic technology, with many technical challenges and constant R&D being applied. There are certainly scalability limitations, and when the core code requires updates, this can pose a considerable issue to blockchain developers.
If you are using this innovative technology, or are attempting to overcome the technical challenges associated with it, you may well qualify for R&D tax credits.
How ForrestBrown can help you claim R&D tax credits for blockchain R&D
We have one of the largest teams of chartered tax advisers specialising in R&D tax credits in the UK. Highly experienced in digital technology, we find qualifying R&D in blockchain that others miss. And while this means we often submit larger claims for our clients, they are also extremely robust.
Our award-winning claims process has built-in quality assurance stages that are managed by former HMRC tax inspectors. Therefore, the claims will meet the exacting standards of HMRC, meaning peace of mind for you.
Contact us on 0117 926 9022 to find out more and we can help you get the most from this government incentive.