Yesterday I wrote about using the power of blockchain technology to incentivise people to take part in medical research via the Folding@Home project. I hope that helped to give a sense of how the invention of the blockchain has created the potential for far more than simply Bitcoin as a new form of “geek money”.
So today I thought I’d point out another new project that uses the power of the same foundational technology to do something completely different. Factom provides us with a fascinating opportunity to create truly secure, private and global record-keeping using Bitcoin’s blockchain. Check out the video below for further details:
As the video points out, we currently live in a world in which records are kept in centralised institutions that we are forced to trust and rely upon to be both honest and 100% secure. History has of course shown us that this can be a foolish thing to do.
Take the recent robo-signing controversy in the States for example, where five big US banks paid a settlement of $9.3 billion to see off allegations that they were guilty of mass producing a collection of false and forged signed documents. The trusted financial institutions produced documents in mysterious circumstances. Claiming they’d been signed in the past, they then relied on these documents to prove that they were entitled to repossess homes of those who they claimed had defaulted on their obligations.
Without a trusted record that proves when – and if – a document was signed, it had become increasingly difficult to pick up on such fraudulent behaviour. There was no definitive record of these documents that could be proved to have existed in a certain form on a certain date. This evidential gap had very real life consequences for the thousands of families who were turfed out on the street as a result.
Factom has developed a way of taking a vast database of records, encrypting them so that they remain private and then embedding these within the blockchain. As a result, anybody will be able to prove that a specific document existed in a specific format (i.e. with a signature, in the robo-signing case) at a specific point of time by reference to its permanent record within the blockchain.
For many projects that are looking to expand the use of the blockchain to record additional information, the current limit of 1Mb per block every ten minutes is seen as a challenge. Yet Factom has invented a way to ensure that vast databases can be recorded and represented by only a tiny amount of data being embedded within the blockchain.
You hear plenty of chat from the traditional markets about how Bitcoin needs to be regulated. Yet a project such as Factom provides the regulators with the tools that they need to enforce the very same laws that they’re creating. For example, this technology should make it far easier to prove that institutions have complied with the necessary regulatory requirements as it enables a simple, fast and unforgeable route for a third party to verify (perhaps automatically) the existence (or absence) of key documents.
There are huge possibilities with this once you start to consider the recording of property, such as land or car ownership. For example, just think about recording intellectual property rights – musicians embedding songs within the blockchain to prove their creation date for example – which can then be used to defeat any later third party claims. With Factom, any organisation will be able to rely on cryptographic proof that documents existed as and when they claimed, without any possibility of forgery.
It’s early days yet for the project – they’re planning a crowdsale in February 2014 I believe and only published their White Paper fairly recently. But it’s yet another one to watch.