Blockchain technology has been in development since the 1990s but only came to global prominence in 2009 as a component of the cryptocurrency bitcoin. As bitcoin has become synonymous with financial risk, the blockchain technology behind it has been lauded as revolutionary for its wide-ranging potential.
In essence, blockchain is a series of records – or blocks – with each block securely linked to every other block in the chain. Secure linking means that any one block cannot be altered without altering all the blocks in the chain. Those blocks can be thought of like entries in a ledger, and the ledger can be distributed among users in an open and transparent way. Interested parties can see each transaction in the ledger and therefore fully trust the records.
For a good report on how companies are using regtech to meet growing regulatory demands in financial services, download Enterprise Ireland’s free new white paper here: Regtech: Beyond Compliance
The Blockchain Revolution
“In practical terms, blockchain allows people to send money or records in an open, transparent and identifiable way. Its application has the potential to revolutionize entire sectors,” said Eoin Fitzgerald, senior fintech development advisor at Enterprise Ireland. “I think that the time is right for us to invest in blockchain. It has certainly come of age and we are starting to see concrete examples of how beneficial this technology is. It is no longer the tech which runs bitcoin.”
Enterprise Ireland recently launched a fintech and deep-tech fund for start-ups based in Ireland, which will invest in technologies like proptech, Artificial Intelligence (AI), machine learning, augmented and virtual reality, the internet of things, cloud, and blockchain. This is the first time that Enterprise Ireland has sought investments in blockchain.
Recently, a business chamber in England certified an export consignment from an engineering company using blockchain. A certificate of origin is used to prove where goods were made for customs purposes.
The development has been described as a possible solution for Brexit if such certificates are required in bulk. Such information is stored via blockchain and tracked with a QR code. As the technology is extremely secure, it would be very difficult to falsify a certificate.
“As blockchain is perfect for sending relatively small amounts of data – not millions and billions of records – it has many varied uses in any supply chain or distribution network,” explained Fitzgerald.
Irish Start-ups Leveraging Blockchain
Recently Enterprise Ireland made its first direct investment in blockchain by backing Irish start-up AID:Tech. By utilizing blockchain technology, the company’s software creates secure digital identities for people. With a secure identity — aid, welfare or remittances can be safely tracked and delivered to individuals.
“AID:Tech’s leveraging of blockchain is a great example of how to safely and securely transfer money or aid from an organization to a person, no matter where they are,” said Fitzgerald. “While AID-Tech is operating in the NGO sector, there is tremendous scale in what they can achieve and over the next year we expect to see such solutions being adopted wholescale by companies which need to track the transfer of payments or records.”
Other Irish companies developing blockchain products include TravaCoin, which has created a payment solution which enables airlines to compensate and refund passengers.
GECKO Governance has developed a number of blockchain-integrated products which allow fund managers and banks to schedule all end-to-end compliance and regulatory tasks on a single platform.
GECKO Governance believes that the technology is the future for regtech – regulation and compliance in financial services.
Ireland’s fintech ecosystem is helping companies in the country to leading the way in innovating such solutions.
“What we are seeing in Ireland is the rapid growth and maturity of blockchain. It’s only a matter of time before we see governments using the technology. State healthcare services and social welfare payments are perfectly positioned to adopt such technology,” explains Fitzgerald. “When I think of blockchain, I see Ireland becoming a center of excellence for the technology.”