Bitcoin’s underlying technology, blockchain, has been applied to numerous industries and markets over the last several years in an effort to capture the type of value that the technology confers to the legacy cryptocurrency. Many of these initiatives are still in their early stages, and will take some time to fully play out before their outcomes are revealed as legitimate or not, while others offer some immediate improvements over traditional systems.
For example, contract lifecycle management functions as a staple of modern businesses ranging from industries in healthcare to big tech — and blockchains can play a significant role in the market’s future development.
The problems with document management primarily center on endemic fraud and manipulation of material that should otherwise remain unaltered or at least contain some form of asterisk noting its alteration. With potentially millions of dollars on the line for larger enterprises or pending medical treatments for patients dependent on the accuracy of document lifecycle management, the stakes are clearly high.
Blockchains, specifically public blockchains, provide a unique medium for indexing and storing such information as they are predicated on the notion of censorship-resistance. That’s the area projects like V-ID are targeting, as a viable means to validate the authenticity of information rapidly in a range of applications.
How Blockchain-Based Validation Works
One of the technologies that have risen in prominence parallel to blockchains is IPFS, a P2P hypermedia protocol that is naturally congruent with blockchains. The compatibility draws from the use of hash-based data fingerprinting with IPFS, that can be trivially stored on a blockchain, such as using bitcoin’s OP_RETURN function or indexing data in smart contracts on ethereum.
IPFS helps to offload much of the data from the blockchain itself, while still furnishing the timestamp and security of the data (i.e., content) that are an inherent advantage of public blockchains. Using hash-based identifiers, any alterations to data files are immediately noticeable, as the corresponding hash to the data set is completely different than the original.
V-ID applies a similar concept to their document management and validation services, focusing on embedding the fingerprints into 5 different blockchains:
- IBM’s HyperLedger
- LTO Network
It is worth reiterating that for maximum security, document management that is validated and secured by blockchains is optimally performed with a public blockchain. Otherwise, criticisms of the lack of necessity of a blockchain in such instances, and rather the simple requirement of a database, are well-founded.
Ideally, bitcoin or ethereum would fit the best mold for document management concerning public blockchains, but the notion of arbitrary data storage in bitcoin’s blockchain is already polarizing.
One of the intriguing advantages of V-ID’s implementation of blockchain-based validation of documents is its harmony with existing workflows — specifically CRMs. The user-experience of blockchains is noticeably lacking, and providing the type of integrated product that is congruent with popular CRMs helps to overcome one of the cardinal limitations of blockchains as they exist today.
V-ID even deploys an API that can hook into CRMs and can be self-validated by registered entities (i.e., employees) using KYC processing.
With data security and privacy at a premium in today’s digital era, the ability to efficiently validate documents containing critical information has many positive downstream consequences.
Applications and Use Cases
The concept of blockchain-based validation has been around for a while, most notably its application in the field of supply chain tracking and logistics, where the conditions and location of products can be uploaded to a blockchain using technology like RFID tags.
Translated to the management of documents, internal data, and high-level contracts, blockchain validation can have a compelling impact on risk management and the bottom line of firms in multiple industries.
For example, V-ID cites the use of its product in preventing fraud in certificates of information, where embedded fingerprints of the data of a document (e.g., a diploma) can be authenticated quickly. Similarly, invoices can be cross-checked against their initial financials when they are sent out and received by customers, helping to avoid any fraudulent transactions or missed payments.
Finally, sharing sensitive information, like medical documents, is highly restricted via HIPAA laws and other risk-management concerns regarding patients. Many times, such sharing is only on a read-only basis, but the handling of documents online can become a convoluted process when, for instance, a Google Doc is shared between multiple parties and trust is required that no specific information is altered. Even if it is altered, the complexity of such patient data can make mistakes commonplace and not reported accurately.
In such instances, V-ID can provide a critical safeguard against inaccurate or missed reporting of changes to the data.
At a high level, document validation with projects like V-ID can function as viable replacements to conventional notary systems, which are often cumbersome and inconvenient. Overhead costs with authenticating data can skyrocket with large data sets, particularly medical data, and as we progress towards a more mobile-driven, digital age, blockchain verification solutions seem the inevitable future in document lifecycle management.
Some projects are even incorporating artificial intelligence (AI) into contract and document management. For example, LawGeex, an AI-based contract analysis product, outperformed lawyers in identifying risks of non-disclosure agreements (NDAs) across a range of metrics, and won handily in many categories.
Projecting integration with blockchains to validate the authenticity of the documents before AI analysis materializes, and you can see the automated potential and convergence of two innovative technologies.
V-ID’s initiative is representative of some of the early steps towards more practical, immediate solutions that leverage the advantages of blockchains. The added benefit is that the simple and intuitive user interface that is compatible with CRMs can also help onboard more users who may be hesitant to use other blockchains-based solutions based on their complexity and friction in user-experience.
Criticisms of blockchain’s application outside of preserving the fixed monetary policy and consensus rules of bitcoin have legitimate evidence and momentum behind them. However, molding applications out of some of the collateral advantages of blockchains (i.e., embedding timestamped data fingerprints in them) is not necessarily a wholesale divergence from their original, intended use case — trust anchors.
V-ID is not a revolutionary take on the application of blockchain technology, but its immediate practical advantages to enterprises looking for enhanced document management lifecycle should lend credence to the notion that blockchains have extended use cases outside of preserving specific consensus rules in decentralized networks.