There is a significant buzz in the financial world, and increasingly in other industry domains, around the potential impact of blockchain-like technology to greatly simplify business processes and remove the role of intermediaries. An obvious example is the growing potential in the legal world to invoke smart contracts and disrupt the traditional centralised registries such as land title and patent registration.
In this article, we take a closer look at this latest technology sensation and why everyone’s talking about it.
What is Blockchain?
Blockchain is a secure transaction record that cannot be deleted or attacked through a central registry. Historically connected to the use of the virtual currency phenomenon, Bitcoin, the many applications of blockchain technology are only beginning to be explored, – and it potentially includes validating the creation of IP and authenticating its digital form.
The blockchain is the complete ledger of every transaction ever made, and it is this public and transparent ledger that gives a chain of transactions its security and reliability. It is secure in the sense that it cannot be hacked. The trade-off however is that the information is public and therefore not confidential. While most of the hype and discussion for the application of this technology continues to be focussed on financial transactions, there is the emerging recognition that the blockchain approach can be applied to many other areas of activity.
In a digital economy the blockchain algorithm is already being used to verify the contents on any document or the digital IP at any certain point in time, all without knowing what is in the document itself. Services such as proofofexistence.com are making it easy for the upload and storage of documents to enable easy certification of existence at a later time. In the real world, as an example medals issued by the International Olympic Committee have special qualities and markers befitting the awards they represent. So being able to verify where something comes from, who passed it on, and who received it is one of the ways we can trace the value of things that matter most in our world. Being able to unequivocally ensure the providence of a piece of intellectual property will ensure its value is maintained.
Instead of centralising the verification power in one entity, the blockchain distributes the ledger across separate nodes with agreed rules that make transactions valid and the system work. It’s this removal of the need for a third party arbiter that makes the blockchain settlement mechanism so innovative.
The Technical Definition
A blockchain is a public ledger of all transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the network using a client that performs the task of validating and relaying transactions) gets a copy of the
blockchain, which gets downloaded automatically upon joining the network. The blockchain has complete information about the dataset right from the genesis block to the most recently completed block.
Application to the IP world – what blockchain could mean for your business
Blockchain has been used already in other areas outside the financial world. For example, you can use the blockchain technique to establish ownership of a piece of art or you could timestamp a document. This is an approach that means the evidence and chain of activity cannot be circumvented, the record exists essentially for ever and cannot be deleted which makes it ideal to store, track and ensure the integrity of documents.
And there are many more new art focused blockchain ventures emerging.
The blockchain approach is being enhanced by many organisations across the globe as the potential to support innovation becomes more apparent.
“10% of global GDP would be stored on blockchain by 2025” Klaus Schwab’s The Fourth Industrial Revolution.
Without a centralised mechanism for registration, the role of the owner of IP interest moves from one navigating the mechanics of the process to strategically managing the scope and positioning of their innovation.
The IP owner like everyone else has a keen interest in removing roadblocks to innovation and supporting a thriving ecosystem. A single source of truth and a trusted register for authenticating the creation of ideas would have significant impact on IP registration. It would change the role of the IP professionals and bring to the fore their deep industry and domain expertise to better support and manage the clients innovations. Smart Contracts are also emerging as a result of the infiltration of blockchain potential into new domains. The smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. As an example, Ethereum www.ethereum.org is a decentralized platform that runs smart contracts.
Smart Contracts enable developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middle man or counterparty risk.
While it’s still in the works Blockchain can be used as the official registry of intellectual property owned by its citizens, or ownership of land title – for example, Honduras has already announced it will move to a blockchain lands title system. This enables the joining up of many different processes efficiently and effectively without the need to build a centralised control mechanism.
We predict blockchain to be an important emerging underlying technology that has the potential to disrupt many existing business models and provide the opportunity for significant improvements in many businesses and supply chains.