Blockchain is widely recognised to be one of the most exciting and potentially transformative technologies around at the moment, but a lot of people outside the technology and finance spheres do not really understand what it is, why there is so much hype or how it can be used. Here we begin to speculate on how it could be used in the world of professional regulation.
In very basic terms, blockchain technology functions by holding an identical electronic register of information in a number of places at the same time. Once new entries, or "blocks", are verified through complex computer calculations, these are added to the "chain" of previous entries on all of the registers in the network. Where information is held on a distributed register like this it is much harder to defraud as if one register is changed this will show up as an anomaly against all of the other registers and the system is built on strong encryption technology.
At present, blockchain is best known as being the technology used by crypto-currencies such as bitcoin, a highly secure digital currency that can be transferred without the need for banks. However, blockchain can be used for a range of other purposes, and as people become more familiar with the technology more uses are being explored. People are already looking to exploit its potential to validate real estate transactions and to ensure the provenance of food items such as coffee and chocolate from farm to processing factory.
Whilst it is very early days, we can also see the potential for it to be used in the world of non-financial regulation. For example, one of the most common problems for regulators is ensuring the authenticity of professional qualifications held by applicants for registrations, especially across international borders (where one regulator may be unable to identify authentic degree certificates, let alone read them). At the moment the European Commission operates a database for the recognition of professional qualifications between European regulators, but a blockchain system could be used by more countries, including those outside the EU, by operating a system that does not require centralised management (i.e. the role currently fulfilled by the Commission) and does not require trust in any one database or entity operating it. By using blockchain between universities and regulators, it would be possible to verify 'ownership' of a qualification, preventing fraud and allowing regulators to easily confirm qualifications without the costly and potentially hazardous posting of original documents.
At the 'front end' of regulation, blockchain technology could also be used to assure the public of the identity of professionals. Many regulators have search functions on their website allowing them to check that a name is a registered professional, but blockchain technology could allow for a secure 'professional identity' to be set up, allowing an individual to ascertain the professional's registration, qualifications and current ability to practise. This could further public confidence in the profession, furthering one of the core roles of professional regulation.
While these are just two of the potential uses that could apply to the regulatory sphere specifically, it is easy to see how blockchain technology may have further uses by regulators more broadly. For example, ownership of documents underpinned by blockchain could have real implications for data heavy sectors such as law, accountancy or healthcare. While blockchain is currently seen as the remit of start-ups, tech companies and the banks, regulators should pay close attention to this emerging technology to see how it could transform both its sector and its own operations.