Dear reader, welcome back to our next topic that will take us into the fascinating world of blockchain. But why would we want to learn about this topic? First of all it is relevant to stay informed since the current (crypto) technologies are emerging every day. Secondly, the topic "What is blockchain?" is my second assignment topic for the course E Skills. In this following report you will find the how, what and where of the blockchain principle in detail.
How did i solve this assignment?
I tackled this assignment through looking into big data and desk research provided by our trustworthy internet and mother Google. After all, what better place to investigate high tech technology than at its core? You will find all the necessary examples in the report where i analyzed graphs, previous papers and articles that provided clarity on the research questions i have for you today.
instructional video about blockchain
Relevant to the topic of today, you will here find a instructional video that explains the blockchain principle in 7 minutes. This will already give you a warming up before diving into my report. Enjoy and learn!
(Simplilearn, 2019)
Simplilearn. (2019, February 27). Youtube video Blockchain In 7 Minutes | What Is Blockchain | Blockchain Explained|How Blockchain Works|Simplilearn. Retrieved from Youtube: https://www.youtube.com/watch?v=yubzJw0uiE4&list=PLEiEAq2VkUUKmhU6SO2P73pTdMZnHOsDB
What is blockchain?
Table of Contents
Introduction
1. What is blockchain?
2. How does blockchain work?
3. What types of blockchains exist?
4. What are cryptocurrencies?
5. What are the potential dangers of implementing blockchain?
6. What is DeFi?
7. What companies could benefit from this technology?
8. Do we also have some real life examples of companies that are currently already implementing blockchain successfully or could benefit from this technology?
9. What is withholding companies to use blockchain?
10. Conclusion
11. Reflection
12. Appendices
13. Bibliography
Introduction
1. What is Blockchain?
Blockchain, a word that gets thrown around a lot in the current business industry and perhaps even something we will not be able to look past years or months from now. It is the year 2023 and AI technology and smart devices are slowly but surely taking over remote work, reducing labor time and even finding their way to simplify transactions and the financial industry. But now we still haven’t answered the question as to what blockchain actually is allow me to illustrate with a small example I have found while conducting research. There are numerous sources that list to explain the blockchain principle. However most of them consist of very technological terminology that makes it even more complicated to read than when starting to conduct research. I first found a video of Simplilearn made on October 2021 that helps us gain insight. To put it simple and straightforward, blockchain is actually a ‘self-proclaimed” revolutionary technology that disrupts the way we know transactions work or have worked in the past. It has been created to create a safe and secure foundation for transactions using digital cryptocurrencies which actually makes cash or ‘plastic’ credit card money irrelevant. To put it quite frank the blockchain completely illuminates the interference or need of a third-party involvement such as banks which in the defense of the creator of blockchain would ensure more efficiency and less possibility for online crime or fraud. The name blockchain is chosen with a reason because it actually works as pretty selfexplanatory. A blockchain consists of blocks that record transaction information in a digital ledger distributed across the entire network, making it highly secure and resistant to manipulation, hacking, or cheating as mentioned above. Cryptocurrencies like Bitcoin and Ethereum utilize blockchain for transactions, and the increasing market capitalization and interest in cryptocurrencies indicate a growing participation in this economic revolution because this invention and implementation could and is already, disrupting what we currently know about our (online) trading system. Blockchain has been called to have a great potential to revolutionize the world's economy and technology, with some experts believing that everything will eventually be tokenized and connected through blockchain in the future.
(Simplilearn, 2021)
Is this information still relevant in 2023?
The short answer is yes because the video we have seen summarizes to a great extend what blockchain is and what blockchain does without falling into a rabbit hole of terms. However today, we are two years later and I stumbled across another interesting source taking us through blockchain. The source I will be discussing is called “Blockchain facts : What is it, how it works and how it can be used” found on Investopedia written by Adam Hayes updated on April 23,2023.
(Liu, 2023)
From the information in this article we can still conclude that what we previously watched in the video of Simplilearn still counts up until today. However, this time we get a bit more detailed. Blockchain is a digital database that distributed among the nodes of a peer-to-peer network. Meaning basically the same we’ve seen. It is mainly used to create security and to simplify and automate transactions but that is not all. The shared database stores information in blocks linked together through cryptography. Its most well-known use is in cryptocurrencies, providing a secure and decentralized record of transactions. However, blockchain's applications extend beyond cryptocurrencies, as it can be used to make data immutable in any industry which indeed would make this application and implementation disruptive. The key characteristic of blockchain is that once data is recorded in a block, it cannot be altered, ensuring its integrity and trustworthiness. This eliminates the need for trusted third parties like auditors, reducing costs and minimizing errors. The technology's use cases have expanded since Bitcoin's introduction in 2009, including decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts. The research emphasizes that different types of information can be stored on a blockchain, but its primary use is as a ledger for transactions. The blockchain is decentralized, meaning no single person or group has control; instead, all users collectively retain control. Moreover, decentralized blockchains are immutable, making the entered data irreversible and permanently recorded for anyone to view, as seen in Bitcoin transactions. Overall, blockchain technology holds great potential to revolutionize various industries and is a significant subject of interest in the world of finance and technology.
(Investopedia, 2023)
(Stanford University. Stanford, California 94305., n.d.)
2. How does blockchain work?
Now that we are a bit more familiarized with the definition and terminology of the blockchain principle it is time to take a look at how it actually works; A blockchain functions as a distributed database where information is entered and stored in blocks linked and secured through encryption. This is different to the traditional databases we have familiarized ourselves with over the years. Blockchain's key distinction lies in its decentralized nature, where multiple copies are saved on various machines, requiring consensus for validity and the limitation of fraud or error. The process of transactions on a blockchain involves collecting transaction data and creating blocks with encrypted information. Miners compete to solve cryptographic puzzles to validate and add blocks to the chain, a process known as "proof-of-work." This ensures transaction irreversibility and maintains transparency.
(Investopedia, 2023)
Blockchain's decentralized security and trust are achieved by storing blocks linearly and chronologically, making them tamper-resistant. While blockchain technology is known for its security, vulnerabilities in coding can be exploited, emphasizing the importance of robust protocols to safeguard against attacks like the 51% attack. Overall, blockchain holds promise as a revolutionary technology with applications beyond cryptocurrencies, offering immutable and transparent data storage for various industries for instance not only for banks but also for regular companies to optimize their business processes or ERP system excellence.
3. What type of blockchains are there?
Because we have listed the fact that blockchains can be implemented into various sectors, it should therefor not come as a surprise that there are more than one type of blockchain networks that can be used or implemented. Since different situations require different approaches. I will now include an overview of which ones were found while conducting research and explain what they are. We can categorize 4 different models.
1. Public blockchain network
Similarly to the blockchain name speaking for itself a public blockchain network is pretty much the same. It implies that anyone can join and participate in this blockchain network. To give an example we think of Bitcoin where blockchain can be traced back from originally. The advantages of a public blockchain network is that it is easy to enter, information gets distributed through a peer-to-peer network where an algorithm gets created by the agreements of all participants involved. This network is permissionless which means everyone and anyone with the access to the internet can sign onto this type of blockchain and be authorized and able to operate from and in it. Drawbacks of this type of network however are that there is little or no privacy for transactions, and weak security. These are important considerations for enterprise use cases of blockchain and should be used carefully. For instance only to provide and distribute standardized information that is allowed to be open and freely distributed among the internet. The network can also run much slower than secured networks since the users can’t limit access or use since it is public.
(Investopedia, 2023)
(IBM, n.d.)
(Christine Campbell, 2023)
2. Private/permissioned blockchain network
Opposite to the public blockchain we also have a private blockchain network.
This blockchain network is under control of a specific selected audience and does require access permission to maintain optimal security within this blockchain. This blockchain is on utilized for smaller specific networks inside a corporation or organization to distribute, share and create specific transactions or information exclusively for that audience. The advantages of a private blockchain network are evidently that you have a lot more security and are now able to work with a limited amount of users in that blockchain. This can be useful for confidential company information and to generate security since you have the selection here who can make changes, view or add/change data and who can’t. Because these networks are also much smaller than public blockchains they are also a lot faster and as a result process information much quicker. The disadvantages might include that there is discussion as to if we can really still consider these private blockchain networks still blockchains. This because blockchain’s main purpose is to decentralize and by implementing a private blockchain some say that you are defeating the purpose. Since the information is also available to only a selected amount of people the credibility becomes lower too since there is a selection of who can edit. Finally only allowing a small amount of nodes to the blockchain could also be interpreted as less security. For instance, someone leaves the company and knows about this confidential information he or she could blackmail or disclose the information. When it comes to anonymity the private blockchain is just as ‘public’ as the previous example. It therefor really comes down to individual selection if this blockchain network would work or not. It is best to use it for its speed and to keep information private or at least more private than in a public blockchain network. In TechTarget we read the example of for instance sharing competitive edge information of operational excellence in management or customer experience for instance. This can be shared through use of the private network within the company without it reaching the competition.
(Investopedia, 2023)
(IBM, n.d.)
(Christine Campbell, 2023)
3. Hybrid blockchain network
When companies feel as if they require both the benefits of a private and a public blockchain network they will implement a hybrid blockchain network. It allows you to create a private permissioned blockchain environment with including speed that comes from it combined with a public blockchain network where non-confidential information can be distributed openly. Transactions can be verified by for instance smart contracts. Which are self-executing contracts with the terms of the agreement directly written into lines of code. A special element to include in the characteristics of this network is that when a user joins the network he or she has access to the full network anonymously. It is only when he or she makes changes, or adjustments the information of the user gets shown to the other users of the network. Which should be operating as another safety measure added to this network. The advantages are that it works from a closed ecosystem which sets it rather safe from hackers by 51%. It allows privacy but also share of information publicly. It is fast and cheap and provides much better security than a public network.
The disadvantages are that complete transparency is not present here as the information can be protected or manipulated to a certain extend. Upgrading might also become a problem since new users are unable to contribute to the network. These networks are mostly used in real estate who can add listings but keep financial information private, it is also known to be used and implemented in the bank sector.
(Investopedia, 2023)
(IBM, n.d.)
(Christine Campbell, 2023)
4. Consortium blockchain network
A consortium blockchain, also called a federated blockchain, combines features of private and public blockchains. It involves multiple organizations collaborating on a decentralized network. This type of blockchain offers limited access to a specific group, reducing the risks associated with a single entity controlling the network. In a consortium blockchain, consensus procedures are managed by preset nodes, including a validator node that initiates, receives, and validates transactions, while member nodes can also participate in transaction activities. This network is just as the previous one more secure than a public network. It is also more efficient and offers more control when it comes to access. The disadvantages are that a consortium blockchain is not as transparent as public blockchain. It can be vulnerable to compromise if one of the member nodes is breached, and its own regulations might hinder the network's performance. This type of network is mostly used for payments and for banks. Banks can collaborate and create a consortium network with agreed upon nodes for transactions. It is also practical for research or supply chains because this network can track food or medicines it can be implemented in multiple sectors successfully.
(Investopedia, 2023)
(IBM, n.d.)
(Christine Campbell, 2023)
4. What are cryptocurrencies?
No blockchain principle without the mention of cryptocurrencies. But what are those now specifically? If we can believe what the internet says we can state that cryptocurrencies are the more sophisticated, safer alternatives for ‘real money’ such as cash, bank deposits etc. But why is that now the case? Mainly because this type of money is virtual currency that gets encrypted which makes double spending or stealing impossible. If we state it like that it almost seems as a dream come true and a feature of the future brought to us today. In detail we can see that cryptocurrencies eliminate the interference of banks to validate transactions. How does this work? Basically throughout digital entries to an internet database. Cryptocurrencies go hand-in-hand with the blockchain since that is the main basis of their existence being a public distributed ledger that keeps track of all transactions by the owner of that particular account user. How are cryptocurrencies now created? Or do they just ‘exist’ out of thin air? The answer is no. Cryptocurrencies exists through miming a process generated by computers that are specialized in mathematical issues generate the coins. Crypto can also be traded, bought and spend using cryptographic wallets. To illustrate and to make it a bit more graphical lets assume that imagine you have cryptocurrency. It is different in theory to real money because you cannot physically touch the money. It is almost as a enabler or special key that lets you transfer digital money to someone else without needing intermediaries such as banks or any other middleman to oversee the process.
Bitcoin, the first cryptocurrency, has been around for a while (since 2009), but there are still new and exciting ways to use cryptocurrencies and blockchain technology in the financial world. In the future, people believe that we could even trade things like bonds, stocks, and other financial assets using this technology. It's like a whole new way of handling money and financial transactions.
Other examples of cryptocurrency include Ethereum which was founded in 2015. It is another blockchain platform that has its own digital currency known as Ether (ETH) or Ethereum. When looking at popularity it is in second place following right after Bitcoin.
Litecoin is another example. Litecoin is similarly to Bitcoin at a fast pace of innovation by implementing quicker payment processing and enabling higher volume transactions.
Ripple was established in 2012 mainly operational as a distributed ledger system going beyond cryptocurrencies. It is mainly utilized for tracking and tracing various different types of transactions. It is also known that the company responsible for Ripple has successfully collaborated and is collaborating with numerous banks and financial institutions.
Lastly, we have Altcoins a non-bitcoin cryptocurrency differentiating from the original Bitcoin. In short we can state that Cryptocurrencies are a type of digital money that uses strong security measures, making it extremely difficult to create fake or duplicate transactions as mentioned earlier. They operate on decentralized networks that rely on blockchain technology, which is a system maintained by many computers working together. One significant aspect of cryptocurrencies is that they aren't controlled by any central authority, which means they can't be easily influenced or manipulated by governments. The benefits of cryptocurrencies include faster and cheaper money transfers and systems that are not vulnerable to a single point of failure. However, cryptocurrencies also have some drawbacks, such as their price fluctuations, the high energy consumption involved in mining, and their use in illegal activities because of the anonymity, lack of supervision, money laundering possibilities and the borderless transactions possibilities
( 2023 AO Kaspersky Lab, n.d.)
(FRANKENFIELD, 2023)
(Jaya Vaidhyanathan, 2023)
5. What are the potential dangers of implementing blockchain?
As an informed and young business student I start to recognize and find a healthy level of ‘doubt’ linked to every new solution or application implementation that almost seems too good to be true. Linked to the previous topic I thought It would be interesting to take a deeper look into what could and might be the potential dangers of implementing blockchain in your company or use it for your transactions. As of which there are many things to consider starting with a nice overview founded on the World Economic Forum.
(World Economic Forum, n.d.)
In this mind map view we recognize 5 key areas and multiple smaller aspects that can be at risk when implementing the blockchain principle a summary of problems that might occur. To put it into more tangible examples there have been seven main risk factors and problems identified when talking about the potential dangers of blockchain.
1. Non-compliance with data regulations or confidentiality agreements and the risk of sensitive data exposure due to inadequate policies.
2. 51% hacker attacks: Certain blockchain designs, particularly decentralized ones, are susceptible to 51% attacks. Malicious actors with over 51% of the processing power can control the chain, leading to double-spending and manipulation of transactions.
3. Flash Loan Attacks: DeFi ecosystems offering non-collateralized loans are vulnerable to flash loan attacks. Attackers exploit arbitrage opportunities to manipulate token values and withdraw profits, leading to substantial losses.
4. Coding Loopholes: Centralized blockchains can be targeted through coding loopholes, allowing hackers to gain access to blockchain keys and transfer assets from native wallets.
5. Centralization of Information: Blockchain systems relying on external sources, such as oracles, may face significant losses due to incorrect data, leading to price discrepancies and losses for users.
6. Low Scalability and Interoperability: Blockchain networks like Bitcoin and Ethereum face scalability challenges, resulting in slow transaction speeds and high gas fees. Interoperability issues between different blockchain protocols can hinder efficient data exchange.
7. Energy Consumption: Proof-of-work systems like Bitcoin and Ethereum require massive energy consumption for mining, raising environmental concerns and facing regulatory inquiry.
8. Low Workforce Availability: The blockchain industry is experiencing high demand for skilled talent, leading to a shortage of qualified professionals. Companies are competing for blockchain specialists, impacting project development and implementation.
Despite these challenges, investment in the blockchain industry continues to grow, and innovative technologies are being developed to address scalability and interoperability issues. As the industry matures, organizations must carefully consider these risks while implementing blockchain solutions in various sectors. Next to all the benefits we have seen previously we can also illustrate a lot of counterintuitive problems that might occur when exposing your company or transactions in general to the blockchain principle. The listed examples list the main points but it may not include every possible risk since it is a fairly ‘new’ technology and not every effect is already that widely known. Before implementing the blockchain an organizations should use these pro’s and con’s as guidance and adapt it to their specific project needs to manage risks effectively. Alternatively most (larger) companies opt for a specific managerial risk management approach that takes into account these dangers which should eliminate or at least minimize the potential harm that can be done through usage of blockchain.
( Cointelegraph 2013 - 2023, n.d.)
(World Economic Forum, n.d.)
(Marr, 2023)
6. What is DeFi?
Defi is unsurprisingly also interlinked to the blockchain principle. The name is an abbreviation that stands for decentralized finance. But what does this now mean in detail? To be correct ‘defis’ remind us of cryptocurrencies since they also consist of financial technology originated from secure distributed ledgers which are very comparable to the ones of crypto. Decentralized Finance (DeFi) is a revolutionary concept that challenges the traditional centralized financial system governed by institutions like banks and brokerages. In the United States, the Federal Reserve and the Securities and Exchange Commission (SEC) set the rules for these centralized entities, controlling access to capital and financial services for consumers.
( 2022 Linen Mobile, Inc., n.d.)
DeFi empowers individuals by enabling peer-to-peer digital exchanges without the need for intermediaries similar to what we have seen with blockchain and crypto currency. It operates on emerging technologies that eliminate the reliance on third parties and centralized institutions for financial transactions.
One of the key advantages of DeFi is the elimination of fees charged by banks and financial companies for their services. Instead, individuals can securely hold their funds in digital wallets and make instant transfers with just an internet connection. This democratized approach to finance provides better financial freedom and accessibility to anyone.
The components of DeFi include stablecoins, which are digital currencies pegged to stable assets, as well as software and hardware that facilitate the development of various applications within the decentralized ecosystem.
The infrastructure and regulation surrounding DeFi are constantly evolving as this novel approach gains traction and popularity. As the industry progresses, DeFi has the potential to reshape the financial industry offering more inclusive and efficient financial services for individuals worldwide.
(SHARMA, 2022)
7. What companies could benefit from this technology?
We know that blockchain is very useful when it comes to elements that need tracking and tracing, transactional data transmission and eliminating unnecessary intermediaries as our starting point. But what companies can now benefit the most from all these elements that blockchain has to offer?
1. Supply chain efficiency
First of all we can link a positive impact on the business process of the supply chain. Why is that so? Because blockchain can play a vital role in tracking every step in a shipping and distribution process. If companies decide to implement the blockchain principle therefor in their supply chain data management chances are that there will be a much lower error rate and much more sufficiency and clarity upon tracking data. By eliminating paperwork and creating more automation you reduce the risk of problems occurring, create more and better real time precision and excellence within your supply chain and ultimately within your company.
(IBM, n.d.)
2. Law
One might think of this one as an odd solution to add but nothing less is true. Blockchain could be a great asset to use in the future for law enforcements and regulatory purposes. This because blockchain could provide real time video footage that cannot be tampered with and therefor also cannot be refuted. This would allow the court or legal processes to run a lot smoother and leave little to no room for discussion or misinterpretation since the data would be in real time accurate and undisputable.
3. Identity management and protection
Another aspect also linked to safety and efficiency is using blockchain for individuals and their ID protection. Since fake or stolen IDs are a very real threat in our society. The blockchain technology would allow an individual to take full and complete ownership of their identity through a global ID again without the access or interferences of third party involvement which should in its turn result in more safety and secureness for the ID user.
4. Protecting privacy through messaging applications
With the threat of hackers and cyber crime very present in our daily lives blockchain could be a step In the right direction to limiting the options for hackers to access our private data. This because blockchain illuminates the need for personal details such as IDs, phone numbers etc. You only need a crypto wallet address which is already less than what most online messaging applications require. With this blockchain also helps to offer protection of your messages by encrypting these with nodes that are anonymous and non-connected to the user/writer of the messages.
5. Software As A Service companies
These companies work with a subscription based client model that offers software applications all over the internet. They are known to host these applications acquired on their servers which then, after subscription, becomes available for their end customer without he or she needing to download or (re)installing anything. Blockchain could really be useful for these type of business models because they could make use of the smart contracts blockchain offers. Founders can submit their annual reccuring revenue and receive approval of credit in a record time. Gaps in the corporate revenue can be addressed quicker and the overall business performance gets more automated and finetuned.
6. Real estate
In this sector blockchain can work by eliminating middlemen brokers, agents etc. and create a more translucent market through blockchain. It is only the question if real estate companies will be happy to use this modern technology since it would result in cutting out the actual brokers who live off this. However blockchain can also be used for real time revenues, listings and authorization of credit checks, bids the list goes on.
7. Mobility industry
From trains to airline to bus companies all mobility providing companies could benefit from the usage of blockchain. To for instance create more automated tickets sales, payments and also infrastructure check-ups tailored and regulated by blockchain. This would result in less time efficient processes and the ability to for instance track luggage through blockchain etc.
8. The financial industry
As mentioned, blockchain crypto and defi has been introduced to us to ‘simplify’ our regular known transactional format with banks or financial institutions as intermediaries. With blockchain however, transactions are technically more secured, anonymous and efficient. It is therefor evidently changing the bank and finance industry forever.
9. Government
Blockchain offers a sophisticated online solution to optimize the processes of information and data interlinking. By adding this to the government institutions things such as expenses, investments, taxes and revenue collections will become much more transparent and efficiently distributed. It can also illuminate the need to fill in tax forms since this process could be automated through usage of blockchain which will keep track of all financial records of a specific user at a specific time.
10. Medical industry
Medicines, medical record lists and everything required and linked to a patient can be linked the blockchain principle which can allow the patient to be treated better and more suited. Important history gets found way quicker and solutions get adapted to the needs provided by the up-to-date blockchain system.
11. Education
Tasks, classes and assignments can be put into smart contracts which enable the student and teacher to engage in the processes linked and to work on them at their own pace. From a teacher perspective he or she also has the option to set required submission details and the option to grade the assignment at a fingertip. It also has the opportunity later to add graduation papers, degrees and all other previous paperwork into the blockchain without actually needing the paper version anymore. By a few clicks you will be able to access all the acquired information and it will be there forever, no alterations no loss of papers.
(Purohit, 2022)
(Expert Panel Forbes Councils Member, 2022)
8. Do we also have some real life examples of companies that are currently already implementing blockchain successfully or could benefit from this technology?
1. Mastercard
Since Mastercard is a digital credit provider it is no shock that the company is aware of the potential shift in the financial industry and the opportunities blockchain holds. Therefor a recent article show that they are currently taking steps to embrace blockchain technology and digital assets in the global payments industry. They are expanding their Engage partner network to enable businesses to quickly launch and scale products for their so called Web3 economy. This move aims to facilitate the introduction of new crypto card programs and crypto to authorization conversion capabilities, making it easier for various players in the crypto value chain to participate. Mastercard Engage offers benefits for both those looking to launch crypto card programs and those seeking partners to develop and expand their digital asset offerings. By leveraging blockchain and digital assets they are jumping on the train of the revolutionary technology, Mastercard aims to provide more choices in payments and commerce while maintaining the safety and security associated with its brand which is a smart move and extension to make.
( 1994-2023 Mastercard, 2023)
2. Amazon
As one of the current biggest online selling platforms it comes as no surprise that Amazon (being and online store) could benefit from the usage of blockchain. For instance with regards to maintaining an up-to-date and real time supply chain overview, the tracking and tracing of goods, deliveries etc. It could also help the company by providing general security, reliability and scalability with transactions for example. These automations could help meet the needs and demands of their thousands and thousands of customers and help simplify their company processes.(123mangooo, n.d.)
(Matthew Frankel, 2023)
3. Walmart
Walmart is known to be the first to jump onto new resolutions and innovations to further evolve their business. It is therefor that they have also chosen to successfully implement blockchain for their supply chain processes. They have implemented DL Freight which is their supply chain partner who now regulates all the data, steps and records linked to their supply chain and previously encountered problems by usage of the blockchain principle. The company has reached great success by doing so since it now is down to 1% disputed invoices whilst before making the transition this was 71%. This shows that a correct implementation of blockchain can really optimize your business process if you implement it to the required areas with care for maintaining company authenticity.
(Makarov, 2022)
4. Food industry
We have seen now that blockchain can be used into various businesses and business sectors. However one we haven’t discussed yet is the food industry. The right implementation of blockchain can result in a positive affect on this market as well mainly by combining blockchain with IoT also known as the Internet of Things. Because blockchain is a star at monitoring, tracking, tracing and so on it can also be used in combination with IoT to automate food condition monitoring. This would result in better and more accurate streamlining of regulatory compliance and would eventually result in less food waste and more food safety. For example at a butcher’s shop one could implement IoT sensors into the refrigerators. This would mean that this technology then can detect temperature issues and employees or owners of the shop can quickly be alerted of this issue and resolve it based on HACCP guidelines. The information is recorded on the blockchain, ensuring transparency and trust in the food supply chain. By opting for this technology you are again reducing the amount of error in manual labor (checking food dates, refrigerator temperatures etc.) and creating a safer more sustainable food production and consumption environment. As a business active in this industry it is vital today to improve food safety and reduce food waste. Currently, businesses face challenges in balancing economic losses from spoiled food with ensuring food safety. Foodborne illnesses are still a significant concern globally. The blockchain and IoT technology helps prevent foodborne illnesses and reduces food waste, benefiting both businesses and the environment opting for this change would only result in long term benefits for both the producer/seller as the end consumer.
(Makarov, 2022)
9. What is withholding companies to use blockchain?
Blockchain has been called a revolutionary technology numerous times and the benefits has been proven. However, while conducting research I have found that it is not getting used nearly as much as it in theory should if we really are moving into the direction of this tech revolution.
But why is this now the case? We deep dive into a few issues.
1. Lack of trust
As with all ‘fairly new’ technologies and inventions companies and business owners are still rather unsure and on the hesitant side when it comes to blockchain. The great words of how much easier and better it will make our transactions aren’t necessarily been proven yet on a long term perspective since the principle hasn’t been around for that long yet. It is therefor the case that most companies are rather watching from a distance as to what this new technology could bring than that they immediately jump onto the bandwagon of the, in their eyes, uncertainty.
2. The right system is not a one size fits all solution
When you read some articles it is almost as if blockchain can solve it all but in practice this isn’t the case. Most companies while making adjustments or investments in their business processes acquire a solution that can help with more than one aspect of a problem unless their needs are really specific such as in the case with supply chain optimization. Then a blockchain principle is right up their alley. However If that is not the case it becomes a search as to what blockchain to choose and how it will affect the overall outcome this because a blockchain network can only mainly focus on one or two solutions. These are for instance a fast and decentralized network which is costly to acquire. Or an affordable alternative that is also decentralized but a lot slower. It is thus a real search to find the right system that fits within your organization and with the company goals. Therefor a lot of companies just leave the blockchain as it is. There have been alternatives presented such as a Tangle but again because these solutions are far to new and not enough information is known about them companies are mostly choosing not to make the implementation.
(Bernard Marr 2021, n.d.)
3. Unskilled employees
If companies do decide to switch to an implementation of blockchain in their companies there are also consequences. For instance having to train your employees to work with this new system and to be informed about what a distributed ledger network is and what it does. Without doing so, implementing blockchain could do more harm than good. This is again another cost of resources for the companies since it will require time and money to train employees and it will be a process of trial and error. Again because of this uncertainty, companies withhold themselves from making the shift.
4. Regulatory issues
It is nothing new that cyber criminals love crypto currencies and the newest technologies such as blockchain to be able to engage in criminal activities and keep their anonymity. Therefor blockchain could also be a danger for companies to implement since in theory you are ‘safer’ than with a regular online transaction but we all know that nothing can 100% protect you from a cyber-attack. Furthermore because there is no legal ground because of the decentralization there is also no power from the law. Meaning in the blockchain there are basically no rules and restrictions and what get’s stolen for instance is gone forever. Smart contracts which are another claimed benefit from the blockchain also hold no legal ground outside of the blockchain principle since they are not validated or recognized. Meaning that if problems occur you are on your own which is too risky for a lot of companies.
5. Overall speed issues
Blockchain has identified itself as a quicker, safer and more secured way of transactions. However, their main problems have also been reported to be speed limitations and slow networks. Although the intermediaries such as banks get eliminated in a blockchain process, that still doesn’t mean that everything goes smoothly and automatically within the blockchain. Each transaction requires a verification by nodes before it is actually a block this because of the decentralization. In the opposite spectrum what we know as the government institutions or banks millions of transactions get done per day instead. Therefor the general ‘faster’ than previous systems and authorities becomes invalid and companies are aware of this issue which results in loosing interest in the blockchain principle.
(Ali, 2022)
10. Conclusion
Today we have dived a little deeper into the so claimed next big thing in tech revolution. Needless to say that the world of blockchain is fascinating as we have seen what it can do, what it can illuminate and what (potential) impact it has or may have on various industries. Throughout the study, we have explored the fundamental principles of blockchain, its decentralized nature, and its potential to revolutionize existing systems. The analysis of real-world use cases, such as supply chain management, finance, and healthcare, demonstrates the versatility and promise of blockchain in enhancing transparency, security, and efficiency. The technology can work great for credit providers such as the one we have spoken about, being Mastercard. One of the key findings of this research is the recognition of blockchain's ability to address trust issues by providing an immutable and auditable ledger, thus fostering greater trust among stakeholders. Additionally, the integration of smart contracts has shown great potential for automating processes, reducing intermediaries, and lowering transaction costs. However, this study has also revealed some challenges and limitations faced by blockchain technology, including scalability concerns, regulatory hurdles combined with the lack of trust of the overall business industry. Overcoming these obstacles will be crucial for the widespread adoption of blockchain in the future if it really wants to reach that success developers have spoken out for. As the technology continues to evolve, it is evident that collaboration between researchers, developers, policymakers, and industry players is vital to unlocking its full potential. Standardization efforts and interoperability between different blockchain platforms are necessary to build a cohesive and inclusive ecosystem. However with what we know taken into consideration. The future of blockchain still holds immense promise, and it will likely shape the way we conduct transactions, share data, and establish trust in our digital world and disrupt these processes forever. Once the technology has become known, trusted and optimized I believe it will become a fixed value in our society moving forwards. In conclusion, while blockchain is still a maturing technology, its transformative potential is undeniable. As it continues to disrupt traditional systems, we look forward to witnessing its continued growth and positive impact on society, economy, and governance and how businesses in return implement this technology. As we have seen its positive impact on healthcare, supply chain and even the food industry, the potential once all the issues are resolved are unlimited.
11. Reflection
In this final section of my research paper I will perform a reflection on today’s research paper and my findings while conducting research. I have taken the reader with me throughout the search for ‘clarity’ on the subject of blockchain revolution technology. A subject that was fairly new to me as well and where I have learnt quite a lot about while conducting this research. I found it interesting to know and search the how and what of what blockchain now exactly is and how it operates and if it is really the next big thing people or tech providers are claiming it to be. In my opinion blockchain has a lot of potential, as I’ve mentioned and analyzed in my paper and conclusion. But it also seems to still have a lot of hiccups when you take a closer look and deep dive into the actual application of the principle. Sure you may decentralize payments but if you for instance work with a private network you are again creating that ‘centralization’ effect which is the polar opposite of what a blockchain claims to do. Another contradictory finding I have encountered was the fact that for instance the blockchain principle thrives of the claim that it’s a lot faster, more efficient than working with intermediaries which are for instance banks and credit card providers. However, we have seen that every transaction also needs to go through approval by nodes before the information actually becomes a block which is also not that fast and limited compared to the millions of transactions processed daily by financial institutions. Another thing to remember for me personally is that there are no regulatory boundaries tied to operating in these types of networks. Which essentially set the door open for money laundering, cyber crime and potential loss of money. Lets say a company is working with someone through a smart contract created in the blockchain and the other party doesn’t comply with what has been agreed upon. In a normal situation one would go to court or get an attorney and proceed with legal assistance. Because blockchain isn’t tied to anything regulatory you basically have nowhere to go if things go sideways. In conclusion to what I have found and giving my unbiased opinion based on my research I believe this technology has potential but first it needs to get ride of some hiccups. Is it the next big thing in my opinion? At this point I would say no. There are so many situations where information supporting the benefits of blockchain are being brought to dust by another article saying it’s the complete opposite. Therefor it is not abnormal that not a lot of companies have switched to using this technology and personally I would not do so either at this stage. With my paper I have shown answers to all the questions included and checked each source credibility by analyzing more than one source who could verify the same information. One challenge I did encounter was the fact that blockchain is controversial and as mentioned one will praise it others will tear it down in my opinion it is just not ready yet to takeover everything it claims to take over. . Regardless, i have enjoyed doing research about this topic since I am always interested in learning more about tech revolutions and ways to optimize our general (business) processes and I hope that with this paper I have managed to give the reader the same experience as I had. Which is an interesting educational journey on the revolutionary ways of the blockchain anno 2023.
12. Appendices
Here you will find an overview of screenshots of relevant articles, videos and other information used while conducting research and writing this paper.
(Simplilearn, 2021)
(FRANKENFIELD, 2023)
13. Bibliography
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