Scotland has worked hard to establish a reputation for being a hub for business in the Financial Technology (or Fintech) sector.
One of the biggest innovations in Fintech, and perhaps one of the most disruptive innovations in any sector in recent years, is the Blockchain technology which powers cryptocurrency.
Bitcoin is most famous cryptocurrency and operates using a Blockchain which is a form of encryption technology that aims to allow for something akin to a crowd-sourced security platform.
Each transaction between two users adds a new block of data to the chain, meaning that any suspicious activity (such as attempted theft or an invalid transaction) triggers a response that alerts every user.
As banking giants start to embrace the technology in the transferring of data, money, and other secure transactions, will become commonplace in the public and private sector.
Callum Sinclair, Head of Technology and Commercial at Burness Paull LLP, believes that Scotland is an attractive place for investors in Blockchain innovation because it has already been established as a Fintech hub.
“Scotland has good academic institutions producing high quality graduates, as well as strong government support for the sector,” Mr Sinclair told the Scotsman.
He added: “The lower cost of living and doing business than London is also a factor, and the country’s historical associations with innovation especially in the finance and banking sector.”
We look at three companies in Scotland that are driving forward this revolution.
Wallet.Services is moving Blockchain technology beyond cryptocurrency.
Based out of Scotland’s Fintech incubator Codebase, Wallet.Services have ambitions they say are inspired by the original vision for the world wide web set out by its founder Tim Berners-Lee.
Their mission statement says: “Blockchain’s transformative technology is the missing link needed to bring integrity and control to your digital life.”
They aim to harness the benefits of Blockchain for use across society and have worked with clients including Strathclyde University.
Their ‘Siccar’ platform utilises Blockchain for the storage of data, using the new form of cryptography to ensure data is secure.
The amount raised in an initial seed funding round wasn’t disclosed, but was described as highly successful.
It might have been founded in Switzerland, but Avaloq’s Scottish base now employs over 500 people in Edinburgh.
Avaloq is not only using its own talent pool to improve their use of Blockchain, but are making canny investments in the sector, recently acquiring a significant stake in blockchain and cryptocurrency specialist Metaco.
As a leader already in digital banking, Avaloq is uniquely placed to work with its existent client base to tailor Blockchain solutions to some of that industry’s problems.
The use of data in public services has long been a difficult question.
Blockchain could however be used to make it easier to protect sensitive patient data.
On the potential benefits, Mr Sinclair was enthusiastic, telling the Scotsman: “Any scenario where a tamper-evident record is required which notes a series of facts at a given time is a potentially good use for blockchain.
“In the public sector things like identification services would be an obvious one, creating a shared and secure system of verifying ID across local services so you don’t have to verify who you are with the GP or the library or the Job Centre for example.”
That is an area where Spiritus could become a market leader thanks to a pilot scheme which involves NHS National Services Scotland.
Announced last year, the Data Lab backed project will track connected medical devices throughout their life, helping to manage chronic conditions.
CEO Susan Ramonat said: “ We believe that both organisations will bring the best to bear through this exciting project. We’re also inspired to Scotland’s commitment to find new ways for delivering health and social care with patient safety and cyber-security at the forefront.”