Blockchain is best known as the technology that sits behind bitcoin, recording all of the transactions made with the virtual currency. It is a highly secure, cryptographic digital ledger – each transaction made has a digital signature, which cannot be forged. And this underlying technology is now being used to record all sorts of data, not just currency.

Blockchain is decentralised – created by a network of computers – so there is no single server to hack. However, any new information needs to be verified by multiple computers – the nodes within the blockchain – so it is virtually impossible to add bogus information to it. If the majority of nodes do not verify a new piece of information (through its history and its transaction signatures) then it will not be added.

While bitcoin has yet to be embraced by the public, investors and entrepreneurs are increasingly enthusiastic about the potential for blockchain technology. For the reasons given above, proponents say that blockchain, or distributed ledgers technology, should be used to record and store a wide variety of different transactions and decisions. Information such as mortgage certificates, health records, welfare benefits and even voting registration could be managed via a blockchain. The creation of accessible, secure data networks that run in near real time really does sound like a holy grail in the digital age.

Richard Mabey is the co-founder and CEO of Juro, which uses blockchain technology to underpin the creation and signing of legal contracts. The business provides a freemium (free for the basic features, with a charge for premium features) model for SMEs and a subscription for larger companies and has signed up over 500 clients since launching last year. “We are seeing real traction from businesses and it’s clear that this technology has moved from academia into the world of business,” Mabey says.

The very concept of a contract could be radically changed by blockchains, says Mabey. Contracts written in word documents will be surpassed by smart contracts created in code. Mabey gives the example of a property deal, where each step of the transaction will be recorded on the blockchain. Once one phase is complete, a token can be sent from one ledger to another to authorise the release of funds and update the Land Registry. However, it may be bad news for solicitors. “This is something that can democratise legal contracts as before it would have cost hundreds of pounds. The blockchain is a really inexpensive way of handling contracts.”

Indeed, there are wider concerns around blockchain. Although it is viewed as a standalone technology it is still linked in the minds of many with bitcoin. It is complex, based on concepts unfamiliar to most, and so has every chance of being as misunderstood as the virtual currency it emerged with.

Also, while digital ledger technology may seem like a brilliant idea to insiders, the public is yet to be convinced as to how and why this will help improve their security and privacy. A lack of education and public awareness may be blockchain’s biggest challenge, rather than the technology itself.

Paper documents seem to have no place in a responsive, digital world, and blockchain is the answer

However, there are signs misgivings are being overcome and its potential uses understood. The UK government has shown an active interest in blockchain technology and its relationship to open data. A recent report by the UK government chief scientific adviser, Distributed Ledger Technology: beyond block chain(pdf) stated that:

“Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services.”

One company hoping to take advantage of this enthusiasm is Credits, led by CEO Nick Williamson. Credits has just been accepted on to the G-Cloud, a digital marketplace that vets SMEs that want to bid for government contracts. Now all government departments can start using its digital ledger platform.

“Our service allows people to create and launch their own blockchains,” says Williamson. “You do need to be a developer, but you don’t need to be a blockchain developer in order to build a Credits blockchain. We provide a robust framework that allows developers to develop and deploy blockchains with only a few dozen lines of code, rather than hundreds.”

Williamson says that any organisation that needs to verify identity, be it public or private sector, should see the potential of the blockchain ledgers. “If I need to check if you are over 18 and live in the UK then you can text me a token, which I can check, and it will show me that the UK passport office can certify that you are those two things,” he explains.

The technology should also reduce the likelihood of fraud, which is rising rapidly in the online world and undermining confidence. Furthermore, paper documents seem to have no place in a responsive, digital world, and blockchain is the answer, Williamson suggests. “We are drowning in a whole bunch of paperwork each time we try to prove identity – passports, utility bills and so on. Then we have to manually go over it and hopefully we will be able to tell if these documents are good or fraudulent. It’s a very manual, error-prone process and we are trying to provide solutions, which make identity much more transactional and contextual,” he says.

The globalised economy has created long, complex and international supply chains. Increasingly, though, consumers want to understand more about how their goods are created. Concerns over safety, as well as ethical and environmental considerations, fuel demands for transparency.

Jessi Baker, founder and CEO of Provenance, is using blockchain technology to track raw materials as they move through the supply chain. The company has just completed a six month trial tracking tuna fish in Indonesia. Here, fishermen text message details of their catches to the Provenance blockchain and a digital token is attached to the fish as it passes through the supply chain. Baker says the trial was a success and has “proved the viability for public blockchains”.

“The whole reason for doing this is to differentiate fish that are caught in a sustainable way to those caught illegally. Most fishermen have got a mobile phone and, as much as possible, we’ve tried to make our system work using existing infrastructure.”

Provenance is now working with The Co-operative to ensure that its products in its supermarkets are derived from ethical sources. “We are currently working with the Co-op on several consumer food products. With their ambitions for radical transparency, we hope for this to hit stores soon.” Baker says this could be the start of a new dawn of transparency in retail.

Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.