Blockchain - what's happening?
In more and more contexts, people talk about blockchain and its technology has become one of the most debated topics. For a long time, the potential of blockchain technology has been discussed and how this will revolutionize the business models of several industries and organizations. Most people seem to agree that blockchain technology has great potential, but how to use it in concrete terms seems to be more difficult to answer. We at Ekan Management are curious about the development and its potential use cases. In this blog we reflect on when and how the technology will break through. If it breaks through ...
What it is about
First and foremost - what is blockchain? Blockchain has mainly received its attention as the technology behind the mentioned cryptocurrencies, with Bitcoin at the forefront. The technology itself is used to transfer and store value and acts as a distributed database consisting of different blocks where digital transactions are handled, logged and visible to everyone who is part of the block chain's network. Everyone in the network has access to the same history of what, when and to / by whom the transactions were transferred and can follow changes and verify that the information is correct. In order for a transaction to be possible, this must be approved by the majority of the network. The transparency and shared history of blockchain technology make it difficult to manipulate the data in the blockchain, as this block of data would not match the corresponding data block in the blockchain.
To find out more about the potential and future of blockchain technology, we chose to interview Tobias Dahlberg, Managing Director at the Swedish Blockchain Association. The Swedish Blockchain Association is working to clarify the benefits of blockchain and to simplify for those organizations that are interested in using the technology and are in that way trying to contribute to the development of the market for blockchain in Sweden.
Fields of application and potential
Tobias views the blockchain market positively and the technology's potential to be applied in several areas in various industries. He mentions that there are currently many organizations' IT departments that test the technology and that many have come a long way in terms of how the technology can be used, but that it has not yet been implemented to any great extent. Tobias points out that there is a great value in the ability of a network to be able to exchange and verify that a certain information is stored only in a digital location. It becomes a way for the network to verify the information without intermediaries, thus creating a "hard-coded" trust towards the others in the network. The information exchanged in the network does not only have to be about digital money, which a lot of people probably think of in the first place, but can be about any information such as documents and contracts, etc.
Tobias also raises an advantage for consumers with the opportunity to make more conscious and safer choices. E.g. by being able to track a product's life cycle, from raw material to final product in store. In this way, the block chain can be followed so that the various parts are handled in a correct and environmentally friendly way. Where does the raw material come from? What working conditions exist? Which means of transport have been used? Where in the flow are the largest carbon dioxide emissions? Instead of relying on different suppliers, you can see the information directly in the transparent code for the block chain. In this way, the consumer can make use of useful and secure information that cannot have been manipulated by a third party. The consumer thus has access to more valuable information and can also make a more conscious decision about which products to buy.
The potential for the technology has been recognized in several places and some more concrete cases are in the financial sector where one sees a great advantage in being able to track and transfer capital at a reduced time and cost through fewer intermediaries. For example, the stock exchange Nasdaq is in the process of testing the technology and has, among other things, enabled the first private securities emission ever, using blockchain technology (link). The transport industry is another example where, together with IBM, Maersk is implementing a pilot project for a logistics solution based on blockchain technology. The logistics solution is designed to promote a more efficient and secure global trade that contributes to the transparency and information sharing of, for example, shipping documents and digital customs stamps for the players in the chain (link). Recently, a property acquisition, which has been run as an innovation project at Lantmäteriet, was also carried out using blockchain technology where buyers, sellers, concerned banks and brokers were involved in the transaction process. In this way, an often time-consuming process could be shortened and the amount of paper documents minimized (link)
The future of Blockchain
The fact that there are advantages to blockchain technology seems to be an unanimous agreement, but what does the future of blockchain really look like? Will it break through and if so how? Tobias believes that if blockchain technology is to break through on a larger scale, a company or project of a larger kind must find a scope that delivers economic value. Then even more people will be interested in and adopt the technology. If Nasdaq or Maersk mentioned earlier can prove that their fields of application is working and that it also can create competitive advantage and economic value, then blockchain will break through. Until these companies succeed, the future will be uncertain. Tobias still believes in a relatively rapid breakthrough and that blockchain will seriously break through in 2020.
There are many pilot projects underway and in 2019 the technology and various fields of application will be tested properly. The challenge ahead will be to realize the technology and usage fast enough, says Tobias. It may not take too long before a larger amount can start using the technology. Actually, it is not the technology itself that is complicated but the fact that it is a niche knowledge where the experience of the technology is inadequate.
One area that Ekan Management encounters in several parts of the daily projects is the General Data Protection Regulation (GDPR) and how organizations should respond to these legal requirements. When you read about Blockchain, is it easy to ask whether blockchain and GDPR will collide with each other? For example, when data is stored in a blockchain without a time limit, data will be accessible and public to everyone who is part of the network and the requirement regarding erasing data will be difficult to meet. Of course, this depends on the type of data, but it is clear that the regulation on GDPR can be a challenge for blockchain regarding the protection of personal data. Tobias comments on the potential challenge of the GDPR and explains that the whole meaning of blockchain technology is that the information is constant and that it should not be able to be edited afterwards. GDPR may be a challenge, but Tobias believes it will be solved. However, personal data should not be stored in the blockchain itself, but there will be other ways that you will be able to store data “off-chain” and instead refer/link to the public blockchain.
Regardless if blockchain is here to stay or not, the future development of blockchain will be interesting to follow. What we will use the technology for remains to be seen and there are both opportunities and challenges to continue wrestling with. However, the major benefits of the technology seem to be the possibility to execute faster and more secure transactions (of various kinds), and where you can trust the information in the blockchain.
Perhaps the most difficult challenge right now is to identify how the technology should be used. We are looking for what to do with this technology, which we suspect will be revolutionary. Maybe it's the same way as previous innovations? Take for example the wheel - the "invention of the invention". It was not entirely obvious in the beginning how it was supposed to be used. But when we succeeded in finding a successful field of application, our whole transportation system changed. Countless new use cases were developed and continue to do so today. Maybe something similar is happening with Blockchain technology? Is a single breakthrough all that is needed to change how we conduct digital transactions with higher security and trust?
Are you interested in discussing further about blockchain or, for that matter, how Ekan Management can support you in a time of ever-changing conditions, including process analyzes, risk assessments, change management and review of business models? You are welcome to contact us!