In this post, we delve into the often misunderstood, yet undeniably revolutionary world of blockchain and the top blockchain companies in the UK. Blockchain was initially created to record the transactions of cryptocurrency Bitcoin. But such is the efficiency and security of the Bitcoin blockchain, that blockchain technology is now being incorporated in many different sectors, with a plethora of blockchain-based businesses emerging.
This post presents an overview of blockchain, outlines how the Bitcoin blockchain operates, and outlines the industries which blockchain technology looks set to disrupt in the future. Plus, we profile 13 of the most exciting blockchain startups to watch in 2020 and beyond.
What is blockchain?
Blockchain was introduced anonymously under the alias ‘Satoshi Nakamoto’ in 2009. Essentially, blockchain is a distributed, online ledger that records a history of digital transactions, without the need for a regulating authority. Its name aptly describes its function:
A ‘block’ is a file which contains a group of transactions. Each block contains three main pieces of information. Firstly, it includes data about the transactions themselves, like the value of the transaction, the date it took place, and the transaction participants. The number of transactions within a block varies, with one block on Bitcoin, for example, able to store up to 1mb of data, which can equate to several thousand transactions. Secondly, a block contains a unique code consisting of a series of letters and numbers – called a hash code – which is used to identify the block. Thirdly, a block contains the hash code of the immediately previous block.
The ‘chain’ element refers to the fact that each block is strung together in a chronological and linear arrangement. Perhaps the chain’s most important feature is that once a block has been added to the chain, it cannot be removed or modified. This ensures greater security, as the permanence of the block precludes hackers from removing or changing it. Any attempted change to the block will result in a new hash code being created, thus rendering a block unchangeable once added to the chain.
Features of blockchain
Blockchain’s distributed ledger technology enables thousands of computer systems all around the world to access and validate transactions. This sophisticated layer of verification provides a comprehensive and secure system of recording digital transactions.
Transactions recorded on blockchain only occur between parties to the transaction, without an intermediary – such as a bank – being needed to facilitate the transaction. This decentralised feature means no transaction costs are required, as no fee-charging intermediaries are needed to operate the process.
Once a block is added to the chain, it is immutable, meaning it cannot be removed or modified in any way. This shapes blockchain as being immune to corruption, with hackers unable to alter any transactions stored within a block, once it is included in the chain.
The Bitcoin Blockchain
Blockchain was initially created to serve as a public ledger for cryptocurrency Bitcoin. The Bitcoin blockchain remains one of the most well-known and popular blockchains today.
How does the Bitcoin blockchain operate?
Bitcoin uses blockchain as a platform to securely record transfers of bitcoins from seller to buyer. The process begins with a purchase request of bitcoins. This transaction is represented within a block, which may also contain other similar transactions. Then, the block is broadcast to an entire network of computer systems, called ‘nodes.’ Systems within the network must then validate the transactions. Upon validation, the block is permanently added to the chain, and cannot be removed or modified. The new updated version of the blockchain will now be used.
What makes the Bitcoin blockchain secure?
The Proof-of-Work system is one way in which the Bitcoin blockchain boasts an ultra-secure system. Proof-of-Work requires ‘miner’ nodes to race to solve a complex computational problem, known as a hash function. This problem requires extremely large processing power to complete and thus requires expensive hardware systems. Therefore, it becomes extremely expensive for malicious miners to attack the network, which acts as a deterrent and barrier. The race amongst miners to solve the problem also promotes speed and efficiency in processing the transaction. The first miner to solve the problem is rewarded with newly minted bitcoins, meaning they have incentive to process the transaction as quickly as possible.
Blockchain’s security is also enhanced as blocks cannot be removed from the chain. Every block contains the hash code of the previous block. When a transaction is modified or altered, the hash code of the block is also changed. This new hash code will conflict with the hash of the following block, which includes the original, untampered hash. So, for a hacker to modify one transaction, they would subsequently need to modify every following block in the chain to ensure the hash codes remain consistent—a possibly never-ending task which makes blocks practically ‘immutable.’
Top 13 Blockchain companies in the UK
Founded in 2017, Genomes.io develops blockchain technology that aims to protect the storage of DNA data. Genomes.io uses the Ethereum blockchain to provide its users with more control over their genome sequence data. Users can then share their genome segments in a secure and anonymous manner. Geonomes.io has secured £253k in fundraisings through two funding rounds both backed by investors Crowdcube and is currently in the seed stage.
Coadjute was founded in 2018 and develops blockchain-based software that aims to increase the transparency and speed of property transactions. Coadjute’s ‘Smart Property’ department is using a blockchain network to host data such as building records and utility services. This will enable relevant property stakeholders to access and collaborate on a single, trusted source of information. Coadjute raised £750k in September 2019 following a successful global test of its blockchain-based network in speeding up property transactions.
OpenBrix was founded in 2018 and uses blockchain-based software to provide a decentralised and transparent property management platform. This blockchain platform aims to provide a collaborative space which property owners, home buyers, tenants and landlords can transact and communicate. In June 2020, the venture stage company secured a £178k equity fundraising taking its total fundraisings to £409k.
Provenance is a blockchain development company enabling e-commerce and other businesses to track items through their supply chains, so that customers can verify the origins and histories of the products that they buy. Through its smartphone app development, Provenance has created a solution that allows shoppers to reward socially and environmentally responsible businesses. To date, it has raised £1.76m and received £703k through several grants. In June it won the ‘Blockchains for Social Good’ €1m prize from the European Commission.
11:FS offers research, advice and consultancy services to businesses in the financial technology and banking sectors, and produces multiple podcasts, specialising in FinTech, cryptocurrencies and blockchain technologies. Founded in 2016, the 11:FS is currently in the growth stage and has gone on to raise £3m in funding with Norway based investors DNB. In March 2020, the company was named Consultancy of the Year in the British Bank Awards.
Founded in 2017, and currently in the Venture stage, AiX develops an artificial intelligence-based trading platform broker for both regular trading and cryptocurrencies, using chatbots to feed back analysis to users. It’s mission is to use the power of blockchain technology to give traders a greater level of insight and control. To date it has received £4.35m through two funding rounds and was awarded in April 2020 a £289k grant from Innovate UK.
Fetch.AI develops blockchain technology that provides a smart ledger service, aiming to use machine learning to determine legitimate transactions. It offers an innovative platform with a unique smart contract capability for connecting IoT devices and algorithms to enable collective learning. Plus, the open source tools allow users to create diverse ecosystem infrastructures and easily deploy new commercial models. In the same year that it was founded (2018) Fetch.AI secured a £11.2m equity fundraising led by Outlier Ventures. Since then, it has been expanding its operations, headcount and has entered the venture stage of growth.
Coinfirm is developing a risk and compliance platform for blockchain-based transactions, that aims to combat money-laundering and the financing of terrorism as well as helping clients meet other regulatory requirements regarding crypto-currencies. Its mission is to make the world of digital currencies more transparent, by allowing users to register and authenticate any type of data. With better security, Coinfirm’s blockchain infrastructure is designed to help firms protect against multi billion pound losses. There is a fair amount of financial fuel behind the seed-stage company, with it raising £4.43m in funding through two rounds.
Founded in 2016, Refineryy is a spin out from University College London and develops software which aims to simplify financial asset management, focusing on commercial real estate. They were also in the first ever cohort of UCL’s PhD Accelerator, ConceptionX and were winners at the Global AI awards in 2019. They are still a relatively small business in the seed stage but have secured £150k in April 2020 backed by the SFC Regional Fund.
Cryptograph develops a range of unique collectable digital assets that support good causes. These Crypographs are one-of-a-kind digital creations made by artists and cannot be forged due to blockchain technology. For users to trade and hold Crytopgraphs, they need a digital wallet, which acts like a bank account on the blockchain. The seed stage company was founded in 2018 and has gone on to secure £880k in fundraisings.
Adhara develops liquidity management and payment processing software, designed for companies in the financial sector. The company offers real time solutions for multi-currency liquidity management, FX and international payments based on tokenized money over a smart contract-enabled, decentralized ledger. It was founded in 2018 and that same year Ashara secured £11.4m of funding backed by New York based investors Consensys and is now in the Venture stage.
Blockchain develops an online bitcoin wallet and also provides a range of search tools, statistics and charts for the bitcoin market. The best funded of all blockchain technology companies in the UK with a staggering £50.5m of fundraisings secured through only two rounds since being founded in 2014. Since then, the company has gone from strength to strength, in 2018 it was featured in LinkedIn Top Startups UK and in 2019 it attended the Future Fifty accelerator. It is now one of the most trusted and fastest growing crypto companies, helping millions of people with cryptocurrency exchange.
Founded 2016, Zamna develops blockchain services and technology software that uses machine learning, big data analysis, and biometrics to verify digital identity validation. It mainly provides services for governments and the aviation industry so that airlines are able to verify a passengers identity prior to them arriving at the airport. Zamna uses blockchain applications to securely share passenger data, whilst improving the customer experience. Currently in the seed stage, Zamna has gone on to secure £8.41m in funding through 5 rounds. Investors include LocalGlobe, Oxford Capital, Seedcamp, London co-investment fund and several other funds.
Industries disrupted by Blockchain companies
Whilst the Bitcoin blockchain is the most commonly used blockchain today, blockchain technology can be adapted to store any type of digital information, with a variety of use cases. It is thus often referred to as a ‘disruptive’ technology due to its potential impact in transforming industries as we know them today. Several emerging companies across a broad range of sectors, from fintech and artificial intelligence, to real estate and the Internet of Things (IoT), have implemented various blockchain solutions in order to provide a secure system of recording digital transactions.
We explore how blockchain can disrupt the banking, legal and healthcare industries and the emerging blockchain-incorporating companies within these sectors who look poised to grow.
Banking and financial services
Blockchain banking offers a cheaper, quicker and more secure payment alternative to traditional financial institutions . Blockchain banking would involve banks issuing their own digital currencies, thus replicating a Bitcoin style blockchain, where cryptocurrency is used as a form of payment.
As blockchain is decentralised, meaning transactions only occur between the buyer and seller without involvement from a financial intermediary, no middleman service fees will be charged. This is particularly useful for ‘cross-border’ transactions that involve payments between overseas parties. If cross-border payment processing is facilitated through blockchain, parties will save on financial service fees and exchange-rates.
Blockchain banking also offers a more efficient payment system, with payments being processed as soon as they are verified. Bitcoin transactions, for instance, take ten minutes on average to be verified by miners, at which time payment is immediately transferred, regardless of the parties’ location. Additionally, due to blockchain’s immutable nature and its complex cryptographic secured network, transactions are extremely secure. This secure payment channel offers unrivalled protection from hackers and thus enables payments to be highly safeguarded.
A large part of the legal services industry’s operations involve the processing and storing of sensitive and important information. Blockchain ledgers can thus function as a perfect tool for this sector.
The legal sector can tap into blockchain’s advantage of securely storing contracts by incorporating ‘smart contracts.’ A smart contract is a digital code mapped out on a blockchain, that automatically monitors and executes legal agreements. Smart contracts can be used by companies in the legal sector where the triggering event of a contract can be measured digitally – such as when payment is made or public registries are updated. This eliminates contractual monitoring by lawyers and enables an automated, secure system of contract operation. The Ethereum blockchain is a popular blockchain that facilitates smart contracts and is used to execute them today. Ethereum even provides options for payment to occur through blockchain, using its own cryptocurrency: ‘Ether.’
Blockchain systems can also simplify the conveyancing process, where property is transferred from seller to buyer. The conveyancing process involves many parties – such as buyers, sellers, both their legal representatives and both their banks – and many documents – such as transfer of land contracts and certificates of title. Dealing with this number of documents and parties often involve lengthy and complex business processes . However, this process can be transparent if details about the property and the relevant documents are stored within a block, and this block can be accessed by all parties. This would reduce correspondence between parties and requests for information, offering significant time savings, whilst also providing a secure space for confidential information to be stored.
The healthcare industry is dense with personal data records, medical insurance claims and other pieces of important patient health information, which are all stored in different systems. Blockchain infrastructure offers an easily shareable and secure system of patient management. This could operate through all the patient’s data being stored within a block, which can then be shared with different medical institutions and practitioners in real-time. This would also ensure confidentiality as the block would only be able to be shared by the patient after their consent has been given.
Additionally, use of blockchain in healthcare would result in a more efficient and streamlined process. Patients would not need to constantly provide their same medical information every time they visit a new medical institution or practitioner, with their data readily accessible on request and approval. This would also prevent the problem of data being lost and needing to be recollected, such as lost blood test samples which require repeated tests.
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*This article was first published on 24th October 2019, and updated on 13th August 2020