How Blockchain Will Revolutionise The Ways Companies Are Incorporated

Taking the world by storm

While banking, investing, and cryptocurrency took the world by storm, so now is Blockchain revolutionising the ways in which companies are incorporated. Blockchain applications within the private and public sectors are now going way beyond the financial, banking, healthcare, and legal sectors, and are positively impacting the company formation business sector.

Blockchain, a specific type of database and record-keeping technology, stores data in blocks that are chained together. When new data is loaded, it is entered into a fresh block, which is then chained onto the previous block. The data is chained together in chronological order. Storing different forms of information, Blockchains, when decentralised, are immutable with data irreversible and transactions permanently recorded and viewed by all who have access - with control collectively retained.

Corporate Registries and blockchain

With corporate registries possessing the need to share information, Blockchain is suitable for use through its distributed and decentralised nature. In this application, Blockchain acts as a cross-province audit log and improves services through easily accessible cross-provincial data which is accessed by internal staff.

Further motivation to make use of this technology, according to Diacc is that Blockchain resolves challenges for Corporate Registries, more specifically across jurisdictions. It can also replace some elements of current registry systems - primarily actions needed for recording. The providence of those actions is vital.

Recently, worldwide company registries are looking at implementing Blockchain and some have already created a decentralised company registry.

According to IBM, France’s National Council of Clerks has deployed a nationwide blockchain-based solution that brings added transparency and efficiency through improved management of legal transactions related to the life-cycle of companies. IBM further revealed that Dubai’s Unified Commercial Registry initiative also uses Blockchain. It stores the company registration information and streamlines the process of opening a business and creates flowing business operations. This ensures the issuance of trade licenses and regulatory compliance.

Another notable example of the implementation of Blockchain is reported on Africanews which states, “The Centre for Affordable Housing Finance in Africa, research consultancy 71point4 and Seso Global have partnered to develop South Africa’s first blockchain-based property register.” Within this example, all the properties are government-subsidised and have not yet been registered on the Deeds Registry.

Dubai on the forefront

Adding to the long list of company registries who have implemented this technology, the Dubai Department of Economic Development also launched its company registration blockchain. LedgerInsights reports that “The government body worked with Dubai Pulse to host its Unified Business Registry Platform (UBRP) on the firm’s blockchain system.” Revolution Comes With Advantages And Risks, So Caution Is Advised As with any innovative technology, advantages and risks do exist. For a company implementing Blockchain, advantages, risks, and legal impacts need to be assessed and proactive measures performed.

Risks

To avoid potential risks, according to Deloitte, “It is essential that the technical requirements are established upfront depending on the number of processes that will be executed on the blockchain and the amount of logic required.” According to Deloitte, it is vital to fully understand the legal implications of using Blockchain. “Intermediaries should perform valuable functions beyond transaction recording which may possibly include this party’s interest protection and fulfilling regulatory tasks.”

While airing on the advantageous side, and Blockchain positively revolutionising the ways companies are incorporated, it is recommended that caution still be applied from the start to avoid risk. Nonetheless, Blockchain technology’s potential does in fact improve transparency, trust, and efficiency of registry data.

And as risks and advantages are kept top of mind, so too is the changing nature of Blockchain as an innovative technology - and one that is currently similar to Bitcoin with regards to its model. Does The Future Of Companies Incorporated Through Blockchain Sit Within The Same Model As Bitcoin? The future of companies to be incorporated through the Blockchain, with no jurisdiction and no supervision authority, while similar in nature as Bitcoin, is by no means the same model. With advancements still taking place and Blockchain continuing to go down the every-changing path, it is not yet known how far-off the Bitcoin model Blockchain will travel. However, in its own right, when used for business formation companies, it is recommended that keeping abreast of Blockchain’s updates will render favourable outcomes for those implementing this technology within their business formation company.

Should you wish to gain further insight into Blockchain and how it can positively impact your company formation business, get in touch with our SFM team today. Visit www.sfm.com.