The success of blockchain applications depends on actual practice
It seems like stating the obvious, blockchain applications only have an impact once they are implemented in actual practice. Yet, this has only been happening since 2017. Many organisations have discovered opportunities for blockchain applications and have experimented with it. However, due to the disruptive potential of blockchain technology it appears to be a challenge to apply it within or among organisations.
Because implementation in actual practice determines the success of blockchain applications, we are focusing on the technical, organisational and associated legal aspects. By incorporating all of these aspects during the phase where you discover and experiment with blockchain, you will be able to successfully develop and operationalise blockchain applications.
How does blockchain work?
Blockchain was first used for the Bitcoin cryptocurrency in 2009. The second blockchain generation dating from 2015, can be used for a wide range of organisational processes in any sector. This automation technology distinguishes itself through four principles:
- Reliable storage of data in a growing and connected chain of blocks (the blockchain).
- A collective source of data through the distribution of data blocks to many parties in a network.
- Consensus among all parties about the data that is to be stored in the last block.
- Reliable execution of programming code in this network.
We regularly inform executive directors, management boards, managers and employees about these blockchain principles. For example, please read our white paper 'The easiest way to understand blockchain and its applications'.
What is the strength of blockchain?
Blockchain applications create a fundamental change in the way in which companies, and public and semi-public organisations perform their tasks:
- The way decisions are made changes because there no longer is a trusted third party and there is (information) equality among the involved parties. Instead of control, trust in the data and the automated decisions is key in the services provided.
- The processing of (financial) transactions changes because this happens automatically with blockchain and the administrative flows largely disappear.
- The interaction between clients, citizens and suppliers changes because they truly collaborate. This reduces waiting time and administrative burden.
Four typical blockchain applications in government
Currently there are four categories of blockchain applications. The first category includes applications that are close to the current ways of thinking and working and can therefore be realised over a relatively short period of time. For second and third category applications this is true to a lesser extent. The implementation of these blockchain applications therefore presents a greater challenge. The disruptive effect when the technology is optimally used appears in the fourth category. The realisation of such applications requires significantly more time than the applications in the first three categories.
- Category 1: Simplification of administrative processes involving many parties.
- Category 2: Preventing rather than curing: changing the control function.
- Category 3: Clear registration of the ownership of information security details.
- Category 4: New citizen identity: managing one’s own identity details.
Three typical blockchain applications in the business sector
Globally speaking, blockchain technology has three major benefits: assurance that the data has not been compromised, assurance that contracts are executed correctly and the elimination of the need for a trusted third party to record agreements. These three benefits are useful for improving various processes. As a result three main types of blockchain applications are emerging:
- Tracking and Tracing: recording and providing insight into the origin, quality and ownership of (digital) products.
- New ways of chain cooperation: using only one shared data infrastructure without a thrusted party
- Efficient execution of processes: automatization of processes where proper execution is guaranteed without a thrusted party.
Blockchain applications in actual practice
Our approach combines technical, organisational and legal aspects. Together with you we work on the technical, organisational and legal issues and challenges at the same time during the discovery, experimentation and implementation of blockchain applications. These three issues cannot be resolved independently of each other, because they affect each other. For example, what is the legal privacy framework and how can this technically be guaranteed in a blockchain application? Due to the cohesion of our blockchain approach, blockchain applications can be developed that can really be implemented and that have an impact in actual practice.
Technical issues and challenges
- How do we provide a solution that meets requirements relating to the user interface and user experience?
- Which blockchain platform meets the specified requirements and wishes?
- How do we develop a truly decentralised solution?
- How do we develop a future-proof solution?
- How do we provide a solution that fits into the existing ICT infrastructure of the involved parties?
- How do we develop a solution that can technically be expanded to include other services or that can be scaled up to include other organisations?
Our preference is to use the iterative short-cyclic Scrum method. During each iteration (sprint), the team takes on a previously selected quantity of work within a specified period of time and delivers a full or a partial result.
Organisational issues and challenges
- How do the blockchain applications fit into the organisation of the partnership and governance?
- How do the parties in the chain work together?
- What is the decision-making process?
- What role is permitted to do what and when?
- What is the impact of blockchain applications on strategy and policy?
- How do blockchain applications fit in with existing processes and procedures?
- What HR policy is required for the provided blockchain applications?
- What new roles and functions arise as part of the new performance of tasks?
- What are the required competencies for this?
- At what point does the development and implementation of blockchain applications deliver a positive business case?
- What are the benefits for the parties in the chain?
- What investments and operating costs are involved for all parties?
All parties will be involved in the feedback loop to manage the development of blockchain applications and to anticipate the organisational effects.
Legal issues and challenges
A number of issues relating to blockchain at the interface of the technology and the application require close collaboration. We address these issues in Scrum sprints with multidisciplinary teams.
- How do we develop a blockchain solution that meets the privacy legislation (General Data Protection Regulation (GDPR)?
- How do we deal with requirements concerning the deletion of data, while it is impossible to delete data in a permissionless blockchain?
- How do we develop a blockchain application that complies with a specific law domain, such as financial products?
- How does a government organisation comply with the decision-making conditions under public law in relation to the use of smart contracts and keep (minimum) control?
Actively acquire knowledge together in cocreation
We would be pleased to enter into a partnership with your organisation to explore the added value of blockchain applications, and to experiment with these applications or to demonstrate their added value in actual practice. The basic premise is to actively acquire knowledge together. The needs and the innovation potential of your organisation are leading and as such are the determining factors in formulating the learning process. You are in control and the acquired knowledge will be embedded in your organisation.
If you would like to know more about the impact of blockchain on your organisation and to what extent this technology enables you to protect the added value of your organisation, please contact one of our consultants.