Blockchain - where does the way lead to?

07. Mai 2020, 11:15 Uhr   |  Tobias Schlichtmeier

Blockchain - where does the way lead to?
© GeniusKp |

AI and IoT are currently the dominant topics in the course of digitalisation. The block chain technology is somewhat neglected. Yet it is the basis for new innovations.

Basically, the block chain technology goes back to crypto currencies, more precisely Bitcoin. It is also called »Distributed Ledger Technology« (DLT). Currently it is still overshadowed by artificial intelligence (AI) and the Internet of Things (IoT), but is attracting more and more attention. Besides AI it is considered the technology of the future. But since it is still in its infancy, many questions are still open.

Definition searched

Since banks are often distrusted, the founders of the crypto-currencies tried to build a new system: All data such as amount of money, owner or transaction details are transparent and can be retrieved at any time - all stored in one record or block. Each user of the block has a copy that is relevant to him. All data blocks are public and are updated and linked together during transactions. Thus, every user knows at any time who, where and what sum of currency is held. With this, the founders want to exclude fraud and abuse from the beginning.

The way a block chain works is best described with the help of the popular crypto currency Bitcoin: A so-called proof-of-work algorithm generates Bitcoins, the algorithm is integrated into software. It can be downloaded and run on computers within the Bitcoin network. With the help of the algorithm, transactions (transfers) made from one account to another account can be cleared. The entire data set is integrated into the block chain in encrypted form. The calculation process is called mining.

Blockchain 1
© elenabsl |

Six steps show how a block chain works. The picture shows steps 1 to 3.

All transactions are cryptographically encrypted with a hash function and are combined in a block. This saves time and storage space. The algorithm converts the transaction information into hexadecimal numbers and assigns them a place within the block chain. Newly created hash blocks contain information from the previously inserted hash block. Hence the term »block chain«. From a technical point of view, it is nothing more than a sequence of hash blocks. [1]

Meanwhile, the principle is no longer only used in the financial sector and for crypto-currencies, the technology is supposed to guarantee secure data storage and transfer in various industries. The first applications can be found, for example, in the automotive and manufacturing industries.

Blockchain 2
© elenabsl |

Six steps show how Blockchain works. The picture shows the steps 4 to 6.

Germany has some catching up to do

The study »Blockchain in Germany - Use, Potentials, Challenges« of the digital association Bitkom deals in detail with the new technology. Companies from various industries were interviewed about the use of Blockchain. The study showed that the majority of the companies questioned had not yet dealt with the topic at all. Larger companies with 500 or more employees are at least open-minded and interested. Many companies are currently more likely to have topics such as cloud computing, big data and analytics and the Internet of Things on their agenda.

However, the gap between small and large companies is wide: companies with 500 employees or more are already using Blockchain or are thinking about its implementation, while smaller companies are not. This is mainly due to tight innovation budgets. Technologies such as AI, Big Data or IoT compete for the small amount of capital. Small companies prioritize technologies such as cloud computing, whose application scenarios are more proven and scalable than those of the new technology.

Companies that already use a block chain mainly come from the areas of accounting, finance and controlling as well as logistics, warehouse and shipping. They see a need to catch up: Germany is in the middle of the field or even lagging behind when it comes to block chaining. One expert cites the lack of regulation as the reason: in other European countries, or in the direct competitors Switzerland and Singapore, there is very positive regulation - which results in a competitive disadvantage for Germany. [2]

Bitcoin 2
© Wit Olszewski |

One of the first applications of block chain technology was the cryogenic currency Bitcoin. It can be used to explain block chain well.

Incentive for new business models

What are the advantages of using the new technology? By far the most frequently mentioned factor by experts is trust or the dissolution of existing mistrust in business relationships. In this way, companies can come together that would otherwise never have thought of working together.

As the goal of block chain deployment, companies cite above all an increase in efficiency and security for cross-company processes. Closely linked to these goals are potential areas of application - the most frequently mentioned are

  • Improving information security
  • Better data quality management
  • Data validation in the business ecosystem

Consumers could also benefit from the new technology. Applications that return data sovereignty to the consumer are conceivable. With the help of a platform-independent, digital identity, consumers could transparently understand what is happening to their data, prevent it from happening in certain circumstances, or negotiate an appropriate value for their data.

Another important potential of Blockchain lies in its combination with other emerging technologies such as IoT, AI and Big Data and Analytics. If you manage to combine them, completely new innovations and product ideas can emerge. In addition, many companies hope to optimize their existing products and services. [2]

Possible scenarios

The automotive industry in particular could be a pioneer in the use of the new technology in the future. For example, an automobile manufacturer could map its value chains completely via the block chain, starting with the integration of its suppliers. For quality assurance purposes, information about the production of components would be easily stored, such as production conditions, raw materials used or machines. Another scenario concerns electromobility. Here, for example, block-chain-based transactions for recharging at electric filling stations or even traffic lights are conceivable: At traffic lights, the car recharges the battery via induction loops and the user automatically pays by credit card.

Mechanical and plant engineering could also benefit: With the increasing networking in the course of Industry 4.0, processes can be automated, autonomous and comprehensibly represented in the digital twin. Industrial companies will thus gain a deep insight into their production halls and the data generated there.

A further scenario is conceivable in the field of energy supply. Here the block chain could help with transparent electricity trading. For example, the feeding of regenerative energy sources such as photovoltaic or wind could be documented and invoiced in real time - cryptographically encrypted and comprehensible for all those involved. [2]

Concrete application cases

What exactly the concept for German medium-sized businesses could look like was developed by Datev Lab together with Deutsche Telekom. Datev hopes that the block chain technology will relieve tax consultants and their clients of routine tasks. For example with bookings in real time with high reaction speeds.

Another application: election via e-voting. Many elections still take place with pen and paper. Although e-voting is more efficient and less error-prone, it seems uncertain to many voters. Blockchain technology could change that. With it, voting processes from voting to counting can be made forgery-proof. During voting, the identity of the voter is checked in real time, and the ballot is only released if the result is positive. Once the vote has been cast, it is incorporated and processed as a new block. [2]

Experts - missing

Whether block chaining will have similar effects to the Internet - experts disagree on this. The US research and consulting company Gartner classifies the block chain hype in 2018 on its way to the valley of disappointments. [3] Many experts share this assessment, but see light at the end of the tunnel in the short or long term. For even if the new technology does not develop a transformational power comparable to that of the Internet, the potentials show that the German economy sees great opportunities in it.

What has been missing so far are concrete and successful application scenarios and cases - which are, however, absolutely necessary to motivate companies to use the technology. Appropriate personnel or experts are also difficult to find. Universities and Universities of Applied Sciences in particular have a duty to train young people in the new technology. Bitkom therefore calls for a massive expansion of block chain expertise in the university sector in the sense of new chairs and courses at the interface between information technology and business. [2]

[3] Gartner: Hype Cycle for Emerging Technologies, 2018

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