Legal and financial firms handle documents that have significant consequences. When a document is challenged, knowing which version is genuine can become particularly important. A business may need to establish when information was created, whether it’s been changed, and what happened during a transaction.
This is one area where blockchain for cyber security could have a role. By creating a cryptographically linked record of information, blockchain can make changes to recorded data easier to identify and provide a verifiable history of transactions.
The technology isn’t a replacement for established document management or security controls. Instead, blockchain can provide another layer of confidence around document integrity, particularly where several parties need to rely on the same information.
What Is Blockchain Document Security?
Blockchain is a type of distributed ledger that records information across a network. Records are linked using cryptographic techniques, making it difficult to alter previous entries without the change being detectable.
For document management, the document itself doesn’t necessarily need to be stored directly on the blockchain. A system can instead create a unique digital fingerprint (known as a hash) for a document and record that information alongside relevant transaction data.
This can provide useful evidence when establishing whether a document or piece of data is the same as the version originally recorded. That is one of the potential benefits of blockchain document security for organisations dealing with important records.
How Blockchain Data Integrity Works
Traditional document management systems already provide valuable security features, including access permissions, version control, backups and audit logs. These can all help organisations protect their information.
Blockchain data integrity approaches the problem from a different direction. Rather than simply relying on a central database, blockchain creates a distributed and cryptographically linked record.
Depending on how the system is designed, this can record information such as the existence of a document, its hash, a timestamp and events associated with a transaction. This can make it considerably harder to make an undetected change to the historical record.
What HM Land Registry Shows About Blockchain
HM Land Registry has explored blockchain technology through its Digital Street research and development programme. In 2018, it investigated how blockchain, distributed ledgers and smart contracts could support land registration and property transactions.
HM Land Registry later reported that it had successfully simulated a digital property transfer using blockchain, with the transaction running alongside the conventional process. The prototype provided simultaneous visibility of transactional data to the parties involved. This was an important demonstration of what blockchain could potentially do in a regulated environment.
Why Blockchain Adoption Remains Limited
Blockchain offers interesting possibilities, but introducing it into legal or financial processes isn’t as simple as putting existing documents onto a blockchain. Regulated businesses need to consider how a new system will interact with existing legislation, professional standards, data protection requirements and internal governance.
There are also practical questions around:
- Who is allowed to add information to the blockchain?
- Who can access the information?
- What information should be stored on-chain?
- How can errors be corrected?
- How will the system work with existing software?
- What happens if different organisations use incompatible systems?
These questions need to be resolved before blockchain can become a practical part of mainstream legal or financial workflows.
Blockchain Must Work With UK Legal Requirements
A blockchain system used for UK property or legal records cannot operate separately from the existing legal framework. The Land Registration Act 2002 remains part of the statutory framework governing land registration in England and Wales.
Data protection is another important consideration. The ICO states that the UK GDPR's principles include data minimisation, accuracy, storage limitation, integrity and confidentiality and accountability.
Professional processes are also evolving alongside digital technology. The Law Society's current guidance on signing and exchanging property contracts recognises electronic documents and electronic signatures where they are legally valid for the intended purpose.
What Happens When A Document Is Disputed?
One of the most useful applications of blockchain for cyber security could be helping organisations deal with questions about document authenticity. Imagine that two parties are involved in a property or financial transaction and one later claims that an important document was changed.
With a conventional system, an investigation might involve checking document versions, emails, access records, backups and other sources of information. A blockchain record could provide another source of evidence.
If a document's cryptographic hash and relevant transaction information were recorded at the appropriate point, the organisation could compare the document in question with the original record. A matching hash could support the conclusion that the document has not changed since it was recorded. A different hash could indicate that the contents are no longer identical.
This doesn't automatically prove who changed a document or resolve a legal dispute. Professional judgment and other evidence would still be required. However, blockchain data integrity can provide a valuable additional layer of verification.
What Blockchain Document Security Could Mean For Firms
For legal and financial organisations, the potential benefits are mainly around trust, verification and accountability. A suitable blockchain implementation could help provide:
- A verifiable record
- Greater confidence in document integrity
- A clearer audit trail
- Greater transparency between parties
- Additional protection against undetected changes
Gasp Software has developed blockchain-based tools that give legal and financial firms a verifiable audit trail for important documents. Contact us today to find out more.
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