The blockchain could possibly add billions of dollars to the global economy posteriori/iStock

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It's easy to think we've reached peak Bitcoin, but the blockchain at the heart of cryptocurrencies contains the seeds of something revolutionary.



The blockchain is a decentralised electronic ledger with duplicate copies on thousands of computers around the world. It cannot be altered retrospectively, allowing asset ownership and transfer to be recorded without external verification.


Investors have now realised the blockchain is bigger than Bitcoin. In the first quarter of 2016, venture-capital investment in blockchain startups overtook that in pure-play Bitcoin companies for the first time, according to industry researcher CoinDesk, which has tallied $1.1 billion (£840m) in deals to date.

Even governments have taken an interest. Sir Mark Walport, the UK government's chief scientific adviser, published a report on the blockchain in January this year, outlining how the massively distributed shared ledger is "a database that tracks who owns a financial, physical or electronic asset". But it could also, say, monitor driverless cars.

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"Autonomous vehicles are becoming a reality - cars are increasingly part of the internet of things," Walport explains. "You don't want your connected vehicle to be tampered with. So blockchain's distributed ledger has the potential to monitor car operating systems, sensors, doors. You can baseline the known state of the device's configuration and then check for tampering."

A simple guide to the blockchain and bitcoin Startups A simple guide to the blockchain and bitcoin


Many firms are already using the blockchain to trace and record ownership, and to cut out middlemen. In the first group, there's London-based Everledger, which uses the distributed ledger to track individual diamonds from the mine to the consumer, helping identify conflict diamonds and combat insurance fraud. More than 980,000 diamonds have been registered since Everledger's 2015 launch. The company plans to expand into the fine wine and fine art market, having invested in Berlin-based Ascribe and UK-based Vastari, allowing Everledger to materialise their platform into new and emerging asset classes beyond diamonds.

Stampery, meanwhile, offers creatives and startups an IP protection service - as well as offering a document-stamping service to the legal world, allowing lawyers to certify documents without expensive court fees. Stampery's next step is system and critical infrastructure security, working with Microsoft to allow developers to embed the blockchain in their systems and thus record the history of every file.

"The blockchain can confirm if a product is indeed authentic" Jessi Baker, Provenance founder and CEO

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This may sound like an insurance nightmare, but the blockchain - inevitably - could be the perfect solution. Based in Canada, Plex.ai is a car-insurance startup using an automotive telematics platform combining blockchain variant Ethereum, machine learning and artificial intelligence to give insurance companies real-time, remote diagnostics on a car and its driver.



Some urge caution. Cornell University professor and cryptocurrency expert Emin Gün Sirer points out that services such as Uber and Airbnb handle security checks, vetting of drivers and landlords and a variety of other safety issues that require human judgement. "These are not things we should trust to market forces," he argues.

The blockchain's potential for removing the middleman has found enthusiastic supporters in the music industry. Singer-songwriter Imogen Heap released her latest single, "Tiny Human", on Ujo Music, which has its own currency and digital-rights registration, as well as song tracking and feeding back data to artists. Bittunes, meanwhile, uses Bitcoin to buy and share music, offering artists increased earnings and buyers a form of cashback as songs become more popular.

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The wealth-creating aspect of Bittunes excites MIT Media Lab director of digital currency Brian Forde, who is investigating the blockchain's social impact on developing-world economies.


"Capitalism took off in countries such as the US with small-business-owners borrowing against property equity," he says. "Where people don't have a formal property title, as in Egypt, all this capital is tied up. But if you create a property title on the blockchain, even if there is a change of government, it's proof: the government can't say you don't own the property. In Egypt alone, that unlocks $400 million (£304m) in capital overnight."

The idea that the blockchain could possibly add billions of dollars to the global economy is just the start, says Amos Meiri - co-founder of Tel Aviv's Colu, which offers blockchain-supported local currencies. "The blockchain brings safety to everything from online purchases to opening the front door of your holiday home," he explains. "It's not just a new way of thinking about money - it's a new way of thinking about trust."

There are problems, of course - the technology may not scale up to handle an enormous number of frequent trades or updates. There's also a very uneven response from regulators. And although to date hackers have struggled to break into the widely distributed network itself, recent high-profile attacks on dependent websites and services indicate that the more value stored on the blockchain, the greater their incentive to access it.