Many industries must comply with regulations or standards for how they are operated, and/or the quality and safety of their products. These industries are usually those affecting public safety, such as aviation, rail, nuclear, medical products and devices, and oil and gas.

But other customer-facing industries are not immune to government and regulatory standards that can create bureaucracy, large expense and barriers to entry. The costs of compliance activities are generally quite high. As an example, the United States Federal Government alone has over 41 different regulations that bring in $1 Billion USD each every year in payments (2016).

Regulation and compliance standards are an important bedrock of a functioning economy, but it comes with many difficulties for businesses. Blockchain technology can serve to automate, reduce, or otherwise eliminate auditing and oversight activities as well as significantly increase trust in these industries by providing immutable records and traceability.

Taking the example of aviation: pilot time logs, training records, maintenance logs, and inspection records must be maintained. Developers of hardware and software for aviation must comply with certification standards such as DO-178C and DO-254 which are extremely burdensome and, at times, unclear. Any organization which is ISO 9000 registered operates a large quality management system involving extensive documentation and audits to prove compliance. In these examples, the standards or regulations apply to the business processes, and the time sequence of activities is crucial and is recorded in the documentation as part of “proof of compliance”.

However, no organization is perfect, and there will always be a temptation to change previously created documentation, or create backdated documentation (i.e. falsify documents) to cover up process slips prior to an audit.With blockchain technology, when a document is created, a cryptographic hash of the document can be created and stored along with the timestamp in a public blockchain. This ensures that:

1) any attempt to tamper with the document is immediately obvious when the document’s hash is re-calculated and compared to the hash on the blockchain, and

2) the time sequence of documents is frozen, capturing the sequence of process steps and

3) it is impossible to delete a document or create a backdated document to falsify data. (The term “document” is used loosely here, and could be any chunk of data. The blockchain based time stamping could even be done for each approval signature step on a document. Multi-signature approvals are common in such applications.)

By using a public blockchain in which no single entity controls the blockchain, including any of the organizations involved with the aircraft or aircraft personnel, guarantees that the data on the blockchain cannot be tampered with.

This is a game changer in the realm of evidence capture for business processes, providing an enormous boost to the level of trust in documentation evidence. This should in turn force organizations to comply with regulations and standards improving process and product quality, and safety. Taking this further, by storing key workflow status and role information on the blockchain to make the system aware of business process, smart contract capabilities can be used to automate and enforce workflow rules.

These uses are applicable to many other industries where compliance is essential. In the energy production industry (oil, gas, solar, wind, hydro), data sensors implemented on the production materials, such as pipeline leak sensors, can feed data into a blockchain for regulators to see in real time. This process could not only save time and money, but also indirectly affect the contentious political realm around energy production.

Furthermore, movement of industries into blockchain based reporting will allow regulators and governments to conduct data analysis more frequently, quickly and accurately.