Using The Blockchain To Fight Crime And Save Lives

Blockchain technology has been described as email for money, but it has the potential to be so much more.

According to Blythe Masters, the blockchain represents a watershed moment in technological history. “You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s,” she said in an interview with Bloomberg.

Blockchain technology is a hyper-secure record of digital events that is distributed among many different computers. The blockchain can only be updated by consensus of a majority of the participants in the system, and once information has been entered, it can never be erased. Blockchain technology is best known for its connection to the cryptocurrency, Bitcoin. It’s what enables transactions to happen without middlemen or a central body, while protecting against duplication and fraud.

To date, the focus has been on blockchain applications for the financial world. However, this is just the tip of the iceberg. There are several other industries that are already putting blockchain technology to good use. In this article we will look at the ways that startups are using the blockchain to reduce crime and counterfeiting, and potentially save lives.

Art Authentication

A Swiss art-research lab recently caused a stir by claiming that more than 70 percent of the works it checks out are fakes, forgeries or misattributions. While exact figures are unknown for the amount made in forged art each year, high-profile cases over the last decade have revealed that forgers can make millions. Some forgeries are so convincing that they were displayed in the most prestigious art galleries in the world.

The emergence of new online art sales platforms, such as Artspace, Paddle8 and Amazon Art, are making it increasingly difficult to keep track of authentic art pieces. This facilitates the spread of counterfeit art. Buying online is especially popular with the younger generation, with almost 25 percent of 20–30 year olds surveyed saying they first bought art online without seeing the physical piece. The Hiscox Online Art Trade Report 2014 estimated the value of the online art market will rise to $3.76 billion by 2018.

The only true way to prove a piece is the real deal used to be through a certificate of authenticity — which also could be forged.

When purchased online, art does not follow usual channels, and tends to pass over the middlemen, such as auction houses or galleries, who play a part in ensuring authenticity and recording the ownership and location of rare art. In the past, authenticating a work of art involved a number of important stages, from defining the origins of the piece, working out whether it has been exhibited in the past and previously valued and, finally, having the piece professionally authenticated by an expert. Because of the level of skill of professional forgers, the only true way to prove a piece is the real deal used to be through a certificate of authenticity — which also could be forged.

L.A.-based startup Verisart believes it has come up with the answer, by using the blockchain to “foolproof” the system. Using blockchain technology, it has created a non-centralized database of art that verifies each work by assigning it unique authenticity codes. Owners and buyers alike could then use these individual blockchain codes to validate the authenticity of the pieces, and monitor their movement worldwide.

“The art world is not broken. It just relies too much on middlemen to ensure trust and liquidity…As more art sales move online, there will be increasing demand for certificates of authenticity as well as the need to perform real-time verification of provenance,” said Verisart Founder Robert Norton in an interview with TechCrunch. “The blockchain allows potential buyers to verify the chain of title in a work without relying on any single node of verification.”

The startup has added Bitcoin hero Peter Todd as a board advisor, and hopes to offer a secure safety net for artists, dealers and collectors alike with a digitalized system that could verify pieces in real time. The new system would not only ensure authenticity, but also provide a level of anonymity for the buyer and seller, which is an important factor in the art world, where anonymous buyers are not uncommon.

High-Value Goods

According to the U.S. Custom and Border Protection, millions of shipments of counterfeit high-value goods, such as electronic items and fake designer clothes and accessories, enter the country each year. More than $1.2 billion worth of goods are seized annually, but the authorities acknowledge that this is a fraction of the total goods entering the country. The counterfeit market has been named the “crime of the century.” In 2015, the International Chamber of Commerce (ICC) expects the value of counterfeit goods to exceed U.S.$1.7 trillion globally, accounting for more than 2 percent of the world’s total current economic output.

In response, London-based startup Blockverify aims to use the blockchain to authenticate a wide range of high-value goods (ranging from mobile phones to diamonds) to simplify sales tracking and product verification.

Using blockchain technology, Blockverify’s system is able to authenticate counterfeit products that are already in a company’s possession, track goods to see if they have been diverted from their original destination, trace and locate stolen goods and track fraudulent transactions. Each product is labeled with a tag, so when consumers purchase a product, they are able to verify that the product is genuine and activate it. Companies are able to create a register of their own products, then monitor the supply chains with ease via the Blockverify platform. Products can even be verified using mobile devices, making it viable to verify products on a large-scale and at the point of delivery.

Counterfeit Drugs

Blockverify also uses its system to combat the international trade of counterfeit drugs. According to HavocScape, drugs are the most commonly counterfeited products, and account for more than $200 billion in losses each year.

Interpol estimates that more than 1 million people are killed each year by counterfeit drugs, stating that the manufacture and sale of counterfeit drugs is becoming one the most lucrative businesses for organized crime gangs around the world. The most common counterfeit drugs are antibiotics, HIV/AIDS and cancer medication, anti-depressants, erectile dysfunction pills, weight-loss supplements and anti-malaria medication, according to Caracol. Interpol reported that more than 200,000 people die worldwide annually from counterfeit anti-allergy drugs alone.

More than 200,000 people die worldwide annually from counterfeit anti-allergy drugs alone. Interpol

As also seen in the world of art, the growth of online pharmaceutical sales is making it harder for officials to keep track of the flow of real and counterfeit products. A number of leading sites such as Snapdeal Medidart, Buydrug and Meramedicare have installed safety features, requiring users to upload prescriptions for prescribed drugs while placing orders, and extra checks on vendors. However, the World Health Organization estimates that more than 50 percent of medications purchased from online vendors in which the doctor’s name is concealed are counterfeit.

Blockverify claims that it has the technology to put an end to this flow of deadly counterfeit products by using the blockchain to track pharmaceuticals throughout the supply chain, and to ensure consumers receive authentic products.

Big Changes Ahead In Many Industries

Oliver Bussmann, Chief Information Officer at UBS, said recently, “I know of more than 100 firms that are trying to make the blockchain more scalable, more secure, to make the one that everybody will use. There’s a race on out there.”

While the technology is still in its early stages, and will take years to be assimilated universally, the opportunities for offering fast and secure transactions, verifying goods and tracking products throughout a supply chain could potentially save trillions of dollars, and hopefully reduce the flow of dangerous counterfeit products worldwide.