Bitcoins may, or may not, one day be the coin of the realm, but the technology that makes the bitcoin system work is beginning to be used in a wide variety of industries. Many of the start-ups that find unique uses for the technology are located in Israel, according to Meni Rosenfeld, chairman of the Israel Bitcoin Association.
“There’s no question that blockchain technology, which is one of the basic features of the bitcoin system, will have a major impact on the world economy,” Rosenfeld told The Times of Israel. “It’s at least as important as the concept of the bitcoin as an independent means of exchange.”
Rosenfeld spoke on the sidelines of “Bitcoin and Beyond,” the biggest annual event on bitcoin and associated technology in Israel. “Actually, it was somewhat bigger last year,” Rosenfeld said of this year’s event, which attracted around 400 people. It’s not that people were scared off by some of the big bitcoin “scandals,” such as the alleged theft and eventual bankruptcy of the bitcoin exchange Mt. Gox, Rosenfeld added.
“There was a bigger hype factor regarding bitcoin over the past few years, but now that people know what it is — and what its capabilities and limitations are — that’s calmed down a bit. That’s better for the industry, because the ones who remain in the business are serious about it,” he went on.
That seriousness showed itself in some of the start-ups that are using blockchain technology in innovative ways — far from its original purpose, as the security engine of bitcoin. “In a blockchain, all payments — or, in our case, documents — have to be approved by all parties involved, and any changes made along the way are detected immediately,” said Gadi Ruschin, CEO of Israeli start-up Wave, which is applying the technology to the shipping industry.
Unlike an electronic version of a document, such as a PDF, which can be copied umpteen times, a blockchain-approved document is a single, one-of-a-kind product, because it needs the electronic “signature” of everyone involved.
Wave uses that blockchain concept to connect carriers, banks, forwarders, traders and other parties of the international trading supply chain via the bill of lading — the official document used throughout the supply chain. “Since everyone is approving it, everyone can trust it,” said Ruschin. “Thus we can send a bill of lading in this manner and satisfy all the security and data issues, and eliminate the long, drawn-out process of passing the bill around.”
Another company that uses the blockchain for a beyond-bitcoin application — or rather, numerous applications — is Colu, a company that has developed an engine based on blockchain technology that can be deployed as an API for use in many scenarios to create digital assets. Such assets could include tickets, money, car registration and ownership documents — or even music.
“We work with a company called Revelator, which provides sales and marketing intelligence for the independent music business,” said David Ring, the cofounder & vice president of R&D at Colu, which is developing a rights management API for Revelator that provides secure issuance and distribution of digital assets, including listing and registration of musical works for clients.
“When a songwriter or producer puts a digital copy of their work on their Revelator account, the firm secures it with our blockchain platform, which ensures that they are in control of their work. If anyone tries to access it without permission, their digital signature shows up on the work, so the creator knows who violated their rights,” explained Ring.
Colu is also using its platform to help actualize the ultimate bitcoin fantasy. Working with authorities in several small countries in the Caribbean and the online exchange Bitt, Colu is developing a platform for a bitcoin-style dollar that will be legal tender — as opposed to “funny money,” viewed suspiciously in other countries such as the US, where the greenback is the only instrument that can be termed money.
‘“They are doing this to serve the many people in the region who have no bank accounts, but do have smartphones and cellphones — which means they can have digital wallets. Blockchain technology ensures secure transfer and storage of funds. The digital cash will be converted into bills at ATM machines and other outlets,” Ring went on.
Clearly, bitcoin and blockchain technology have a lot of unexplored potential. And to draw that potential out into the open, said Eden Shochat, the Aleph venture capital fund is offering $50,000 to companies that can help solve issues that are preventing bitcoin tech from making an impact as a possible means of exchange. Those problems, said Shochat, a founding partner at Aleph, will be suggested by contestants — as will the solution.
“At Aleph, we invest in start-ups that bring change to industries that are still doing things the old way,” said Shochat. “We believe that bitcoin and blockchain tech can bring change to the financial industry, as well as to others. What we’re looking for is an idea that’s not just better, but different and better. If you want to really make an impact on the market, it’s not enough to develop a way to do the same thing better. You need an idea that’s really different, and that’s what we believe bitcoin and blockchain can provide.”