Examining and Evaluating Potential Blockchain Applications ...uu.diva-portal.org/smash/get/diva2:1298133/FULLTEXT01.pdfthe blockchain is a distributed, immutable data base, able to

TVE-MILI 19001

Examensarbete 15 hpFebruari 2019

Examining and Evaluating Potential Blockchain Applications in Manu- facturing and R&D

Peter Soldner

Masterprogram i industriell ledning och innovationMaster Programme in Industrial Management and Innovation

Teknisk- naturvetenskaplig fakultet UTH-enheten Besöksadress: Ångströmlaboratoriet Lägerhyddsvägen 1 Hus 4, Plan 0 Postadress: Box 536 751 21 Uppsala Telefon: 018 – 471 30 03 Telefax: 018 – 471 30 00 Hemsida: http://www.teknat.uu.se/student

Abstract

Examining and Evaluating Potential BlockchainApplications in Manufacturing and R&D

Peter Soldner

Blockchain – the technology behind virtual currencies such as Bitcoin – is being promoted by many as one of the most promising emerging technologies. At its core the blockchain is a distributed, immutable data base, able to pinpoint exactly when and by whom a given transaction has been made. Similar to the internet in its early days, blockchain (often referred to as Distributed Ledger Technology) must be seen as a foundational technology, enabling a great variety of potential applications. The blockchain’s greatest potential lies in its ability to disintermediate and optimize very specific processes, companies should first evaluate exactly where and how they could benefit from it and whether blockchain-based solutions could provide an advantage compared to traditional ones. Some of the blockchain’s key advantages include disintermediation, improved traceability of products, increased transparency of transaction histories, as well as enhanced security of records regarding fraud and unauthorized activities. Within manufacturing industries, some of the most promising applications of the technology lie in the field of supply chain management and logistics, distributed manufacturing (e.g. 3D-printing), as well as the Internet of Things (IoT). R&D departments might be able to use the technology as a way to defend intellectual property, similar to how they could use a notary service. Blockchain enabled 3D-printing might also be of interest in the case of low production volume samples and prototypes.

TVE-MILI 19001Examinator: Enrico BaraldiÄmnesgranskare: Sofia WagrellHandledare: Marc Fritzen

TableofContent

I

Table of Content TableofContent..................................................................................................................I

ListofFigures....................................................................................................................IV

ListofAbbreviation............................................................................................................V

1. Introduction................................................................................................................1

1.1 ProblemDiscussionandResearchObjectives...................................................................1

1.2 Content............................................................................................................................1

2. Background.................................................................................................................3

3. Methodology...............................................................................................................4

3.1 ResearchPhilosophy........................................................................................................4

3.2 ResearchApproach..........................................................................................................4

3.3 ResearchStrategy.............................................................................................................4

3.4 TheoreticalChoices..........................................................................................................4

3.5 Validity.............................................................................................................................5

3.6 Reliability.........................................................................................................................5

3.7 Bias..................................................................................................................................53.7.1 Biasindatainterpretation.................................................................................................................53.7.2 Samplebias........................................................................................................................................5

3.8 Ethics...............................................................................................................................6

3.9 SourcesandDataCollection.............................................................................................63.9.1 Literaturesources..............................................................................................................................63.9.2 Non-writtensecondarysources:.......................................................................................................63.9.3 Primarydatacollection......................................................................................................................7

4. TheUnderlyingTechnology.........................................................................................8

Definition.............................................................................................................................8

4.1...............................................................................................................................................8

4.2 HowBlockchainTechnologyWorks..................................................................................84.2.1 Fivebasicprinciplesofblockchain....................................................................................................94.2.2 Blockchain’sarchitectureexplained................................................................................................10

4.3 TheCurrentStateofBlockchainTechnology...................................................................114.3.1 Firstgenerationblockchains............................................................................................................124.3.2 Secondgenerationblockchains.......................................................................................................12

4.4 LimitationsofBlockchainTechnology.............................................................................124.4.1 Currenttechnicalchallenges...........................................................................................................124.4.2 Nontechnicallimitations.................................................................................................................13

5. TheoreticalAnalysis...................................................................................................14

5.1 DefiningInnovation........................................................................................................14

5.2 TechnologyAdoption.....................................................................................................14

TableofContent

II

5.2.1 Thediffusionofinnovationtheory..................................................................................................145.2.2 Thecurrentstateofblockchaintechnologyadoption....................................................................155.2.3 Thes-curveprofileoftechnologyadoption....................................................................................165.2.4 Critique............................................................................................................................................16

5.3 TechnologyImprovement...............................................................................................165.3.1 Thes-curveoftechnologyimprovement........................................................................................165.3.2 Discontinuity....................................................................................................................................175.3.3 Critique............................................................................................................................................18

5.4 AnalyzingthePaceofTechnologySubstitution...............................................................18

5.5 AssessmentAlongtheGartnerHypeCycle......................................................................20

6. Blockchain–AFoundationalTechnology...................................................................21

6.1 AdoptionStatusofFoundationalTechnologies...............................................................21

6.2 AdoptionMatrixforFoundationalTechnologies.............................................................21

7. DifferentApplicationsofBlockchainTechnology.......................................................23

7.1 EnvironmentsinwhichBlockchainisUseful...................................................................237.1.1 Advantagesofblockchaintechnology.............................................................................................237.1.2 Environmentsinwhichblockchaintechnologycouldbebeneficial................................................247.1.3 Genericblockchainapplications......................................................................................................24

7.2 OverviewofBlockchainUseCasesacrossdifferentIndustries........................................257.2.1 Banking............................................................................................................................................257.2.2 Insurance.........................................................................................................................................257.2.3 Energymarkets................................................................................................................................267.2.4 Retail&consumergoods................................................................................................................267.2.5 Publicsector....................................................................................................................................267.2.6 Healthcare.......................................................................................................................................277.2.7 Automotive......................................................................................................................................277.2.8 Entertainment.................................................................................................................................28

8. BlockchaininManufacturing.....................................................................................29

8.1 Supplychainandlogistics...............................................................................................29

8.2 InternetofThings(IoT)...................................................................................................308.2.1 Improvedsecurity............................................................................................................................308.2.2 IdentifyingIoTdevices.....................................................................................................................308.2.3 Networkscalability..........................................................................................................................308.2.4 Dataintegrity...................................................................................................................................308.2.5 Grantingaccess...............................................................................................................................30

8.3 3DPrinting.....................................................................................................................31

9. BlockchainApplicationsinResearch&Development.................................................32

9.1 DefensivePublishing......................................................................................................329.1.1 Idea..................................................................................................................................................329.1.2 Example...........................................................................................................................................329.1.3 Benefit.............................................................................................................................................33

9.2 SecuringSpecifications&ChangeRequestsontheBlockchain........................................339.2.1 Example...........................................................................................................................................339.2.2 Benefit.............................................................................................................................................34

TableofContent

III

9.3 3DPrinting.....................................................................................................................349.3.1 SAMPL..............................................................................................................................................35

9.4 DigitalProductBackbone...............................................................................................359.4.1 Idea..................................................................................................................................................36

10. Analysis.................................................................................................................37

10.1 AssessingtheStateofBlockchaininManufacturingandR&D.........................................3710.1.1 Technologyadoption..................................................................................................................3710.1.2 Technologyimprovement...........................................................................................................3710.1.3 Thepaceoftechnologysubstitution...........................................................................................3710.1.4 Gartnerhypecycle......................................................................................................................38

10.2 DefensivePublishing......................................................................................................3810.2.1 Interviewresponses&interpretation.........................................................................................3810.2.2 Adoptionmatrix..........................................................................................................................38

10.3 SecuringSpecifications&ChangeRequestsontheBlockchain........................................3910.3.1 Interviewresponses&interpretation.........................................................................................3910.3.2 Adoptionmatrix..........................................................................................................................39

10.4 3DPrinting.....................................................................................................................3910.4.1 Interviewresponses&interpretation.........................................................................................3910.4.2 Adoptionmatrix..........................................................................................................................39

11. Conclusion..............................................................................................................41

Bibliography..................................................................................................................XLIV

ListofFigures

IV

List of Figures Figure1.Blockchain’sunderlyingtechnologies(source:ownrepresentationbasedonVoshmgir,2016,p.13)....8Figure2.Basicblockchainstructure(source:ownrepresentation).........................................................................9Figure3.Client/ServerandPeertoPeernetworks(source:ownrepresentationbasedonPhillips,2014)...........10Figure4.DiffusionofinnovationaccordingtoEverettM.Rogers(source:publiccontent)..................................15Figure5.Technolgys-curveaccordingtoRichardFoster(source:Mignogna,2015)............................................17Figure6.Technologydiscontinuity(source:Hinks,Alexander,&Dunlop,2007,p.3)...........................................17Figure7.TechnologycompetitionbetweenanoldtechnologywithconsiderationoftheirrespectiveecosystemsaccordingtoAdner&Kapoor(source:Adner&Kapoor,2015,p.5).....................................................................18Figure8.Resultingmatrixwhenconsideringthenewtechnology’semergencechallengeandtheoldtechnology’sextensionopportunity(source:ownrepresentationbasedonAdner&Kapoor,2016)...................19Figure9.Garnerhypecycle(source:GartnerResearch,2013,p.15)....................................................................20Figure10.Surveyresults(source:ownrepresentation)........................................................................................20Figure11.Adoptionoffoundationaltechnologies(source:ownrepresentationbasedonIansiti&Lakhani,2017)...............................................................................................................................................................................22Figure12.Defensivepublishingonblockchain(source:ownrepresentationbasedonBernsteinTech.,2017)....33Figure13.Storingcontractsorotherdocumentsontheblockchain(source:ownrepresentation)......................34

ListofAbbreviation

V

List of Abbreviation CARS Credibility,Accuracy,Reasonableness,Support

GDP GrossDomesticProduct

IIot IndustrialInternetofThings

IoT InternetofThings

IT InformationTechnology

MB Megabyte

R&D ResearchandDevelopment

SAMPL SecureAdditiveManufacturingPlatform

tps Transactionspersecond

US UnitedStates

1.Introduction

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1. Introduction Blockchain,thetechnologybehindBitcoin,hasbeenacontroversialtopicinrecentyears.Manyexpertsseegreatpotentialwithinvariousindustries,andapplicationsofthetechnologyarenotonlyfoundinthefinanceindustry.Whileopinionsonthetechnologyoftenvary,interesthascertainlyspiked,andgiventheWorldEconomicForum’s2015estimatethat10%oftheglobalgrossdomesticproduct(GDP)willbestoredonblockchaintechnologyby2027, it is likelythatthetechnologywillaffectbusinessprocessesinonewayoranother(WorldEconomicForum,2015).

1.1 Problem Discussion and Research Objectives Duetotheongoingpublicinterest,aswellasthefoundationalnatureofthetechnology,manypoten-tialusecasesforblockchaintechnologieshavebeenproposedinrecentyears.Whilethefinancialin-dustryalreadyhasaselectionoffunctioningblockchainapplications,mainlyintheformofcryptocur-rencies,manyoftheusecaseswithinothersectorsaremerelyideasorinitialconceptsatthispoint,whichmakesitdifficulttodistinguishbetweenfactandhype.

The same is true for blockchain applications within manufacturing industries, an area that isstarting to receivemoreandmoreattention.Therefore, thepurposeof this thesis is toa) identifyand describe potential blockchain applications within manufacturing industries on anoperationallevel(Objective1).

A subject that so far has only received little attention, however, is the blockchain’s relevance inregards to product development activitieswithinmanufacturing industries. Thus, the secondmainobjective of the thesis is to b) examine how the technology can be used within manufacturingR&Ddepartments(Objective2).

Forboth,objective1&2,potentialusecaseswereeitherfoundinexistingliteratureorideatedbytheauthor.

Oncethestudyhasbeenabletoidentifydifferentscenariosinwhichblockchaintechnologycouldbeusedinamanufacturer’sR&Dsetting,themainresearchquestionofthisthesis,aspresentedbelow,canbeaddressed.

“Whichpotentialapplicationofblockchaintechnologycouldgeneratethegreat-estimpactonR&Dactivitieswithinmanufacturingindustries,andhowlikelyare

establishedmanufacturingcompaniestoadopttheusecase?”

1.2 Content Inordertocreateabettergeneralunderstandingforthesubject,chapters4,0and6willprovidethereaderwithnecessarybackgroundinformationaboutblockchaintechnology,aswellasexaminethenatureofthetechnologyfromatheoreticalperspective.

Chapter7aimstogivethereaderanideaofhowthetechnologycangenerallybeusedbyexplaininginwhichenvironmentsandunderwhichfactorstheuseofblockchaintechnologycanbebeneficial.Italsoprovidesvariousexamplesofapplicationsacrossdifferentindustries.

Thelatterhalfofthethesisshiftsthefocustowardsthemanufacturingindustry.Whilechapter8de-scribeshowthetechnologycangeneratevalueformanufacturingcompanies(Objective1),chapter9triestoidentifypotentialblockchainapplicationsinResearch&Development(Objective2).

1.Introduction

2

InordertobetterunderstandhowthetechnologycouldbeappliedtoanR&Dsettingdifferentindustryexpertshavebeeninterviewed,andboththeresultsaswellasaninterpretationoftheseresultsarepresentedinananalysis(chapter10).Thischapteralsoevaluateshowthenewlygatheredresultscom-parewiththetheoreticalbackgroundprovidedinchapter5and6.

Atlast,afinalconclusionispresentedinchapter11,whichalsocontainsapersonalopinionandrec-ommendations.

2.Background

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2. Background Asindicatedinchapter1.1,thetermblockchainhasbeenusedquite loosely inrecenttimes.Manyprojects,companies,orresearchgroupsarepromisingblockchain-basedproductsthattheyclaimwillsolveavarietyofproblems.Likeformostotherindustries,therehavealsobeenmanyproposalsonhowblockchaincouldbeusedinamanufacturingandR&Dsetting.

Inordertobetterevaluatetheiractualpotential,theideawastopresentindustryexpertsfromman-ufacturingandR&Dwithpotentialuse-cases,andhavethoseexpertsevaluatethembasedontheirexperience,insight,andknowledge.Apartnershipwith3DSEManagementConsultantsGmbH,aMu-nichbasedconsultancywithexpertise inproductdevelopment, systemsengineering,agileproductdevelopmentandotherR&Drelatedtopics,wouldnotonlyallowaccesstovariousexpertsfromclient-companies,butalsoadaytodayinteractionwithexperiencedconsultantswithinthecompany.

3.Methodology

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3. Methodology 3.1 Research Philosophy Forthepurposeofthestudy,interpretivismwaschosenasthefavoredresearchphilosophy.Asopposetopositivism,whichtriestocompressinsightsintouniversal,law-likegeneralizations,interpretivismpromotestheexplorationandinterpretationofsituationaldetails(Saundersetal.,2009).

3.2 Research Approach Byitsnature,deductivereasoningrequiresapredeterminedhypothesiswhichwillthenbetestedandevaluatedthroughoutthestudy.Duetothenatureofthetopic,aswellastheresearchquestion,adetailedhypothesiswouldhavebeendifficult formulate. Therefore, amore inductive researchap-proachwaschosen.Inductivereasoningrequirestheresearchertotakeanactiveroleintheresearchprocess,aswellasanoverallmoreflexiblestructurethatallowsforagilitythroughouttheresearchproject.Suchanapproachfurtherrequiresagoodunderstandingabouttheresearchcontextwhich,consideringthenoveltyandnatureofblockchain-technology,wouldbealargepartoftheoverallpro-ject.Asolidunderstandingofthetechnologywasalsorequiredas,forresearchobjective2inparticu-lar,usecasesfromdifferentindustriesweretransferredintoanR&Dsetting.Havinganindustrypart-nerwouldmakeitpossibletosetupin-depth,personalinterviewswithvariousindustryexperts(qual-itativedata).Therefore,anotherreasonforchoosinganinductiveresearchapproachwasthatinduc-tive reasoning favorsqualitative-overquantitativedata collection,aswell asbeing less concernedabouthavingtoconcludegeneralizationsfromthedataobtained(Saundersetal.,2009).

3.3 Research Strategy Sinceansweringtheresearchquestionsrequiresadeepunderstandingofthecontextinwhichblock-chain-technologywillbeapplied,acasestudyapproachwaschosen.Ascase-studiesallowforavarietyofdifferentdatacollectiontechniquestobeused,theycanbringflexibilitytotheresearchprocess.Triangulation–validatingdatabyusingdifferentdatacollectiontechniqueswithinthecasestudy–wasachievedbyusing interviews,aswellasaquestionnaireattheendofeach interview.Sinceallinterviewpartnerscomefromadifferentcompanyandhaveuniquebackgrounds,theresearchstrat-egyconsistsofmultiplecases,aseachinterviewcouldbeconsidereditsindividualcasestudy(Saundersetal.,2009).

3.4 Theoretical Choices Inorder togive the readerabetterunderstandingofhownewtechnologiesgenerallybehave inamarket,chapter5willexplaindifferenttheoreticalconcepts.Apartfromdefiningtheterminnovation,thischapterwillalsoexplaintheprocessofhownewtechnologiesareadoptedovertime(technologyadoption),aswellashowtechnologiesimproveovertime(technologyimprovement).Furthermore,differentfactorsthatcaneitherprolongorshortenatechnologieslifecyclewillbedescribed(chapter5.4).Topresentthereaderwithanideaabouthownewtechnologiesareoftenperceivedbythepublic,the theorybehind the famousGartnerHypeCyclewillbeexplained (chapter5.5). Inchapter6 thedifferencebetweendisruptive-andfoundationaltechnologieswillbeexplained,andhowthisdistinc-tionaffectsthetechnologiesadoptionprocess.

3.Methodology

5

3.5 Validity Validitydescribestheaccuracy–thedegreetowhichananswersrelatestothequestion–ofastudy(Mohajan,2017).Thus,wheninterpretingtheresultsoftheexpertinterviews,itiscrucialtorealizethatanswerscanbesubjective.Forexample,whenaskingaboutthebusiness-implicationsofagiventechnologyuse-case,onemustkeepinmindthattheinterviewpartnermightunconsciouslyanswerthequestionwithhisorherpersonalbackgroundorcompany-roleinmind.Thethesistriestoimprovevaliditybyconductingatotalofsevenin-depthinterviews,thusdecreasingtheeffectofeachinterviewpartner’spersonalbackgroundontheoverallscore.However,anevengreatersamplesizewouldfur-therincreasethestudy’svalidity.

3.6 Reliability Duetotheinductiveresearchapproach,aswellasthetechnologieshighdegreeofnovelty,itmustbenotedthatinter-raterreliability,whichessentiallydescribestheconsistencyofstudyresultswhenper-formedbydifferentresearchers,isdifficulttofullyensure(Mohajan,2017).Notonlywouldanotherresearchermaybecomeupwithdifferentuse-cases,thewayinwhichadifferentresearcherwouldexplaintheuse-casestotheinterviewpartnerscouldalsohaveaneffectontheirrespectiveopinions.

Intra-raterreliability,ortheconsistencyofrepeatedtestsbythesameresearcher,ismorelikelytobeestablished since the interview-process,especiallywhenexplaining theuse-cases,waspracticed inadvanceandfollowedaconsistentstructure(Mohajan,2017).

3.7 Bias Biascanbedescribedas“anytrendordeviationfromthetruthindatacollection,dataanalysis,inter-pretationandpublicationwhichcancausefalseconclusions”(Šimundić,2013,p.1).Both,interviewpartnersandresearcherscanbesubjecttobias.Inordertominimizethedeviationfromthetruthitisnotonlycrucialtoacknowledgethatbiasdoesexist,butalsototryidentifyingitssourcesandwhereitmightbemostprominent.

3.7.1 Biasindatainterpretation

Whenresearchingagiventechnologyoveranextendedperiodoftime,researchesoftendeveloptheirownopinionsonwhereandhowthetechnologycanbeused.Whileasolidunderstandingaboutthetechnologyiscrucialforinductiveresearch,researchesmustensuretonotinterpretfindingsinfavoroftheiralreadyexistingbeliefs(Šimundić,2013).

3.7.2 Samplebias

Sinceitisimpossibletointerviewanentirepopulation(e.g.everypersonworkinginR&D),asampleneedstobeselected.However,thissampleshouldbeselectedinawaythatbestrepresentsthepop-ulation(Šimundić,2013).Inthiscaseitwasamaingoaltofindinterviewpartnersfromdifferentin-dustriesandwithdifferentroles.

3.Methodology

6

3.8 Ethics Researchethicsistryingtoanswerhowaresearchtopicshouldbeformulated,howdatashouldbecollected,stored,processed,andanalyzed,aswellashowfindingsshouldbeformulatedinamoralandresponsiblemanner(Saundersetal.,2009).TheRespectProjecthasbroughtforwardawell-de-finedcodeofpracticeforethicalresearchconsistingofthreemainprinciples,eachexplainedingreatdetailandwithvarioussub-categories.Whilethefirstprincipledescribeshowscientificstandardscanbeensured,thesecondprincipleexplainshowcompliancewithregulationsandlawscanbeensured.Thelastprincipletouchesonhowtoavoidsocialandpersonalharminresearch(TheRESPECTProject,2004).

3.9 Sources and Data Collection The informationgatheredthroughouttheresearchprojectcanbecategorized in literaturesources,oralsources,andprimarydata.

3.9.1 Literaturesources

Duetotheinductiveresearchapproach,thefirstmaintaskwastodevelopagoodunderstandingaboutblockchain-technology.Themostconsistentlyusedapproachtoacquirein-depthknowledgewasex-tensiveliteratureresearch.Literaturecamefromboth,primary-andsecondarysources.

Primaryliteraturesources:

Primary literaturesourcesareoftendescribedas the firstoccurrenceofaparticularpieceof infor-mation(Saundersetal.,2009).Inthiscase,primaryliteraturemostlycameintheformofcompanywhite-papers(e.g.white-papersonaparticularblockchain-protocol),andothercompanypublicationssuchaswebsite-content,orcompanyreports.Sinceprimaryliteraturesourcesusuallyarenotsubjecttoreview-processes,contentneedstobetakenskeptical.

Secondaryliteraturesources:

Onceaprimary literaturesourcehasbeenpublished it isoftencategorizedassecondary literature(Saundersetal.,2009).Thus,secondaryliteratureoftencamefromsourceslikepublishedbooks,sci-entific-/industryjournals,newspapers,magazines,andotherdigitalsourcessuchaswebsites.Thistypeofliteraturewouldaccountformostoftheoverallliteratureanalyzedthroughouttheresearchproject.Duetothegeneralhypesurroundingthetopic itwas importanttoevaluatethecreditabilityofthevarioussources.InordertoensurequalityofsourcestheCARS(Credibility,Accuracy,Reasonableness,Support) Checklist for Information Quality as introduced by Harris (2010)was applied. During thisphase,literatureresearchwascomplementedbytwoinformalphoneinterviewswithIT-expertswithknowledgeinblockchaintechnology.

3.9.2 Non-writtensecondarysources:

Apartfromprimary-andsecondaryliteraturesources,informationwasalsogatheredfromaudio-andvideomaterialfoundontheinternet.Especiallyduringtheearlystagesofthethesis,wherethemainfocuswasonunderstandingthetechnologyitself,animatedYouTubevideosandrecordedexpertin-terviewswereavaluablesourceofinformation.ItmustbenotedthatinformationtakenfromYouTubeorsimilarplatformsisnotveryreliableandshouldthereforealwaysbeconfirmedbypublishedlitera-ture.However,theyweremostlyusedasastartingpointforfurtherliteratureresearch,astheyoftenhelpedclarifyingwhattosearchfor.

3.Methodology

7

3.9.3 Primarydatacollection

Duringthirdphaseofthethesis,thedifferentconceptsofblockchaininR&D,whosebasicfeasibilityhas already been proven at this point,were further examined. Informationwas gathered throughsevenone-hourinterviewswithR&Dexpertsfromvariouscompanies,whichwerefollowedbyaques-tionnaire.

Semi-structuredinterview:

Thereasonforchoosingsemi-structuredinterviewswasthatbyeliminatingtightboundaries,aratheropendiscussionabout theapplicability,usefulness,and futureof thedifferentuse-caseswouldbeencouraged.Thisinterviewformwouldalsoallowtovarythequestionsthemselves,aswellastheirparticularorderdependingontheparticipant’sindividualbackground.Furthermore,questionswouldmostlyhaveanopencharacter(Saundersetal.,2009).Assuggestedin(Blandford,2013),interviewsweregivenstructurebyhavingtheinterviewseparatedindifferentsections,aswellashavingvariouskeyquestionsalreadyprepared.Afterabriefpersonalintroduction,intervieweeswereaskedabouttheiralreadyexistingknowledgeonblockchaintechnologies.Thisexistingknowledgewasthensup-plementedbyadditionalexplanationsaboutthetechnology.Onceabasicunderstandingwasensured,participantswereintroducedtothedifferentuse-cases.Inordertoallowforabetterconversationalflow, the entire interview was audio-recorded and only important written comments were made(Saundersetal.,2009).Permissionforaudio-recordingtheinterviewwasobtainedbyhavingpartici-pantssignaconsentform.

Questionnaire:

Withthehelpofafinalquestionnaire,participantswereaskedtoquantifytheirbeliefsaboutthepo-tential,likelihood,andimplementationtimeframesofeachuse-case.Whilepotentialandlikelihoodweretoberatedonascalefrom0to10,implementationtimeframeswereassessedinyears.Giventhethreepresenteduse-casesandthethreedimensionsexplainedabove,atotalofninevalueswereneededtocompletethequestionnaire.Afteraninitialexplanationoftheprocess,interactionbetweenparticipants and the interviewerwas kept at aminimum inorder to ensure anunbiased response(Saundersetal.,2009).

4.TheUnderlyingTechnology

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4. The Underlying Technology Accordingtoa2016surveyconductedbyDeloitte,blockchaintechnologyisbecomingakeybusinessfocusforUScompaniesinvariousindustries.However,thesamesurveyalsofoundthatknowledgeaboutthetechnologyisoftenratherlimited(Schatsky&Piscini,2016).ThefollowingwillthereforetrytogiveabasicunderstandingofBitcoin’sunderlyingtechnology.

4.1 Definition Thetermblockchainwasfirstintroducedinawhitepaperaboutthevirtualcurrencybitcoin.Thenine-pagepaper,whichdescribesBitcoin’sunderlyingtechnology,includingfunctionsandalgorithms,waspublishedin2008bytheanonymousauthor(s)behindthepseudonymSatoshiNakamoto(Nakamoto,2008).Sincethen,manyexpertshavebroughtforwarddifferentdefinitionsonwhattheblockchainreallyis.Thefollowingtwohavebeenselectedbytheauthor.

DonandAlexTabscott,authorsofBlockchainRevolution,definedtheblockchainasfollows:

“Theblockchainisanincorruptibledigitalledgerofeconomictransactionsthatcanbeprogrammedtorecordnotjustfinancialtransactionsbutvirtuallyevery-thingofvalue.” (Tabscott&Tabscott,2016,p.48)

JenniferRideoutexplainedblockchainas

“acontinuouslygrowinglistofrecordsortransactionbetweenpeersthatarelinkedtogethersequentiallyinblocks.Eachblockinthelink(orchain)containsacryptographichashforthepreviousblock,atimestampandtransactiondata.

Blocksincludearecordofeverytransactionthatoccurredonthenetworkduringthatperiod,andeverytransactionisvalidatedtoguaranteeaccuracy.” (Rideout,2018,p.1)

4.2 How Blockchain Technology Works Atitscore,blockchaintechnologyusespeer-to-peernetworking,cryptographyandgametheory,allofwhichhavebeenaroundforyears.Blockchain,however,presentsanewconceptofcombiningthethree(Figure1).

Figure 1. Blockchain’s underlying technologies (source: own representation based on Voshmgir, 2016, p. 13)

Astheblockchainexistsacrossanentirenetworkofcomputers,thereisnoneedforcentralizedservers(Lord,2016).Theblockchainallowsforinformationtoberecordedandsharedbyacommunity,withallmembershavingacopyoftheinformationandcollectivelyvalidatingnewinformation(Trouton,


9

Vitale&Killmeyer,2016).Newinformationisaddedintheformofblocks,whicharechainedtogetherusingcomplexcomputationalalgorithms.Thisprocessiswhatgivestheblockchainitsname.Further-more,eachindividualcomputer(called‘node’)withinthenetworkhasacompletehistoryoftransac-tions,startingwiththeveryfirstblock(Woodside,Augustine&Giberson,2017).

Inotherwords, theblockchain isanetworkofnodesall runningthesameprotocolandholdinganidenticalcopyoftheledgeroftransactions.Throughtheconceptofmachineconsensus,transactionscanbecarriedoutwithoutthehelpofintermediaries(Voshmgir&Kalinov,2017).

Figure 2. Basic blockchain structure (source: own representation)

4.2.1 Fivebasicprinciplesofblockchain

Inordertobetterunderstandthetechnology,itcanbehelpfultoexploretheblockchain’smostfun-damentalattributes.Iansity&Lakhani(2017),forexample,concludedthatblockchainisbestdescribedbythefollowingfiveprinciples:

1. Distributeddatabase:Everynodewithintheblockchainisgrantedaccesstotheentiredatabase,canseeitscompletehistory,andcandirectlyverifyitspartner’stransactionrecordswithouttheneedofaninter-mediary.Therealsoisnosinglypartythathascontroloverthedataortheinformation.

2. Peer-to-peertransmission:Communication between peers occurs directly, thereby eliminating the need for a centralnodetostoreandforwardinformation.

3. Transparencywith‘pseudonymity’:Everyuserwithintheblockchaininrepresentedbya30-plus-characteralphanumericaddress.Everytransactionanditsassociatedvalueislinkedtotheuser’saddressandclearlyvisibletoallothernodesontheblockchain.However,sinceauser’salphanumericaddressalonedoesnotrevealanypersonalinformationbyitself,itisuptotheuserstodecidewhethertoprooftheiridentitytootherusersorremainanonymous.

4. Irreversibilityofrecords:Differentcomputationalalgorithms(furtherexplainedin4.2.2)ensurethatatransactionthathasbeenenteredontheblockchainstaystherepermanent.Thisisduetothefactthatthenewtransactionisnowlinkedtoeveryothertransactionrecordbefore.


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5. Computationallogic:Duetothedigitalnatureoftheblockchainandtheindependenceonintermediariestovalidatetransactions,theseverysametransactionscanbetiedtocomputationallogicandessentiallybeautomatedandprogrammed.

Figure 3. Client/Server and Peer to Peer networks (source: own representation based on Phillips, 2014)

4.2.2 Blockchain’sarchitectureexplained

Thefollowingsub-chapterwilltrytoexplaintheblockchainsbasicarchitecture,itsworkingmechanism,aswellasitsmostfundamentalcomponents.

Blocks:

Asalreadyindicatedbythename,ablockchainismadeupofaseriesofblocks,witheveryblockcon-tainingaspecificsetofinformation.Thetypeandamountofinformationperblockisdefinedbytheblockchain’sindividualprotocol.Onthebitcoinblockchain,forexample,blockscontainasetoftrans-actionswithalimitof1MB.IfaddressAwastosendx-amountofbitcointoaddressB,thisandmanyother transactions would be stored within a block and subsequently added to the blockchain(Drescher,2017).Apartfromtheactualdata,eachblockalsocontainsatimestamp,thepreviousblockshashvalue,aswellasitsownhashvalue(explainedbelow).

Hashvalues:

Ahashvaluecouldessentiallybedescribedasthedigitalfingerprintfordata.Withthehelpofahashfunction,anykindofdata(input)canbeturnedintoauniquehashvalue(output).Hashvaluesarenumericnumberswithafixedlength,whichdoesnotdependonthesizeortypeoftheinput-data.

Hashfunctionsareone-wayfunctions,meaningthatthesameinput-datawillalwaysresultinthesamehashvalue,butthereisnowayofrecreatingtheinput-datafromthehashvaluealone.Theycanfurtherberegardedascollisionresistant,sincetheycanbedesignedinawaythatmakesitvirtuallyimpossibletoreceivethesamehashvalueasanoutput,unlesstheinput-dataisidentical(Drescher,2017).

Timestamp:

Aseveryblock,aswellaseverytransaction,containsatimestamp,itallowstoeffectivelyidentifytheexacttimeanddataagiventransactionwasconducted(Drescher,2017).


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Linkingblocks:

Asthetermblockchainsuggests,blocksarepermanentlylinkedtogethersimilartolinksinachain.Thisisachievedbyusingthehashvalueofthepreviousblockasoneoftheinput-dataforthehashfunctionofthecurrentblock.Thismeansthatthehashvalueofanygivenblockdirectlydependsonthehashvalueofthepreviousblock.

Ifwetakeintoconsiderationthatthispreviousblockagaindependsonthehashvalueofitsrespectivepredecessor,itbecomesevidentthateachgivenblockdirectlydependsonthehashvaluesofeveryotherblockbefore.

Tamperproof:

Theconceptexplainedintheparagraphabovealsoimpliesthatoncedataisstoredontheblockchainitbecomespermanentandtamperproof,asanychangeinablocksdatawouldalteritshashvalue,thusalteringthehashvaluesofeverysubsequentblock(includingthemostcurrent).

Consensusmechanism:

Whenevernewinformationisadded,theblockchain’salgorithmtriestoensurethatonlyvalidblockscontainingvalidtransactionsandvalidblockheadersareaddedtotheblockchain.Thecomputersthatverifytransactionsarecalledminers.Toensurethattheinformationtobeaddedtotheblockchainiscorrect,thealgorithmrequiresamajorityofminerstoagreeoninformation.Thisprocessiscalledtheconsensusmechanism.Ofcourse,noonewouldwillinglyverifyinformationwithouthavingsomein-centive,thusminersareusuallyrewardedwithtokens.Incaseofthebitcoinblockchain,theincentivecomesintheformofbitcoins(Drescher,2017).

Proofofwork:

Asmentionedbefore,ifablockistobeaddedtotheblockchain,allnodesmustagreeonitsvalidity(consensusmechanism).Thisprocessiscalledmining,andtheparticipatingnodesarecalledminers.Butwhatpreventsaminerfromproposingthousandsofinaccuratetransactions,hopingthateventu-allythenetworkwillvalidateoneofhisorherinaccuratetransactions.Proofofworkpurposelymakestheprocessofproposingnewblockstothenetworkexpensive.Onlytheminerto firstsuccessfullysolveanextremelydifficultcalculationcanproposeanewblock.Sinceitismorethanlikelythatablockcontainingfalseinformationwillberejectedbythenetworkanyway,theminerwouldonlywastecom-putingpowerwhentryingtoaddfalsetransactionstotheblockchain(BitFuryGroup,2015).

Proofofstake:

Inadditiontoproofofwork,proofofstakeisanotherapproachtoensuretheblockchain’sintegrity.Nodesparticipatingintheproofofworkmechanismarecalledvalidatorsandcanberegardedastheequivalenttominerswithinaproofofworkmechanism.Here,thevalidatorthatgetstoaddtheblocktotheblockchainischosenrandomlyoutofapoolofvalidatorsthatallhavetokensfromthespecificblockchain.Ifavalidatorischosentoaddthenewblock,thesystemwillfreezesomeofthevalidatorstokensbeforetheblockisadded.Thesetokenswillonlybereturnedoncethenetworkhasagreedthattheblockisvalid.Thedepositsystemthuscreatesanincentiveforvalidatorstoonlyaddvalidblocks(BitFuryGroup,2015).

4.3 The Current State of Blockchain Technology Likewithmostothertechnologies, theblockchain’scapabilitiesareconstantlybeing improved.Alt-houghthereisnocommonconsensusinliterature,mostexpertstypicallycategorizeblockchainsintotwogenerations:


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4.3.1 Firstgenerationblockchains

Theappearanceofbitcoin in2008marked the inventionof theblockchain,andbitcoinasadigitalcurrencywasthefirstusecaseofthetechnology.Bymakingbitcoin’scodeopensource,thecreatorsbehindbitcoinalloweddevelopmentteamsallovertheworldtocreateavarietyofnewblockchains,allmimickingandexpandingonthebitcoinblockchain’sunderlyingideaandcode.Thus,allfirstgen-erationblockchainsweredecentralizedvirtualcurrencies,whichessentiallymeanstheyrecordtrans-actionsandkeepapublicledgerofthem.SomeexamplesincludeLitecoin,Monero,Dashandmanymore(“BlockchainGenerations:Cryptocurrencies,BlockchainPlatforms,DecentralizedWorld,”2018).

4.3.2 Secondgenerationblockchains

ThesuccessoffirstgenerationblockchainsinformofvirtualcurrenciesmadeITexpertsthinkaboutthegreaterpotentialofthedistributedledgertechnology.In2013,RussianprogrammerVitalikButerinproposedtheideaofnotonlyrecordingtransactionsonablockchain,butalsoincorporatingprogram-ming languageontotheblockchain.Heproposedthe ideaofsmartcontracts,whichat itscorearesmall,self-executingcomputerprogramsrunonablockchain.SmartcontractsbecamethebasisforButerin’sblockchainplatformEthereum.

4.4 Limitations of Blockchain Technology Thefollowingchapteraimstodescribewhereandwhyblockchaintechnologieshavetheirlimitations.

4.4.1 Currenttechnicalchallenges

Belowaspectshavebeenidentifiedassomeofthemostimportanttechnicallimitationsoftheblock-chaintechnology:

Security:

Althoughthecryptography itselfused intheblockchain isconsideredextremelysecure, itdoesnotprotecttheownersfromaccidentallyrevealingtheirprivatekeysorhavingthemstolen.Thisprivatekeyistheonlysecurityinstrumentauthorizingthelawfulowner.Onceanotherpersonhasgottenac-cesstotheprivatekey,thesecurityisbroken(Drescher,2017).

Anothersecurityissueisthepossibilityofa51-percentattack.Inthisscenario,asingleminingpoolprovidesmorethanhalfofthesystem’scomputationalpower.Thissingleminingpoolwouldthenbeable to record false informationon theblockchain.However, in reality this isonly relevant tonewblockchains,asonceagivenblockchainhasreachedalargernumberofparticipants(criticalmass),a51-percentattackbecomesvirtuallyimpossible(Drescher,2017).

Limitedscalability:

BlockchainssuchasBitcoinorEthereumrelyonaconsensusmechanismamongstnodeswhenevernewblocksareadded.Thisensuresthatthehistoryoftransactiondataisprotectedfrombeingma-nipulatedorforged.However,thisisalsowhatlimitstheblockchain’sthroughput,ortotalnumberoftransactionspersecond(tps)theblockchaincanprocess(Drescher,2017).Incaseofthebitcoinblock-chain,thetransactionspeedislimitedtoaround7tps.Toputthisnumberintoperspective,theVISAnetworkcanreachupto10,000tps,andTwitterevenhasamaximumofaround15,000tps(Swan,2015).


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Highcosts:

Most blockchains use a proof ofwork consensusmechanism (chapter 4.2.2) to ensures theblock-chain’s integrity.Thismechanismreliesonsolvingcomputationalhashpuzzleswhichrequires largeamountsofcomputerpower,whichinreturnleadstohighcostsinformelectricity(Drescher,2017).

Hiddencentrality:

Althoughanycomputercould,intheory,useitscomputationalpowertobecomeaminer,therealitylooksdifferent.Ashashpuzzlesarerequiredto increase indifficulty,mostofthemining inmatureblockchainsisdonebyafew,highlyspecializedentitieswithvastamountsofcomputationalpower,andareusuallylocatedinareaswithaccesstocheapelectricity.Thesegroupscouldeventuallyformanoligopoly,thusunderminingthedistributednatureoftheblockchain(Drescher,2017).

4.4.2 Nontechnicallimitations

Lackoflegalframework:

Aswithmostinnovations,thesupportinglegalandregulatoryframeworksoftenlackbehindthetech-nology.Incaseoftheblockchain,manyquestionsregardingthelegalimplicationsandacceptanceoftransactionsareyettobediscussed.Manycomparetheblockchain’slegalstatustodaytothelackinglegalacceptanceofinternetcommerceinthe1990s(Drescher,2017).

Intermediariesfeelingthreatened:

Oneoftheblockchain’smainadvantagesisitsabilitytodisintermediateprocessesthatwouldnormallyrequireathirdpartytobecomeinvolved(furtherexplainedinchapter7.1.1).Anexamplecouldbetheentireprocessofpatent registration,wheremany intermediaries (e.g.notaries, lawyers,patentof-fices)areinvolved,makingtheentireprocessextremelybureaucratic.Storingpatentsonablockchaincouldpotentiallymakesomeofthem,orat leastpartoftheirworkobsolete.Those intermediariescouldbecomethreatenedintheirexistenceandmighttrytheirbesttoretainthestatusquo.Anotherprimeexamplecouldbethebankingindustry,whichmakessubstantialpartsofitsincomebychargingtransactionsfees.Especiallywhensendingmoneytoanothercountry,thesefeescouldbeveryhigh.Cryptocurrenciesallowtheexchangeofvaluedirectlybetweenpeersandwithouttheneedofinter-mediariesintheformofbanks.This,ofcourse,posesathreattotheirexistingbusinessmodel.

Lackofuseracceptance:

Thestillverymuchopenlegalstatusoftheblockchaincancauseuncertaintyamongstusers,whichinreturncanreducetheirinterestinthetechnology.Theuncertaintyonwherethedevelopmentoftheblockchaintechnology isheadedcausesfurtheruncertaintyamongstusers, thusfurtherdecreasingtheirinterest(Drescher,2017).

Pricespeculations:

Mostblockchainsareusingsomesortoftoken-systemtoincentivizeandrewardminers(chapter4.2.2“consensusmechanism”).However,manyofthesetokensaresubjecttopricespeculationsandoftenseedailypricefluctuationsofupto10%ormore.Thus,projectsbasedonpublicblockchainsarepre-sentedwithgreatlevelsofuncertainty(Fauvel,2017).

5.TheoreticalAnalysis

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5. Theoretical Analysis Thefollowingchapterwillpresenttheoreticalbackgroundinformation,aswellasatheoreticalanalysisonhowtheblockchaintechnologyfitsintoinnovationtheory.

5.1 Defining Innovation AustrianeconomistJosephSchumpeter,seenbymanyasthemostimportanteconomicthinkerofthefirsthalfofthe20thcentury,wasamongstthefirsttodefinetheterm‘innovation’.Inhis1939bookBusinessCycleshedescribesinnovationasthecreationofanewproductionfunction.Heexplainsthatanewproductionfunctioncouldbetheresultofanewproduct,theexplorationofnewmarkets,aswellaschangeswithintheorganizationalstructure(Schumpeter,1939).

5.2 Technology Adoption Thefollowingwillexplainhownewtechnologiesareadoptedintheirrespectivemarkets,aswellasanalyzethedegreetowhichblockchain-technologyhasbeenadapted.

5.2.1 Thediffusionofinnovationtheory

AccordingtoEverettM.Rogers’diffusionofinnovationtheory(1962),theadoptionofagiveninnova-tionwithinasocialsystemoccursatdifferenttimes.Rogersdescribesasocialsystemas“asetofin-terrelatedunitsthatareengagedinjointproblemsolvingtoaccomplishacommongoal”(Rogers,1962,p.24).Membersofthissocialsystemcouldbeindividuals,informalgroups,orinthiscaseorganiza-tions.Hewentontodividethepopulationwithinthesocialsystemintofivedifferentgroups,consistingofinnovators,earlyadopters,earlymajority,latemajority,andlaggards.

Innovators,whichaccountforaround2.5%ofthetotalpopulation,aretheveryfirsttoadoptanewtechnology.Theyarewillingtotakerisks,havesufficientfinancialbacking,andusuallyknowalotaboutthetechnology.

Thesecondgroupthatadoptsthetechnologyaretheearlyadopters(13.5%).Theyarepeoplethatusenewtechnologiessignificantlyearlierthanthemajority.Earlyadopterscanactasambassadorsofthenewtechnologyandformopinionsamongstthemajorityofusers.

Thenext34%arecalledtheearlymajority.Theyconsistofeveryonewhoadoptsthetechnologyaftertheearlyadopters,butbeforethehalf-waypointofadoptionisreached.

Liketheearlymajority,thelatemajorityaccountsfor34%ofthepopulation.However,thelatema-jorityconsistsofpeoplethatadoptatechnologyaftertheaverageconsumerdoes.Comparedwiththeearlymajoritythosepeopleoftenaremoreskepticaland/orhavealowerincome.Often,theymustfirstbeconvincedorpressuredtoadopt.

Thelastgrouptoadoptatechnologyarecalledlaggards.Theyaccountfor16%oftheoverallpopula-tion,andarethelasttoadopt.Laggardsareoftenaversetochangeandfocusedontraditions.Bythetimetheyadoptatechnology,innovatorsmighthaveoftenalreadymovedontoanewtechnology.

Whenvisualized,thediffusionofinnovationcurveoftentakestheshapeofabellcurve(Figure4).


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Figure 4. Diffusion of innovation according to Everett M. Rogers (source: public content)

5.2.2 Thecurrentstateofblockchaintechnologyadoption

Inordertoassesstheblockchaintechnologyalongthediffusionofinnovationadoptioncurve,Wood-sideetal. (2017) tooka triangulationapproach.They tried toassess the technologiesadoptionbycomparingtheresultofthreedifferentanalysis(anenvironmentalanalysis,atextanalysis,andafi-nancialanalysis).

Environmentalanalysis:

Theenvironmentalanalysis,wheretheyevaluatedthetechnologiespolitical-,economic-,social-,andtechnicalenvironment,determinedthatthatblockchaintechnologyisonitswaytotheearlyadopterscategory.Whatcurrentlypreventstheblockchainfromadvancingtotheearlyadopterscategoryisanongoing competitionbetweendifferentblockchain technologies, aswell as theuncertaintyaroundglobalgovernmentalregulation.Asaresult,thestudyfoundthatblockchainstillresidesintheinnova-torscategory,orthefirst2.5%oftotaladoption.

Textanalysis:

Thetextanalysis,whereannualreportswerescannedfortheword‘blockchain’andotherblockchain-relatedkeywords,foundthatbythetimeofthestudyin2017,onlyonecompanyoutof50(IBM)hadspecificallymentionedtheblockchainintheirannualreport.Comparedwithothermega-trends,suchasartificialintelligence,internetofthings,cloudcomputing,oraugmentedreality,blockchainrankedlast in the textanalysis.Thus, the textanalysisalsoplacesblockchain technology in the innovatorscategory.

Financialanalysis:

Thefinancialanalysis,whichexaminedfinancialinvestmentsinthetechnology,statedthat$1.4billionwereinvestedinblockchainstartupsin2016.Itwasalsomentionedthatthebigfouraccountingfirms(EY,PwC,Deloitte,KPMG)areheavilyresearchingandinvestinginthetechnology.Atthetimeofthestudy,theUSDollarvalueofallcryptocurrenciescombinedhadavalueof$91.073billion,whichwouldbeequalaround5.8%ofthetotalUSDollarcurrencyincirculation.Duetosubstantialpriceincreases


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onthecryptocurrencymarket,thefinancialanalysisfindsblockchaintohavepartlymovedtoearlyadoptercategory.

Resultsandconclusion:

Asaresult,thestudyfoundthattheblockchaintechnologyismostlyseenwithintheinnovatorscate-gory,orthefist2.5%ofmarketshare.However,thestudyalsoacknowledgesthatblockchainisnotfarfromreachingtheearlyadopterscategory,withfinancialapplicationshavingpartlyreachedtheearlyadopterscategoryalready.

Theauthorsconcludethatblockchaintechnologybringsthepotentialtodisruptandinnovatemanykeyareasofbusiness.However,theystatethattheaccountingindustrywillbeimpactedthemostastheblockchaincouldautomatemanyofitsmanualprocesses,suchasthelaborintensivedoubleentrybookkeepingprocess.

5.2.3 Thes-curveprofileoftechnologyadoption

Therateinwhichdiffusiontakesplacecanbedescribedbyans-curve.Itshowsthattherateofadop-tionovertimeisratherslowatthebeginningofthediffusionprocess(innovatorsandearlyadopters),acceleratestowardsthemiddle(early-andlatemajority),andagainslowsdowntowardstheendofadoption(laggards).Thiss-curveisthederivativeofthediffusionbell-curve(Figure4).

5.2.4 Critique

Rogers’diffusionofinnovationtheorycanplayakeyroleinunderstandinghowatechnologyisbeingadopted.However,thetheoryalsohasitslimitations.

Firstofall,Rogers’diffusiontheoryassumesthatthetechnologyitselfisstaticanddoesnotchangewithinitslifecycle(Adner&Kapoor,2015).Astechnologiesundergoconstantprogress,itcanbear-guedthatRogers’staticviewontechnologyisnotentirelycorrect.Forexample,rapidorunexpectedimprovementscouldspeeduptheadoptionprocess.Furthermore,notonlydoesthenewtechnologyundergochange,butalsotheoldtechnologywhichisbeingreplaced.

Thediffusionof innovation theory furtherdoesnot take the technology’secosystem intoaccount.However, both new- and old technology depend on their respective ecosystems. Emergence chal-lengesforthenewtechnologycouldariseduetoproblemswithinthetechnology’secosystem,whiletheoldtechnology’secosystemcouldprovideextensionopportunities(Adner&Kapoor,2015).

5.3 Technology Improvement Inthe1980’s,RichardFosterexaminedthenatureoftechnologyimprovementsandhelpedtoexplainhowtechnologyissubstituted.Amongstothers,hecameupwiththefollowingprinciples.

5.3.1 Thes-curveoftechnologyimprovement

Thes-curveoftechnologyimprovementdescribesthebasicpatternoftechnologicalchangeinthreephases.

Itshowshowperformanceimprovementsachievedthroughagivenamountofeffortortimearerela-tivelysmallintheearlydevelopmentstagesofthetechnology,hencemakingthecurveappearrela-tivelyflat.Thisphaseiscalledinfancy(Figure5–I)

However,asthetechnologybecomesbetterunderstood,therateofprogressincreasesandsubstantialimprovementsinperformancecanbeachievedwithrelativelylittleeffort.Thisphaseiscalledexplo-sion(Figure5–II),andthecurveitselffollowsarelativelysteeppattern.


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Asthetechnologymatures,improvingthetechnologywillbecomeincreasinglydifficultandimprove-mentsthemselvesmoreandmoreincrementalwhichresultsindecreasingreturns.Thisphase,whichiscalledgradualmaturation(Figure5–III),depictsanincreasinglyflatcurve(Foster,1986).

Figure 5. Technolgy s-curve according to Richard Foster (source: Mignogna, 2015)

5.3.2 Discontinuity

Onceagiventechnologyapproachesthetopofitss-curve,meaningithasreachedits limits,anewtechnologicalconceptneedstoemergeinordertoensurefurthertechnologicalprogress.Thistransi-tionusually isnotsmooth,andresults inaphasewherebothtechnologicalconceptscompetewithoneanother(Figure6).Thisphaseinwhichthenewtechnologicalconceptgraduallysubstitutestheoldtechnologyisreferredtoasdiscontinuity(Foster,1986).

Figure 6. Technology discontinuity (source: Hinks, Alexander, & Dunlop, 2007, p. 3)


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5.3.3 Critique

Foster’sideasoftechnologyimprovementandthes-curveoftechnologyimprovementlackinthefol-lowingaspects.

Forone,Foster’stheoriesassumethatthetechnologys-curveoftheoldtechnologywilleventuallyflatten,andnofurtherprogressismade.Thishowever,oftendoesnotholdtrueandsometimesim-provements intheoldtechnologycanstillbeachieved.Adneretal. (Adner&Kapoor,2015,p.17)foundthat“attimes,thepaceofsubstitutionwassloweddueto“lastgasp”effortsbysomefirmstomaximizethevaluethattheycouldcapturefromtheoldtechnology”.

Furthermore,theroleofdemand-sideadoptionismostlyoverlooked.Therefore,thequestionwhendominanceovertheoldtechnologywillbeachievedis ignored,andthewrongassumptionismadethatthebettertechnologywillalwaystakeoverthemarket(Adner&Kapoor,2015).

5.4 Analyzing the Pace of Technology Substitution Whilethetechnologyadoptionliterature(e.g.Rogers,chapter5.2)hasexaminedtherateoftechnol-ogyadoptionbutignoredthatfactthatbothold-andnewtechnologiesaswellastheirecosystemscontinue to evolve, literature regarding technology improvement (e.g. Foster, chapter 5.3)mostlyoverlooksdemand-sideadoptionandthereforedoesnotgivemuch informationaboutwhendomi-nancewillbeachieved(Adner&Kapoor,2015).

AdnerandKapoor(2015)arguethatinordertotrulyunderstandthepaceoftechnologysubstitutionanditsdynamics,theconceptsoftechnologyadoptionandtechnologyevolutionneedtobelinked.Furthermore,theyrecognizethattechnologysubstitutiondoesnotsolelydependonthetwotechnol-ogiesinquestionbutshouldratherbeseenasacompetitionbetweenthenew-andoldtechnology’secosystems.Whiletheoldtechnology’secosystemcoulddelaysubstitutionbyofferingextensionop-portunities for the old technology, emergence challenges within the new technology’s ecosystemcouldalsodelaysubstitution(Figure7).Thisiswhatresultsinadifferencebetweenthetheoreticallypossibletechnicalperformanceofthetechnology,andtheactualrealizedperformance.

Figure 7. Technology competition between an old technology with consideration of their respective eco-systems according to Adner & Kapoor (source: Adner & Kapoor, 2015, p. 5)


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Acknowledgingthis,Adner&Kapoordevelopedaframeworkforanalyzingthepaceoftechnologysub-stitution,whichtakesboth,technologyadoptionandevolution,aswellasbothtechnologies’respec-tiveecosystemsintoaccount.Theresultisamatrixthatconsiderstheemergencechallengeofthenewtechnologyontheoneaxis,andtheextensionopportunityof theoldtechnologyontheotheraxis(Figure8).

Figure 8. Resulting matrix when considering the new technology’s emergence challenge and the old tech-nology’s extension opportunity (source: own representation based on Adner & Kapoor, 2016)

Quadrant1-Creativedestruction:

Quickestsubstitutioncanbeexpectedinsituationwithlowemergencechallengesandlowextensionopportunities.Here,theoldtechnologyhaslittlepotentialrespondtothethreat,whilethenewtech-nology’spotentialisnotheldbackbybottleneckselsewhereinitsecosystem(Adner&Kapoor,2016).

Quadrant4-Robustresilience:

Slowestpaceofsubstitutioncanbeexpectedwhereverthenewtechnology’secosystemfacesgreatemergencechallengesandtheoldtechnology’secosystemhassignificantopportunitiesforimprove-ment.Heretheoldtechnologycanbeexpectedtokeepitsleadershippositionforanextendedperiod.Newtechnologiesthatfall intothiscategoryoftenseemrevolutionaryatfirstbutareoverhypedinreality(Adner&Kapoor,2016).

Quadrant2-Robustcoexistence:

Lowecosystememergencechallengesforthenewtechnology,buthighecosystemextensionoppor-tunitieswillresultinanongoingcompetitionbetweenthetechnologies.Althoughthenewtechnologywillbeabletogainaccesstothemarket,butimprovementsintheoldtechnologyecosystemwillallowittodefendsomeofitsmarketshare(Adner&Kapoor,2016).Thisresultsinaprolongedperiodofcoexistencebeforesubstitutiontakesplace,whichcanbequitebeneficialfortheconsumerasongoingcompetitioncanimprovetheperformanceofbothecosystems(Adner&Kapoor,2015).

Quadrant3-Illusionofresilience:

Highecosystememergencechallengesforthenewtechnologyandlittleecosystemextensionoppor-tunityfortheoldtechnologywillresultinaperiodofstagnationuntiltheemergencechallengescanberesolved.Thisperiodwillmostlikelyleavetheoldtechnologywitharelativelyhighmarketsharebutlittlegrowth.Theoldtechnology’shighmarketsharemustbeseenasveryfragile,becauseonce


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theemergencechallengesforthenewtechnologycanberesolved,substitutionwillberapid(Adner&Kapoor,2016).

5.5 Assessment Along the Gartner Hype Cycle Inordertocorrectlyexaminepotentialapplicationsoftheblockchaintechnologyandpredictfuturedevelopments,itisimportanttofirstdetermineandunderstandthecurrentphaseofthetechnology.

Figure 9. Garner hype cycle (source: Gartner Research, 2013, p. 15)

TheGartnerHypeCycleisacom-monly used tool to determinethephaseofagiventechnology.Developed by the informationtechnology firmGartner Inc., itallows to visualize the expecta-tions in a technology over timesince it emerged. It isbasedonthe assumption that all newtechnologies follow a universalpatternandcanbedividedintodistinctphases.Afterthetechnologyisfirsttriggeredthroughatech-nologybreakthrough(InnovationTrigger)expectationstendtorisequicklyduetohypeandinitialsuc-cessstories.Thissharp increase inexpectationscontinuesuntil thePeakof InflatedExpectations isreached.Onceitbecomesevidentthatthetechnologywillnot,ornotyetliveuptotheinflatedexpec-tations, it is rapidlydiscreditedandsent intotheThroughofDisillusionment.Assecond-andthird-generationproductsarebeinglaunched,thetechnologybeginstoclimbtowardstheearlystagesofmaturity.ThisphaseiscalledtheSlopeofEnlightenment.ItbringsthetechnologyallthewaytothePlateauofProductivity,whichrepresentsthebeginningofmainstreamadoption(GartnerResearch,2013).

A2017study(Dieterichetal.,2017)foundthat,atthetime,mostexpertssawthetechnologyeitherrightontopthePeakofInflatedExpecta-tionsoronitswaytowardsit(Figure10).Thesefurtherstressestheimportanceofdistinguishing between hype and valua-blepotentialuse-casesineachindustry.Itmustbenoted,however,thattheresultsdepicted in the survey have been gath-eredpriortoNovember2017.Combinedwithenormouspricedecreasesincrypto-currencieswithinthefirsthalfof2018,itcanbeassumedthatthetechnologyhasnowalreadypassedthePeakof InflatedExpectations and is advancing towardstheThroughofDisillusionment.Figure 10. Survey results (source: own representation)

6.Blockchain–AFoundationalTechnology

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6. Blockchain – A Foundational Technology Itisoftenheardthattheblockchaintechnologywillrevolutionizevariousareasofbusiness.Althoughmostexpertsrealizethetechnology’spotential,manydonotsharetheongoinghype.Apartfromthetechnology’smany technical-andnontechnical limitation (chapter4.4) thatareyet tobe resolved,blockchain-led transformationofbusinessandgovernmentwill take its timedue toblockchainnotbeingadisruptivetechnology,butratherafoundationaltechnology(Iansiti&Lakhani,2017).Insteadofattackingtraditionalbusinessmodelsandquicklyovertakingthemthroughabetterand/orcheapersolutionasdisruptivetechnologiesdo,afoundationaltechnologyhasthepotentialtocreatenewfoun-dationsfortheentireeconomic-andsocialsystem.Andalthoughanewfoundationaltechnologyusu-allyhasanenormous impact, itoftentakesdecadesforthetechnologytounfold itspotential.Theadoptionprocess(chapter5.2)offoundationaltechnologiesthusisnotsudden,butmoregradualandsteady,slowlygainingmomentumwitheverytechnologicalimprovementorinstitutionalchange.

6.1 Adoption Status of Foundational Technologies Iansiti&Lakhanifoundthattheadoptionoffoundationaltechnologiescanbedefinedalongtwodi-mensions.Thesetwodimensionshelptodeterminehowfastafoundationaltechnology’sdifferentusecaseswillbeadopted.

Novelty,thefirstdimension,describeshownewtheusecaseistoitstargetgroup.Applicationswithahighdegreeofnoveltyarerelativelyunknowntousers.Thismeansthatgreatereffortswillberequiredtomakesurethatpeopleunderstandandappreciatethevaluetheapplicationcreates.

Theseconddimensioniscomplexity,whichisrepresentedbythelevelofecosystemcoordinationre-quiredtomakethespecificapplicationpossible.

6.2 Adoption Matrix for Foundational Technologies Evaluatingafoundationaltechnologyanditsusecasesalongthetwodimensionsdescribedinchapter6.1createsfourquadrantsorcategories.Tomaketheirideasmoretangible,Iansiti&Lakhaniappliedtheir frameworktotheTCP/IPtechnologyasanexample.Theyhavealsogivenpossibleblockchainapplicationsthatcouldrepresenteachcategory(Figure11).TCP/IP (transmissioncontrolprotocol/internetprotocol) is thetechnologybehindthe internet,andintroducedacompletelynewwayoftransmittinginformation.Itcanbeseenasaprimeexampleforafoundationaltechnology(Iansiti&Lakhani,2017).Althoughthetechnologywasalreadyintroducedin1972,ittookyearsfordifferentusecasestobedevelopedandadopted.E-mail,theWorldWideWeb,orVoiceOver IPareonlya fewofmanydifferentusecases the technologymadepossible,andallemergedatdifferenttimes.

Singleuse:

Thisfirstquadrantconsistsofapplicationslowinboth,noveltyandcoordination.Theseapplicationsareusuallyrelativelysimple,butpresentabetter,cheaper,andhighlyfocusedsolution.InthecaseofTCP/IP,earlye-mailsbetweenuniversity researcherswithin theAdvancedResearchProjectAgencyNetwork(thebirthplaceoftheinternet)intheearly70’swouldfallintothiscategory(Kleinrock,2010).Fortheresearchese-mailwasasingle-useapplicationthatpresentedacheapalternativetophonecalls,faxesandmail(Iansiti&Lakhani,2017).

6.Blockchain–AFoundationalTechnology

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Localization:

Despitebeinghighinnovelty,solutionsinthissecondquadrantarerelativelylowincomplexity.Thismakespromotingtheiradoptionquitesimple.AusecasewithintheTCP/IPtechnologythatfallsintothiscategoryistheadoptionofnetworktechnologiesbyorganizationastheystartedtocreatetheirowne-mailnetworksystems(Iansiti&Lakhani,2017).

Substitution:

Inthisthirdquadrant,solutionsarerelativelylowinnoveltyastheybuildonexistingsingleuseandlocalizationusecases.However,coordinationbecomescomplexassolutionswithinthiscategoryhaveabroaderandmorepublicuse.Theyaimtoreplaceentirebusinessconcepts,thusfacinghighadoptionbarriers.Amazon’searlydaysasanonlinebookstore, trying tochange theprocessofhowpeoplepurchasebooks,wouldbeaperfectexampleofausecasefromthiscategory(Iansiti&Lakhani,2017).

Transformation:

Solutionswithinthisfourthquadrantarecompletelynewandveryhighincomplexity.Theyrequirecoordinatingtheactivitiesofmanyactors,aswellas institutionalagreementonstandardsandpro-cesses.Adoptionwilldependonmajorsocial,legal,andpoliticalchange.However,ifsuccessfulthesesolutionscouldchangethenatureofeconomic,social,andpoliticalsystems(Iansiti&Lakhani,2017).InthecaseofTCP/IPtechnology,videoconferencetechnologies(e.g.Skype),whichcouldresultinashifttowardsvirtual-,andawayfromin-personmeetings,canbeseenasanexampleforthiscategory.

Figure 11. Adoption of foundational technologies (source: own representation based on Iansiti & Lakhani, 2017)

7.DifferentApplicationsofBlockchainTechnology

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7. Different Applications of Blockchain Technology 7.1 Environments in which Blockchain is Useful Tobetterunderstandwhichblockchainapplicationswemightseeinthefuture,itmakessensetofirsthavealookattheadvantagesandlimitationsofthetechnology,aswellasexaminingwhichenviron-mentsthetechnologyissuitedforbest.

7.1.1 Advantagesofblockchaintechnology

Amongstothers,literaturedescribesthefollowingaspectsasthemainadvantagesofblockchaintech-nology.

Disintermediation:

Disintermediationisbeingnamedasoneofthemostimportantlong-termimpactsoftheblockchain.Drescher(2017)describestheblockchainasadigitalandstrictlyrule-followingmiddleman,whichbearsthepotentialto,atleastpartly,replacetraditionalmiddlemensuchasbanks,notaries,orlegalinstitu-tions.Thismeans thatmiddlemen in formofhumanorganizations,whichrelyonthetrustof theircustomers,couldbereplacedwithsoftwaresystemsthatensuretrustviacode.Furthermore,secureanddirecttransactionsbetweenpeerscannotonlymakeone,butpotentiallymanytraditionalmid-dlemenobsolete.

Decentralization:

Althoughtheremightbedifferentopinionsonwhethertheblockchain’sabilitytodecentralizeinfor-mationcanalwaysberegardedasanadvantageornot,itdefinitelyisoneoftheverykeyattributesofthetechnology.Withblockchainthereisnoneedforcentraldatahubs(datacenters),becausetrans-actionscannowprooftheirvaliditythemselves(Williams,2017).

Automation:

Theblockchainhasthepotentialtoreplacemanualtasks,whichhavepreviouslybeencarriedoutbyintermediaries,withautomated interactionsbetweenpeers.Therefore,theargumentcanbemadethatblockchainfostersautomation(Drescher,2017).

Increasedtransparency:

Theuseofblockchaintechnologycanmaketransactionhistoriesfarmoretransparentthantheyarerightnow.Asdiscussedpreviously,theblockchaincanbeconsideredaformofdistributedledger,withallnetworkparticipantssharingthesamedocumentationinsteadofeachhavingindividualcopies.Thisshareddocumentationcanonlybeupdatedonceallparticipantshaveagreedonit(consensus),makingdocumentationontheblockchainmoreaccurate,consistentandtransparent(Hooper,2018).

Improvedtraceability:

Greatertransparencyoftransactionsalsoresultsinbettertraceabilityofproducts.Forexample,ex-changesofgoodscanberecordedonablockchain,leavingbehindatamperproofaudittrailofhistor-icaltransactiondatawhichcanproofauthenticityoftheproductandpreventfraud(Hooper,2018).

Enhancedsecurity:

Whencomparedtocentralizedrecord-keepingmechanisms,theblockchainprovidesbettersecuritybypreventingfraudandunauthorizedactivity.Thisisduetotransactionshavingthebeagreeduponbeforerecordingthem,theirsubsequentencryption,aswellasthembeinglinkedtoallprevioustrans-actions.Furthermore,informationisnotstoredonasingleserver,butanentirenetworkofcomputers.


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Thismakesitfarmoredifficultto(purposelyoraccidently)damageoraltersensitivedata(Hooper,2018).

Increasedefficiencyandspeed:

Traditionalprocessesheavilyrelyonpaperwork,arepronetohumanerror,andoftenrequirethird-partyinvolvement.Thesefactorsmakemany,especiallyinter-organizational,processesinefficientandtime-consuming.Theblockchainpromisestoaddressmanyofthesefactors,thusincreasingtheeffi-ciencyandspeedofvariousprocesses(Hooper,2018).

Reducedcosts:

Besidescostreductionsthroughautomation,blockchaincanespeciallycutcoststhroughdisinterme-diation.Theuseofblockchainallowsforfewerthirdpartyinvolvementasguaranteesandlegalpro-tectionprovidedbyvariousmiddlemancanbereplacedbyinherenttrust inthedatastoredontheblockchain (Drescher,2017).Furthermore, therewillbe lessneed to reviewdocumentationbeforetrades,astheblockchainensuresthatallpartieshaveaccesstotheverysame,immutableversionofagivendocument(Hooper,2018).

7.1.2 Environmentsinwhichblockchaintechnologycouldbebeneficial

A2016paperreleasedbyPricewaterhouseCoopers(PwC,2016)identifiedsixdistinctcharacteristicsthatwouldsupporttheuseofblockchain.Thecompanysuggestedthatforeverysituationwhereatleastfouroutofthefollowingsixexamplesapply,blockchainsolutionscouldbeavaluablesolution.

1. Multiplepartiessharedataandneedacommonviewofdata2. Multiplepartiesupdatedataandtheseactionsneedtoberecorded3. Participantsneedtotrustthattheactionsthatarerecordedareverifiedasvalid4. Intermediariesaddcostandcomplexity5. Interactionsaretimesensitive,withdelaysaddingcosts6. Transactionscreatedbyparticipantsaredependedoneachother

7.1.3 Genericblockchainapplications

Basedonthetechnology’scharacteristics,Drescher(2017)describessevendifferentgenericusecasesforblockchain.

1. Proofofexistence:Theblockchaincanhelptoprovetheexistenceofdata.Oncedataisstoredontheblock-chain,everynodewithinthenetworkcanconfirmtheveryexistenceofthedata.Thisusecasebecomesmoreobviouswhen lookingatconcreteexamples likeregistriesof itemssuchasbrandnames,patents,licensecodes,orinternetaddresses.

2. Proofofnonexistence:Contrarytotheexampleabove,thisusecaseprovidesawayofprovingthenonexistenceofspecificentriesoritemsontheblockchain.Examplescouldbeprovingthatapersonorcompanyhasnorecordofcomplaints,fines,orconvictions.

3. Proofoftime:As every block also contains a time-stamp (chapter 4.2.2), the blockchain cannot onlyproveanentry’sveryexistence/nonexistence,butalsotheexacttimeanddatetheentrywasadded.Applications thatcouldbenefitare, forexample, the trackingofpayments,deliveryornotificationtracking,themanagementofpredictions,etc.


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4. Proofoforder:Apartfromstatingtheexacttimeofanevent,theblockchainalsoclearlyprovestherela-tiveorderinwhicheventsoccurred.Provingthatacertaineventtookplacebeforeanothereventcouldbeusedinexamplessuchaspatentapplicationsorcopyrightclaims.

5. Proofofidentity:Asaspecificcaseofproofofexistence,proofofidentitycanensurethatacertainidentityalreadyexists.This couldbeused in the formofdigital identitydocuments forpeople,animals,orgoods,similartoaforgery-proofpaperdocument.

6. Proofofauthorship:Theblockchaincanalsoprovideinformationonwhoaddedcertaindata.Throughthecon-ceptsof identificationandauthenticationrequireauthorstoverifytheir identitybeforemakinganentryontheblockchain.Averygoodexampleforthisusecasecouldbethetrackingofcontentchangesindocuments.

7. Proofofownership:Relyingonallpreviouslymentionedusecases,thispatternallowstomanageandclarifyownershipofrealestate,cars,companyshares,cryptographiccurrencies,andmanymore.

7.2 Overview of Blockchain Use Cases across different Industries Beingafoundationaltechnology(chapter6),theblockchaincouldpotentiallyfinduseinhundredsofdifferentusecases,manyofwhomareprobablynotevenknowntoday.Thefollowingsub-chapteraimstogivethereaderanideaofwheretheblockchaincouldbeused.Itthereforemustbenotedthatthefollowingdoesnotpresentacompletelistofpossibleapplications,butratherafewchosenexam-ples.

7.2.1 Banking

Withcryptocurrenciesbeingtheveryfirstapplicationsoftheblockchaintechnology,thebanking-andfinancialindustryhasnaturallybeenapioneeringsectorforblockchain.Accordingtoa2016surveybyIBM,91%ofbankshaveplannedtoinvestinblockchainsolutionsby2018(Bearetal.,2016).

Solvingthedoublespendingproblem:

Thedoublespendingproblemdescribestheriskthatdigitalcurrenciescouldpotentiallybespenttwice.Incontrasttophysicalcurrencies,whereinorderforonepersontoreceiveapaymenttheotherpersonhastohandoverthephysicalcoinornote,digitalcurrenciesconsistofdigitalinformation.Sincedigitalinformation caneasilybe reproduced,digital currencies require someone toensure thatwhateveramounttransferredfromoneaccounttoanotherisnotonlyaccreditedtothereceivingaccount,butalsodeductedfromthesendersaccount.Intoday’sfiatsystems,thisisensuredbyintermediariesintheformofbanks.Cryptocurrenciessuchasbitcoineffectivelysolvethedoublespendingproblembymaintaininga sharedpublic transaction ledger. Thismeans that funds canonlybe credited tooneaccountiftheyarebeingdebitedfromanotheraccountattheverysametime,similartohowforoneperson to receive a coin another person has to let go of it (“Double-Spending Definition |Investopedia,”).

7.2.2 Insurance

Withintheinsuranceindustry,theblockchaintechnologycouldpotentiallyenablenewrevenuemod-els.Forexample,Gatteschietal.(2018)describehowtheemergenceofsmartcontractsandblockchainbasedpaymentscouldenablemicro-orpay-per-useinsurances.Althoughtheoreticallypossible,thesetypesofinsurancewerenoteconomicallyfeasibleinthepastastheyusuallywerenotabletocovertheadministrativecostsassociatedwiththem.Theuseofsmartcontracts,forexample,couldallow


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quickandcheappolicyundersignmentandmanagementonmobiledeviceswithclosetonowaitingtime.

7.2.3 Energymarkets

Theblockchainissaidtohelpestablishdecentralizedenergymarketsby,forexample,allowingenergysourcesandconsumerstoautomaticallytradeenergywithouthavingtorelyonintermediaries.Here,inputslikeamountofenergyproducedbyadevicecanberecordedontheblockchain’spublicledger,whilesmartcontractscansellthestoredenergytoconsumers(e.g.smarthomes)willingtopayacer-tainprice(Martyniuk,2018).

Inlate2017,SiemenshasdoubleddownonitsinvestmentinNewYorkbasedmicrogridproviderLO3Energy,whohasdevelopedablockchainbasedplatformformicrogrids.Thecompany’splatformallowssolarpanelownerstodirectlytradeunusedsolarenergywiththeirneighbors.Savingandtimestamp-ingeverytransactionontheblockchainkeepsanimmutablerecordofwhosoldwhichamountofen-ergytowho,whiletoken-basedpaymentsystemsallowforrealtimetransactionsettlements(SiemensAG,2017).

7.2.4 Retail&consumergoods

Theblockchainisalsosaidtohaveagreatimpactonretail-andconsumermarketsmostlythroughitspotentialtomakesupplychainsmorevisibleandtrustworthy.

Productorigin:

Astheblockchainmakesaproduct’ssupplychainfarmoretransparent,productinformationcanbemademoreaccessibletoconsumers.Walmart,forexample,onceconductedatracebacktestonman-goespriortousingblockchain.Ittookthemalmostsevendaystotracethemangoesbacktotheorigi-nalfarm.Withthehelpofablockchain-backedsupplychain,Walmartwasabletoprovidethesameinformationin2.2seconds(Charleboris,2017).

Foodsafety:

Integratingblockchainbasedsolutionsintofoodsupplychainsnotonlyhelpstounderstandwheretheproductiscomingfrom,itcanalsohelptoensurefoodsafetyalongtheway.ZetoChain,forexample,isaimingtoprovideanend-to-endsolutionfornotonlyrecordingtheproductsorigin,butalsomoni-toringenvironmentaldatasuchastemperaturealongtheitsjourney.Thisisachievedbyusingblock-chain-enabled IoT temperaturesensorsplacedatevery link in thecoldchain,aswellas theuseofsmartcontractsthatpreventtheacceptanceofaspecificdeliveryshouldsensorsrecordaninterrup-tionintheproductcoldchain(Zeto,2018).

7.2.5 Publicsector

Blockchainsolutionscouldplayavital role invariousgovernmentalprocesses.Manygovernments,includingtheUK,Brazil,China,SwedenandtheUSarealreadyrunningpilots,tests,andtrialsondif-ferentblockchain-basedapplications(Killmeyer,White,&Chew,2017).Someexamplesofpotentialapplicationsinthepublicsectorarepresentedinthefollowing.

Identitymanagement:

Linkingthephysical-anddigitalworldrequiresadigitalidentityandsincemoreandmoreprocessestakeplaceonlinepeoplehavetocreatemoreandmoredigitalidentities.Therearedigitalidentitiesatbanks,insurancecompanies,taxagencies,healthcareprovidersandmanymore.Asofrightnow,ourdigitaldataisstoredonavarietyofdifferentdatabasesandgeneratedatdifferenttimes,whichresultsintheproblemofnotalldigitalidentitiesbeingidenticalanduptodate.TheBlockchainallowsaperson


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tocreateonesingledigitalidentitythatisstoredinasecureandincorruptiblemanner,andwhichcanbeusedforavarietyofonlineactivitiesthatrequireaperson’sidentification.ThegovernmentofEs-tonia,forexample,hasalreadyestablishedablockchain-baseddigitalIDthatcanbeusedtovote,filetaxreports,openbankaccounts,registerproperty,andmanyotheractivitiesthatinvolveaperson’sidentification(Shaan,2018).

Propertyregistration:

Today,land-andpropertyregistrationisamostlypaper-basedandfragmentedprocess,whichmakestransactionscostly,inefficient,andvulnerabletotampering.Byusingtheblockchain,adecentralized,standardized and non-corruptible record keeping system for property registration could be estab-lished.Thissystemwouldreducethenumberof intermediariesrequired(e.g.notaries),strengthenpropertyrights,anddecreaseprocesstimeandcost(Killmeyeretal.,2017).

Voting:

Similartohowpeoplecaninitiateothersecuretransactions,theblockchaincanallowcitizenstocastandvalidatevotes,aswellasverifyelectionresults.Ablockchainbasedvotingprocesspromisestogreatlyreducecosts(e.g.ballotprinting,electronicvotingmachines,maintenance,etc.),increasese-curityandauditabilityofvotes,allowallcitizenstovotefromanywhereintheworld(Killmeyeretal.,2017).

7.2.6 Healthcare

OneoffourpromisingpotentialblockchainapplicationsinhealthcareidentifiedbyBCGin2016(Closeetal.,2016),istorecordapatientsindividualmedicalrecordonablockchain.Thiswouldallowpatientstousepublicandprivatekeystolicensedataaccesstodoctors,hospitals,orotherpartieswithwhomthepatientwouldliketosharehisorhermedicalrecords.Havingmedicalrecordsstoredonablock-chainwouldnotonlygive thosewhohavebeengrantedaccessby thepatientacompletemedicalhistory of the patient, but also provide the patient with a complete audit trail of every doctor,healthcareprovider,medicaldevice,orotherentitythathashadaccesstothehisorherhealthcarerecords.Britain’sNationalHealthService(NHS)iscollaboratingwithGoogle’sDeepMindtocreateaprivateblockchainthatwouldenablepatientstotrackpersonaldataaccessanduseinrealtime.

7.2.7 Automotive

Blockchainisalsomakingitswayintotheautomotivesector.Carmanufacturers,suchasToyota,BMW,Volkswagen, or Renault have announced initiatives to bring blockchain to the automotive sector(McIntosh,2018).

Maintenance-&salehistory:

Blockchainscouldplayakeyroleinkeepingtrackofacar’smaintenanceandsalehistory,givingcardealers,partmanufacturers,andcustomersmoretransparentandreliableinformationabouttheve-hicleshistory.ThecompanyBigChainDBisworkingonthe‘CarPass’platform,whichaimstogiveeachvehicleanimmutabledigitalpassport.

Similarly, carmanufacturerscouldbeable to track individualparts,enabling themtoknowexactlywhichvehicletheywentinto.Knowingexactlywhichpartswentintoaspecificcarbecomesvaluablewhencertainpartsneedtoberecalled,asmanufacturerwouldbeabletoonlyrecallthosevehiclesthatwereactuallyfittedwiththeproblematicpart(McIntosh,2018).


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Autonomousdriving:

According to German automotive supplier ZF Friedrichshafen, artificial intelligence and blockchainbasedtransactionsmustbecombinedwhenitcomestoautonomousdriving.Self-drivingvehiclesnotonlyneedtodrive,butalsoneedtobeabletoperformtransactionsandpayments. IncooperationwithIBMandUBS,thecompanyhasthereforedevelopeda‘CareWallet’basedonblockchaintechnol-ogythatwillallowcarstomakeautonomouson-the-gopaymentsthemselves.Thiscapabilitywouldallowcarstoautonomouslytransactwithpowerchargingstations,andwillbeofspecialimportanceinregardstocar-sharingandpay-per-usemodels(ZFFriedrichshafenAG,2018).

AccordingtoJimMilan,blockchaincouldalsoplayanimportantroleinmitigatingtheriskofhackingattacksonautonomousvehiclefleets.Milanstatesthatinsteadofhavingallconnectedcarsreporttoasingleserver,blockchainwoulddistributethedataamongstallnetworkparticipants.Hackingthesystemwouldnowrequirehackingallvehiclesonthenetworksimultaneously,insteadofattackingasingleserver(McIntosh,2018).

7.2.8 Entertainment

Today,platformssuchasYouTube,Spotify,Netflix,orSoundCloudactasdistributers forvideoandmusiccontent.Thismodelhasledtovariouspaymentdisputesbetweenartists(mostfamouslyTaylorSwift)andplatforms.Blockchainpromisestoenablenewbusinessmodelsintheentertainmentindus-try(Dhillon,2018).

Micropayments:

Bymakingmicropaymentseconomicallyfeasible,blockchaincouldallowartistsandcontentcreatorstosellcontentdirectlytoconsumers,potentiallyeliminatingtheneedforintermediariessuchasrecordlabelsorstreamingproviders.Intheory,artistcouldenjoyfullcontroloverhowtheyarepaidandinwhichwaytheircontentismonetized.Userscoulddirectlybuylicensestodownload,stream,remix,oruseapieceofcontent(e.g.asong)fromthecreator(Dhillon,2018).

Digitalrights:

Blockchaincanalsohelpsecuringrightsandauthorshipforanykindofdigitalcontent.DigitalrightsmanagementstartupMediachain,whichhasrecentlybeenacquiredbySpotify,isworkingonasolu-tionwheredigitalcontentisgivenauniqueIDwhichisthensecurelymanifestedontheblockchain,creating amedia library where author and story behind every piece of content can be identified(Dhillon,2018).

8.BlockchaininManufacturing

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8. Blockchain in Manufacturing A2016surveybyDeloittefoundthatexecutiveswithinthemanufacturingindustryhadamongstthemostoptimisticoutlookonblockchain,with42%ofparticipantsstatingthatsubstantialinvestmentswerealreadybeingplanned for2017 (Schatsky&Piscini,2016).Despite itsoptimisticposition, themanufacturingindustrystillhasalongwaytogointermsofblockchainadoptionwhencomparedtothefinancialindustry(Iansiti&Lakhani,2017).

Beingafoundationaltechnology(chapter6),theblockchaincouldpotentiallyaffectthemanufacturingindustry ina varietyofways.However,experts suchasDieterichet al. (2017), identify threemaincategoriesofhowtheblockchaincouldtransformmanufacturing.

8.1 Supply chain and logistics Supplychainandlogisticsissaidtobeoneofareaswhereblockchaincouldunfolditsgreatestpoten-tial.IBMandDutchlogisticgiantMaerskwereamongstthefirsttodevelopablockchainbasedplatformtohelptrackthepapertrailsofthousandsofshippingcontainersaroundtheglobe.Insteadofhavingbitsofinformationspreadamongstdifferententitieswithinthesupplychain,theblockchaincanes-sentiallyprovideasharedvisibilityledger,everyonewithinthesupplychainreportsto.Althoughsolu-tionsusingtraditionalsoftwaredoexist,theyareusuallyownedbyoneentityandthusnotinteroper-ablealongentiresupplychains.Beingopenstandard,blockchaininitiativeswillallowdifferentsystemstobeintegratedintothesupplychain‘networkofnetworks’(IBM,2017).

Potentialbenefitsofblockchainbasedsupplychainsinclude:

Increasedtraceability:

Blockchainenablesmoretransparentandaccurateend-to-endtrackingofmaterialsalongtheentiresupplychain.Thishelpscompaniestoensurethatquality-,aswellasothercorporatestandardssuchas social responsibility aremet, especially since transaction records essentially become immutableoncerecordedontheblockchain(Deloitte,2017).

ThecompanyEverledger,forexample,hascreatedablockchainbasedplatformthatletsjewelerstrackexactlywhichmineagivendiamondcamefrom.Thishelpsthemtoensurethatminingandtransportofdiamondshasbeeninlinewithethicalstandards(“EverledgerDiamondPlatform,”n.d.).

Decreasedlossesfromcounterfeit:

Knowingexactlyhowpartsandfinishedgoodsarepassedthroughthechainofsubcontractorscouldhelppreventlossesfromcounterfeitandgraymarkettrading,aswellasincreaseconfidenceforend-marketusers(Deloitte,2017).

Improvedvisibility:

Theblockchaincouldensurethateveryauthorizedpartywithinthesupplychainwillhaveaccesstotheverysamedocumentsandinformation.Byreducingcommunicationordataerrorslesstimeneedstobespentvalidatinginformation,whichinreturnspeedsuptheprocessandsafescosts(Deloitte,2017).

Reducedadministrativecosts:

Havinginstantaccesstocompleteandauditproofsupplychaindatahelpstoreducecostsbyacceler-atingadministrativeprocessesforcomplianceorcreditpurposes(Deloitte,2017).


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8.2 Internet of Things (IoT) Connectingphysicaldevisesandallowingthemtocollectandexchangedataonthenetworkissaidtobeoneofthekeydriversofindustrialgrowthsoverthecomingyears.TheInternetofThings(IoT),orIndustrial InternetofThings(IIoT)as it isreferredtoinanindustrialsetting,willhelpcompaniestocapturegrowthbyincreasingproductionratesandefficiency,creatingnewhybridbusinessmodels,foster innovationthrough intelligenttechnologies,andtransformtheirworkforce(Daughertyetal.,2015).

TheblockchaincouldplayanimportantroleinfutureIoTapplicationsandissaidtoimprovecurrentIoTsolutionsindifferentways.

8.2.1 Improvedsecurity

Asofrightnow,IoTdeviceswithinanetworkcommunicatethroughintermediariesintheformofcen-tral cloudservers.Thismakes IoT systemsprone tohackingasa ‘singlepointof failure’ couldgivehackersaccesstothenetwork.Thedistributednatureofblockchainprotectsnetworksbyeliminatesthissinglepointoffailure,whileencryptionprotectsindividualdevicesfromattacks(Deloitte,2018).

8.2.2 IdentifyingIoTdevices

AnotherproblemtheblockchaincouldsolveforIoTsystemsistheidentificationandauthenticationofindividualdevices,whichiscurrentlyachievedthroughcertificatesfromthirdpartyauthorities.Thirdpartycertification,however,comeswithcostswhichmakestheprocessunfeasibleforsmallerorlesssignificantdevices.Incontrasttotraditionalcertificates,registeringIoTdevicesonablockchaintocre-ateauniquedigitalidentityforeachdevicefurthermoreallowstheinformationaboutthedevicetobedynamicallyupdatedandcomplemented(Dieterichetal.,2017).

8.2.3 Networkscalability

BymakingcommunicationwithinIoTnetworksmoresecure(8.2.1)andreducingcostsfortheregis-trationprocess(8.2.2),blockchaincanhelpincreasethescalabilityofIoTnetworks(Dieterichetal.,2017).

8.2.4 Dataintegrity

Theblockchain’sirreversibilityandthefactthateveryblockhasatamper-prooftimestampcanhelpincreasetheintegrityofsensordata.Theblockchainthushelpstoensurethatsensordatawithintheindustrialinternetofthingshasnotbeenmanipulatedafterwards(Dieterichetal.,2017).

8.2.5 Grantingaccess

TheblockchaincouldfurtherhelpwiththeprocessofgrantingaccesstodatathatisgeneratedbyIoTdevices.OwnersofIoTdevicescouldeffectivelysellrealtimesensordatatocustomersindirectex-changeforcryptotokens(Dieterichetal.,2017).

BlockchainbasedIoTnetworkscouldessentiallyeliminatetheneedforcentralizedcloudserverstorunthenetwork.Amongstothersimilarprojects,BoschandCiscoSystemshavefoundedtheTrustedIoTAlliance.IncollaborationwiththeIOTAFoundation,BNYMellon,andavarietyofblockchainstart-ups,BoschandCiscoaredevelopingablockchainbasedIoTecosystem(TrustedIoTAlliance,2018).


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8.3 3D Printing 3Dprintingislikelytoplayanimportantroleinfuturemanufacturingprocesses.Distributedmanufac-turingcouldpotentiallyincreaseflexibilityandshortenshippingroutes.Printingspecificpartsonde-mandcouldsignificantlyreducestoragecostsforspareparts.Theblockchaincouldplayinimportantroleinsecuringintellectualpropertyofprintingfiles,aswellasthetrackingandverifyingindividualpartsalongthesupplychain.

Howblockchaincouldhelpsecuringintellectualpropertyoffiles,andhowitcouldallowprintedpartstobeverifiedwillbefurtherexplainedinchapter9.3.

9.BlockchainApplicationsinResearch&Development

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9. Blockchain Applications in Research & Development Asdescribedinchapter1.1,oneofthemainobjectivesofthisthesiswastoidentifyandevaluatehowR&Dactivitieswithinthemanufacturingindustrycouldpotentiallybenefitfromblockchaintechnolo-gies.Inordertoidentifypotentialusecases,twoapproacheswerefollowed.

Thefirstapproachwastoideatepotentialusecasesandevaluatethemfortheirtechnicalfeasibility,aswellastheirpracticalpotential.ThesecondapproachwastolookatexistingusecasesandideasfromothersectorsandtrytotranslatethemintoaR&Dsetting.

9.1 Defensive Publishing Theideaofdefensivepublishingonablockchaincombinestheconceptofhashingdata(chapter4.2.2)withtheblockchain’simmutablenatureanditsabilitytotimestampdata(chapter4.2.2).Althoughtheconceptwasfirstideatedbytheauthor,moredistinctsearchrevealedexistingprototypes.

9.1.1 Idea

Throughhashalgorithms,anytypeofdatacanbeturnedintoauniquenumericvalueoffixedlength–auniquedigitalfingerprintofthefile.Althoughthehashvaluegivesnoinformationabouttheactualfile,identicalfileswillalwaysresultinidenticalhashvalues.

Ifahashvaluewastobestoredonapublicblockchain,everyonecouldseewhenandbywhomthevaluewasputontheblockchain.Thisessentiallyallowscompaniestolaterproofthattheywereinthepossessionofacertaindocument,withouthavingtorevealtheinformationbeforehand.

9.1.2 Example

Apharmaceuticalcompanydiscoveredarevolutionarynewdrugbutisnotyetreadytofileapatentsincemoretestarestilltobedone.However,thecompanyalsohasagreatinterestinbeingabletoproofthattheywerethefirsttodiscoverthedrug.Disclosingtheirdiscoveriesisnotanoptionasthiswouldgivevaluableinformationtocompetitors.Thecompanydecidestosummarizethecurrentstateofresearchinadocumentandcreateahashvaluefromthedocument.Theynowtakethehashvalue,storeitonapublicblockchain,andrememberexactlywhichblockitwasstoredin.Asthehashvaluegivesnoinformationaboutitsunderlyingfile,noactualinformationwillbemadepublic.However,atanypoint inthefuture, thecompanycouldnowgivetheverysamedocumenttoacourt (orsomeotherkindofauthority),tellthemexactlywhichhashalgorithmtheyusedinthefirstplace,andletthecourthashthefileonceagain.Allthatislefttodoistocomparethehashvaluethatwasjustcreatedfromthefilethecourtreceivedwiththehashvaluethecompanystoredontheblockchainpreviously.Giventhattheoldandthenewhashvalueareidentical,thisprovesthatatthespecificpointinthepast,thecompanywasinpossessionoftheverysamedocument.


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Figure 12. Defensive publishing on blockchain (source: own representation based on Bernstein Tech., 2017)

9.1.3 Benefit

Defensivepublishingonablockchainwouldallowcompaniestoconvincinglyproofthatagivenstateofknowledgeoradiscoverywaspresentwithinthecompanyataveryspecificdateinthepast.Themajorbenefitisthatnoactualinformationhastobemadepublicbeforehand.

Ananalogytothisprocesscouldbeadocumentthatwassealedandgiventoanotarywhoholdsontotheenvelope.Thenotarycouldthenlaterconfirmtheexactdateonwhichhe/shereceivedtheenve-lope,andthatthecontenthasnotbeenaltered.

However,comparedwiththenotary-analogytherearetwomajorbenefits.Firstly,hashvaluescanbecreatedfromanydataregardlessofsizeortype.Secondly,inharshcontrasttoexpensivenotaryfees,storingahashvalueonablockchaincomeswithlittletonocost.Thesefactorsresultinafargreaterscalabilityandautomatabilityoftheprocess.Forexample,itiscompletelyplausibletostorehashesofweeklyorevendailyversionsoflabnotebooksortestresultsonablockchain,whilehavingtheentireprocessfullyautomated.

9.2 Securing Specifications & Change Requests on the Blockchain SimilartotheconceptofDefensivePublishing(chapter9.1),hashvaluesofvirtuallyanyfilecouldbestoredonablockchain.InrespecttoR&D,thiscouldforexamplebeusedforproductspecificationsand/orchangerequests.Althoughnoexistingsolutionsweretobefoundatthetimeofthisstudy,theideaitselfwastransferredfromtheexistingusecasedescribedin9.1.

9.2.1 Example

ContractorAandengineeringserviceproviderBhavejustagreedonamajorchangerequestforanengineeringproject.Theybothwanttobesurethatfromthispointonforwardspecificationswillnotbechangedwithoutexplicitagreement.Theydecidethatabinding‘versionoftruth’ofthedocumentwillbehashedandstoredontheblockchain,withbothpartiesalsostoringthefileontheirprivateservers.Towardstheendoftheprojectthecontractorrealizesthattheengineeringserviceprovidermusthaveforgottenatolerancetheyagreedupon.KnowinglyorunknowinglyserviceproviderBar-guesthatthetolerancewasneverincludedinthespecifications.

However,insteadofwastingvaluabletimeandresourcesonfindingoutwhichofthetwopartiesisright,contractorAcaneffectivelyproofthattheirversionofthedocumentiscorrectbysimplycom-paringthehashvalueoftheirdocumentwiththehashvaluestoredontheblockchain.

Itshouldbenotedthatthisexamplecouldbeappliedtoanycontractordocumentwheretwoormorepartieshaveaninterestinstoringatrustable,tamperproofcopyonneutralground.


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Figure 13. Storing contracts or other documents on the blockchain (source: own representation)

9.2.2 Benefit

Themainbenefitarisingfromthisapplicationistheabilitytostoreanimmutableandtime-stamped‘versionoftruth’ofanydocumentonneutralground.Again,thiscouldalsobeachievedbygivingacopyofthedocumenttoatrustedthirdparty(e.g.notary)whichensuresthattheversionitreceivedstaysunaltered.Aswiththepreviousexample,scalabilityandhighcostsarethemaindisadvantagescomparedtotheblockchainalternative.

Anotherbenefit is thatbyknowing that there indeedexistsanunalterableversionof truthon theblockchain,partiesmightloseinterestintryingtotricktheirbusinesspartnerssincetheyknowthattheotherpartycouldproofthemwronganyway.

9.3 3D Printing 3Dprintinghasbeeninthespotlightforawhilenow,andwithcontinuoustechnologicaladvances,thetechnologyislikelytoplayanimportantroleinfuturemanufacturingprocesses.

Despiteageneraltrendtowardscomputer-basedsimulationsthroughdigitalmock-ups,physicalsam-plesandprototypesarestillrelevantinproductdevelopmenttoday.Comparedtootherproductionmethods(e.g.injectionmolding),additivemanufacturingrequireslittleinvestmentfortoolingandisthereforeespecially adequate for small productionquantities,making3Dprinting also suitable forearlystagesampleproduction.However,apartfromtheprintingtechnologyitselftherearealsootherchallengesthatneedtoberesolved.

Securing intellectual property within the product development process becomes increasingly im-portantasmoreandmorepartiesbecomeinvolved.TheriseofR&Dcollaborations,ashifttowardsusingmoreandmoreengineeringserviceproviders,aswellasthetrendtowardssimultaneousengi-neeringrequiresindividualcompaniestoprotecttheirdata.

Althoughthisusecasewasfoundinexistingliterature,noveltyliesinitspotentialimpactonR&Dac-tivitiesinparticular.


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9.3.1 SAMPL

SAMPL(SecureAdditiveManufacturingPlatform)–acooperationprojectbetweendifferentorgani-zationssuchasAirbus,Prostep,NXP,ortheFraunhoferInstitute,aswellasvariousuniversities–iden-tifiedthesechallengesasfollowed(SAMPL,2017).

Copyright–Intellectualpropertyintheformofprintable3D-filesneedstobeprotected.Similartotheproblemsthemusic-andmovieindustryfaced,manufacturersalsoneedtoprotectfilesfrompiracyandcounterfeitproducts.

Identifyingoriginals–Manufacturesdonotonlywant topreventcounterfeitparts frombeingpro-ducedinthefirstplace,theyalsoneedtoensurethat,ifcounterfeitpartsdoexist,theoriginalpartscanbeclearlyidentifiedassuchanddistinguishedfromunauthorizedcopies.

Liability–Inthecaseofwarrantyandproductliability,manufacturesneedtobeabletoshowexactlywhereandwhenacertainpartwasproduced.

Security–Itfurthermoreneedstobeensuredthatonlyauthorizedentitieshaveaccesstothedata.Thisfirstrequiresunequivocallyidentificationofwhoeverwantstoaccessthedata.

Safety– Itneeds tobeensured thatnounauthorizedchange toproductdataor featurescan takeplace.Thisbecomesespecially importantwhenpartshavesafetyrelevanceandneedtoholduptohighqualitystandards

TheSAMPLproject,whichispartlyfundedbytheGermangovernment,triestocreateablockchainenhanced3Dprintingplatformthatallowsdataownerstohavefullcontrolovertheirfiles.Theirap-proachseesaplatformthatcreatesa‘chainoftrust’betweentheintellectualpropertyownerandthefinalcustomer.Itincludesallintermediaries,theprintingserviceprovider,aswellasthe3Dprintersthemselves(‘trusted3Dprinters’)which’scontrolsneedtobecertified,too.Thischainoftrustiscom-plementedbyablockchainbasedlayerthatprovidesalllicenseandcopyrightinformation.Withinthechainoftrust,everyactionmustfirstbeauthorizedonthelicenselayerandwillthenberecordedonitaswell.Bymakinguseofsmartcontractswithinthelicenselayer,productownerscanaddressspe-cificquantitiestodifferentserviceproviders,knowingthatcertifiedprinterswillonlyprinttheexactquantitytheyarelicensedto.

But theprojectdoesnotonlywant toeffectively trackandsecuredataup to thepoint thepart isprinted,traceabilityofpartsshouldcontinueoncethephysicalpartexists.ByimprintingRFID-chipsontotheparts,eachpartcanbegivenauniqueidentityontheblockchainandthusbetrackedthrough-outitsentirelifecycle.

Othercompaniesaretakingsimilaractions,withGeneralElectricalreadyhavingfiledapatentforablockchainbaseddistributedmanufacturingplatformin2017(USPatent&TrademarkOffice,2018),and3DprintersupplierssuchasHPbeinginvolvedinvariousprojects(Feldman,2018)

Blockchainbased3Dprintingplatformscouldessentiallyallowdataownerstosharedatawithouthav-ingtogiveawaytheactualfile.

9.4 Digital Product Backbone Anotherconceptwhichcouldaffectdevelopmentprocessesistheideaofblockchain-baseddata-andconfigurationsmanagement,whichcouldhelpmanagecomplexityandincreasetraceabilityofproductsub-systems.Thisconceptwasideatedbytheauthorandthusverylittleinformationwastobefoundinexistingliterature.Therefore,onlythebasicideawillbedescribedinthefollowing.


36

9.4.1 Idea

Ascomplexityinelectric/electronicsystemsincreases,traceabilityofE/Ecomponentsfromearlysys-temsengineering toafter salesbecomes increasinglydifficult.Configurationsare currentlydefinedthroughtraditionallystructuredpartlists(billofmaterial).Furthermore,technicaldocumentssuchasCADfilesarealsoattachestothisbillofmaterial,thusfurtherincreasingsizeandcomplexityofthepartlist(Heber&Groll,2017).

Heber&Groll(2017)thereforedescribetheideaofcreatingablockchainbaseddigitaltwinofindivid-ual products or subsystems, acting as product backbone and including all relevant information asmetadata.Intheory,thisdigitaltwinisabletosuccessfullylinkeveryconfigurationandchangeaprod-ucthasundergonetooneanother,aswellasputthemintherightchronologicalorder.

Ifasub-systemishandedoverfromsuppliertoOEM,theOEMcanmirrorthesub-systemsblockchain.Thisallowstonotonlyreceiveallrelevantproductinformationintherightchronologicalorder,theOEMisalsoabletolinksubsequentblockstothealreadyexisting(mirrored)blockchain,ensuringcon-figurationtraceabilityalongtheproduct’sentirelifecycle.

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10. Analysis AddressingthetopicofblockchaininmanufacturingandR&Dfromamoregeneralperspective,thetechnologywillfirstbeevaluatedaccordingtothetheoriespresentedinchapter5.

Afterwardsthethreepotentialapplicationsofblockchain-technologiesinR&D(asdescribedinchapter9)willbeevaluatedin-depthbasedoninterviewresponsesandliteraturefindings.Eachuse-casewillthenbecategorizedalongtheAdoptionMatrixforFoundationalTechnologies(chapter6.2).

10.1 Assessing the State of Blockchain in Manufacturing and R&D In the following, the blockchain technology will be evaluated along the theories presentedinchapter5.

10.1.1 Technologyadoption

Itmustbestatedthattheoverallknowledgeaboutblockchain-technologiesanditspotentialapplica-tions inmanufacturingandR&Dwasrather limitedamongst interviewparticipants.This,combinedwiththescarcityofalreadyestablishedapplicationsinthemanufacturingindustrytoday,supportsthecasethatoveralladoption isnotveryadvancedat thispoint.As JosephM.Woodside’s2017study(chapter5.2.2)alreadysuggests,onlyapplicationsinthefinanceindustryarelikelytohavereachedtheearlyadoptersstageatthispoint.ItcanthereforebeconcludedthatblockchaininmanufacturingandR&Dislikelytostillresideintheinnovatorsstage.

10.1.2 Technologyimprovement

Analyzingthecurrentliteratureonblockchaintechnologyitbecomesclearthatforalargenumberofpotentialuse-casestobefeasible,thetechnologyneedsto improve inkeyareas(chapter4.4). It isthosetechnicalobstacles(especiallythelimitedscalabilityandtherelativelyhighcosts),thatpreventblockchain-technologies fromreally improving.However, if these technical challengescanbeover-come,blockchainislikelytoleavetheinfancyphase,andenteritsexplosionphasewhereperformancewillimproveexponentially.

10.1.3 Thepaceoftechnologysubstitution

ThetechnologyadoptionmatrixdevelopedbyAdner&Kapoor(chapter5.4)putsafocusonthere-spectivetechnology’secosystem.Ittakesthenewtechnology’semergencechallenges,aswellastheoldtechnology’sextensionopportunitiesintoaccount.

Ecosystemextensionopportunities(oldtechnology):

Mostpotentialblockchainuse-cases inmanufacturingandR&Dare in competitionwith traditionalsoftwaresolutions.Althoughsoftwareproductsthemselvesareconstantlybeingimproved,extensionopportunitieswithintheirecosystemhavebecomerarer.Whileinthepast,factorssuchasprocessingpowerorinternetspeedwerelimitingtraditionalsoftwaresolutions,weseemtohavereachedapointwheresoftwareisrarelylimitedbyexternalfactors.

Ecosystememergencechallenge(newtechnology):

Externalfactorssuchasthelackinglegalframeworks(asdescribedinchapter4.4.2)arelikelytofurtherdelayblockchainadoption.Itcanthereforebestatedthattheblockchain’secosystememergencechal-lengesarerelativelyhigh.

Withlowextensionopportunitieswithintraditionaltechnologies’ecosystems,butratherhighemer-gencechallengeswithin theblockchain’secosystem,quadrant3 (illusionof resilience)seemstobe

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whereblockchain-technologiesfallinto.Thismeansthatadoptionislikelytostagnateuntilemergencechallengescanberesolved.Forthisperiodmarketsharesareunlikelytoshiftandwill remainwithtraditionalsoftwaresolutions.However,oncetheblockchain’semergencechallengescanberesolved,substitutioncouldbequiterapid.

10.1.4 Gartnerhypecycle

Giventhattheinitialhypearoundblockchainseemstohavefaded,itislikelythatthePeakofInflatedExpectationshasbeensurpassed.However,therealquestioniswhetherornottheThroughofDisillu-sionmenthasbeenreachedyet.Althoughnodecisiveanswercanbegiven,itislikelythattheblock-chain-technologyasawhole iseitherat,orcloseto it. Itseemsas ifadoptersthroughoutdifferentindustrieshaveshiftedtheirfocusbacktowardsspecificapplicationswherethetechnologycanreallybringanadvantage.

10.2 Defensive Publishing Thefollowingwillpresentan in-depthanalysisoftheuse-caseDefensivePublishingasdescribedinchapter9.1.

10.2.1 Interviewresponses&interpretation

Responses varied depending on the interviewee’s individual position, aswell as the orientationofhis/herdepartment.Asageneraltrenditcouldbeobservedthatmoreresearch-baseddepartmentssawgenerallymorepotentialfortheapplication.Themostpositiveresponse(8outof10forpotential)regardingpotentialcamefromanindividualworkingforaGermanresearchinstitution.Hisargumentwasthatalthoughlabbooksdoexist,theyprovidelittleevidenceinhindsightastheycanbealteredatwill. The research institute however has great interest at being able to proof previously existingknowledgewhenneeded.

Averagedamongstallfiverespondents,theapplicationspotentialwasseenata6.8outof10,whilelikelihoodwasseenat5.1outof10.Giventhatamarketreadysolutionwasavailabletoday,partici-pantsansweredthatitwouldtakeanaverageof2.9yearsbeforetheprocesswasfullyimplemented.

ItmustbenotedthatR&Disaverybroadfield,andnoteveryoneisdirectlyinvolvedwithnewintel-lectualpropertythatmustbesecuredagainstcompetitors.Itisthuslikelythatresponsesvarygreatlydependingonindividual’spositionwithinthecompany,andthecompany’sinvolvementinscientificresearch.Itmustfurtherbenotedthatthemainobjectivemustbetofileapatent,andthattheblock-chainapplicationaspresentedshouldmerelyberegardedasanadditionaltoolingettingthere.

10.2.2 Adoptionmatrix

Novelty:Sincetheonlywayforacompanytoprotectitsintellectualpropertytodayistofileapatentassoonaspossible,beingabletoproofone’sresearchprogressbeyondanydoubtconstitutesahighdegreeofnovelty.

Complexity:Comparedtootherblockchainsolutions,technicalcomplexityranksratherlow.However,whilethetechnicalcomplexityitselfisratherlow,establishingthisuse-caseasanacceptedstandardcouldstillpresentchallengesasbothpatentofficesandcourtsneedtoagree.Thisassumptionisalsosupported by the questionnaire, where despite market ready solutions the implementation time-framewasestimatedtobealmostthreeyears.

Withahighdegreeinnovelty,butalowtomediumdegreeincomplexity,DefensivePublishingcanbeassignedtothesecondquadrant(Localization).

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10.3 Securing Specifications & Change Requests on the Blockchain Thefollowingwillprovideanin-depthanalysisoftheideaofstoringspecificationsandchangerequestsonablockchain(asdescribedinchapter9.2).


Respondentsevaluatedtheconceptwithanaveragepotentialof7.1outof10,andalikelihoodof6.4outof10.Theyfurtherstatedthatifthedecisiontoadoptblockchainbasedsolutionwasmadetoday,andgiventhatamarketreadysolutionisavailable,itwouldtakethecompaniesanaverageof2.8yearsbeforetheprocesswasfullyimplemented.

Interviewrespondentsseemtohaveastrong interest inbetterandmoretransparentsolutionsformanagingchangerequestsandspecifications.Thisimpliesthatmanycompaniesinfacthaveproblemsinthisarea.Itmustbenoted,however,thattraditionalsoftwaresolutionsformanagingchangere-questsandspecificationsdoexists,andthatmostcompaniescouldimprovetransparencyandtracea-bilitybyimprovingoradoptingtraditionalsoftwaresolutions.


Novelty:Giventhattraditionaldocumentmanagementsystemshavebeeninuseforawhile,itcanbeconcludedthatthedegreeofnoveltyisfairlylow.

Complexity:While the technical complexity itself is rather low, establishing thisuse-caseas anac-ceptedstandardcouldpresentchallenges.Althoughimplementationonanorganizationallevelwouldnotbetoohard,thedifficultyliesinturningitintoastandardwhichwillbeacceptedbyvariousdevel-opmentpartners.

Witharelativelylowdegreeinnovelty,butamediumtohighdegreeincomplexity,DefensivePublish-ingcanbeassignedtothethirdquadrant(Substitution).

10.4 3D Printing Anin-depthanalysisoftheideaofblockchain-based3D-printingnetworks(asdescribedin9.3)willbepresentedinthefollowing.


Blockchainenabled3D-printingwasaccreditedwithanaveragepotentialof6.2outof10amongstallsevenparticipants.Likelihoodwasseenslightlylowerwithanaveragescoreof5.6outof10.Thepos-sibleImplementationtime-framewasestimatedtobearound3.4years.

Atthetimeofthisthesis,researchonblockchain-basedProductDataManagementseemstobeinitsinfancy.Beforeamoreconclusiveevaluationonthesubjectcanbeconducted,existingideasmustbeturnedintofunctioningprototypesandcomparedwithcurrentsolutions.Itis,however,aconceptthatshouldbecloselymonitoredoverthenextmonthsandyears.


Novelty:Sincedataprotectionin3D-printingthroughablockchain-basedsolutionisacompletelynewconcept,noveltyrankshighforthisuse-case.Thisassumptionissupportedbythefactthatnoneoftheinterviewparticipantshaveheardaboutthisapproachbefore.

Complexity:Realizingablockchain-supported3D-printingnetworkrequiresnotonlyaworkingtech-nicalsolution,printingcontractorsalsoneedtobecomecertified.Thefactthatsofaronlyprototypesandconceptsexistspeaksforahighdegreeofcomplexity.

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Withahighlevelofcomplexityandnovelty,blockchain in3D-printingmustbeplacedinthefourthquadrant(Transformation).

11.Conclusion

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11. Conclusion Blockchain–thetechnologybehindvirtualcurrenciessuchasBitcoin–isbeingpromotedbymanyasoneofthemostpromisingemergingtechnologies.Similartotheinternetinitsearlydays,blockchain(oftenreferredtoasDistributedLedgerTechnology)mustbeseenasafoundationaltechnology,ena-blingagreatvarietyofpotentialapplications.Intheory,mostsoftwareapplicationstodaycouldsome-howberealizedthrough-orcomplementedbyblockchain.However,sincetheblockchains’securityattributesdonotalwaysoutweighthespeed-andcostadvantagesofconventionalsoftwaresolutions,noteveryapplicationthatcanberealizedthroughblockchainshouldbe.

Atitscoretheblockchainisadistributed,immutabledatabase,abletopinpointexactlywhenandbywhomagiventransactionhasbeenmade.Afteracertainamountofindividualtransactionshavebeenconductedwithinthenetwork,thesetransactionsarebeingsummarizedinablockandsubsequentlyaddedtotheblockchain.Withthehelpofcryptographichashfunctions,everyblockislinkedtobothitspredeceasing-andsucceedingblock.Thisessentially results ina chain-likeconnectionwhereallblocksaresecurelyconnectedtooneanother.Thefactthatwheneveranewblockistobeaddedtothechainamajorityofthenetworkneedstofirstagreeonthecurrentstateoftheentireblockchain–consensusmechanism–makestheinformationstoredontheblockchainvirtuallytamper-proofandcreatesanirreversiblerecordoftransactions.

However,thisconsensusmechanismisalsowhatgreatly limitstransactionspeedandsubsequentlyscalabilityofblockchainapplications.Althoughtransactionspeedsandotherlimitingfactorsarecon-stantlybeingimproved,theblockchainshouldnotbeseenasthesolutiontoallofworld’sproblemsbutmuchratherasatechnologythatcanbringgreatvalueinveryspecificenvironmentsandapplica-tions.

Aspectsthatdofavortheuseofblockchainincludemultiplepartiessharingandupdatingshareddata,theneedtobeabletotrusttherecords,theexistenceofintermediariesthataddcosts,aswellasmiss-ingtrustbetweenthepartiesinvolved.

Someoftheblockchain’skeyadvantagesincludedisintermediation,improvedtraceabilityofproducts,increasedtransparencyoftransactionhistories,aswellasenhancedsecurityofrecordsregardingfraudandunauthorizedactivities.

Inrespecttoobjective1– identifyanddescribethemostrelevantpotentialblockchainapplicationswithinmanufacturingindustries–itcanbestatedthatthemanufacturingindustryislackingbehindthefinancialindustryintermsofblockchainadoption.Nonetheless,thethesisisabletoidentifythreemaincategorieswhereblockchaintechnologiesmostprobablywillaffectmanufacturingcompanies.

Withinthesupplychainand logisticssectors,manufacturingcompanieswillbenefit fromincreasedtraceabilityandvisibilityofsupplychains.Blockchaincould,forexample,helptoensurethatallpartieswithinthesupplychainaccessverysamedocumentsandinformation,thusreducingtheriskcommu-nicationordataerrorsandhelpreduceadministrativecosts.Knowingexactlyhowpartsandfinishedgoodsarebeingpassed through thechainof subcontractorscanalsohelp todecrease losses fromcounterfeitproducts,aswellasallowOEM’stoexactlypinpointwherespecificpartscamefromincaseofmalfunctions.Thiscanfurtherhelpcompaniestoproofthatmaterialsweresourcedinalignmentwithcorporatesocialresponsibilitystandards.

TheInternetofThings(IoT)–afuturekeydriverofindustrialgrowthinitself–isalsosaidtobenefitfromblockchaintechnologies.SecurityofIoTsystems(orIndustrialInternetofThingsasreferredtoinamanufacturingcontext)willbeenhancedastheblockchaincanenablenetworksystemswithouttheneedofacentralcloudserver.ThiscentralcloudserverarchitectureiswhatmakesIoTsystemsvul-nerabletohackingattacksaseverydevicewithinthenetworkcangranthackersaccesstotheentire

11.Conclusion

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system(singlepointoffailure).Furthermore,theblockchaincanhelptoidentifyandauthenticatein-dividualIoTdevices,aprocessthatcurrentlyrequiresthirdpartycertificationwhichagainisaddingcostsandlimitsscalabilityofnetworks.ProjectssuchastheTrustedIoTAlliance,whichamongstotherconsistsofBoschandCiscoSystems,arealreadyworkingonblockchainbasedIoTecosystemsandhavealreadylaunchedtestnetworks.

Thethirdandlastcategorywhereblockchainmostprobablywilltransformmanufacturingisdistributedmanufacturing.Distributedmanufacturing,mainlyintheformof3Dprinting,willallowcompaniestoincreaseproductionflexibility,shortenshippingroutes,andsignificantlyreducetheneedforin-storagespareparts.Blockchainsolutionswill therebyhelptosecure intellectualproperty(e.g.constructionfiles)wheneverprintablefilesaresenttocontractorsorotherthirdparties.ByequippingpartswithRFID-chipsorotheridentificationmeasuresitwillfurthermorebepossibletotraceproductsfromtheverymomenttheywerecreated.ProjectssuchasSAMPL(SecureAdditiveManufacturingPlatform),acooperationbetweencompaniessuchasAirbus,Prostep,andtheFraunhoferInstitute,arealreadytry-ingtoestablishblockchain-based3D-printingplatformsthatwillhelpincreasesecurityinadditiveman-ufacturing.Theproject’sgoalsaretoprotectfilesfrompiracy,helpidentifyoriginals,ensuretraceabil-ityofprintedparts,securedatafromunauthorizedaccess,aswellasensureintegrityofindividualfiles.

Regardingmainobjective2–examineifandhowthetechnologycouldaffectR&Dprocesseswithinmanufacturingcompanies–itmustbeconcludedthat,atleastatthispointoftime,blockchain-tech-nologiesaregenerallybettersuitedforotherenvironmentssuchaslogistics,financial,orthepublicsector.Manyofthoseblockchainfavoringcaricaturistsdescribedabove(multiplepartiessharingandupdatingshareddata,theneedtobeabletotrusttherecords,existingintermediariesthataddcosts,andespeciallymissingtrustbetweenthepartiesinvolved)onlypartlyapplytoR&Denvironments,mak-ingtraditionalsoftwaresolutionsoftenfavorable.However,blockchain,asexplainedearlier,enablesavarietyofdifferentapplications,someofwhichcanalsobringvaluetoR&Ddepartments.

Blockchain-based3Dprintingsolutionsasdescribedabovecanalsobecomerelevantwithinproductdevelopment.Thesmallproductionquantitiesofprototypesorearlysamplesmake3Dprintingagoodalternativetoinvestmentheavyproductionmethodssuchasinjectionmolding,especiallyattheearlystagesofproductdevelopment.ThepreviouslymentionedSAMPLproject,aswellassimilarinitiativesshouldthereforebemonitoredclosely.

Similartohowtheblockchaincouldprotectfileswithin3Dprintingprocesses,itmighteventuallybepossibleforthetechnologytohelpsecurefileswithinvirtualsimulation-andtestenvironments.Sim-ulationsmight someday be run in a virtual black-box, providing companies the simulation resultsneededwithoutgivingaccesstotheactualconstructionfiles.However,therearenoprojectsorinitia-tivesonthetopicyet,makingitunliketoappearanytimesoon.

Anapplicationthatiscurrentlymuchmorefeasiblefromatechnicalstandpointisthestoringofhashvaluesonablockchain.Amongstothers,BernsteinTechnologieshavedevelopedaservicethatallowscompaniestoturnanyfileofunlimitedsizeintoafixednumericcode(hashvalue)whichisthenstoredontheblockchain.Byitsnature,ahashvaluedoesnotrevealanyinformationabouttheunderlyingdocument.However,everytimeanidenticalfileisinsertedintothesamehash-algorithm,itwillresultintheverysamehashvalue.Witheveryblockontheblockchaincontainingatimestamp,andcombinedwith the irreversiblenatureof theblockchain, this concept referred toasdefensivepublishing letscompanieseffectivelyproofthattheywereinpossessionofacertaindocumentatagivenpointinthepastwithouthavingtoprematurelyrevealitscontent.Aprimeexamplewherethisconceptcouldbeusedislaboratorynotebooks.Researchinstitutionshaveagreatinterestinbeingabletoprooftolegalinstitutionsorcompetitorsthatthecontentoftheirlaboratorynotebookshasnotbeenalteredafter-wards.

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Similartotheconceptofdefensivepublishing,virtuallyanydocumentcanbeturnedintoahashvalueandstoredontheblockchain.Thiscouldproofvaluablewhereverthereisaninterestinbeingabletolaterproof that thedocument inquestionhasnotbeenaltered.ProductspecificationsandchangerequestsareanotherexamplewhereR&Ddepartmentsmighthaveaninterestinhavinganimmutable‘singleversionoftruth’ofthedocumentstoredontheblockchain.

Inbothcasestheblockchainessentiallytakesontheroleofanotary.However,blockchainsolutionscanprovidetheserviceforafractionofthecostandwithfarbetterautomatabilityandscalability.

Anatthemomentrathervaguepotentialuse-caseistheblockchain’spossibleinvolvementincreatingdigitalproductbackbonesinformofaproductsdigitaltwin.Althoughanideahasbeenpublishedthatdescribesascenariowhereamajorityofdocumentsrelatedtoagivenproductarestored(oratleastareferencedto)ontheblockchain,itwillmostlikelytakeyearsbeforethefirstprototypesareopera-tional.Nonetheless,theideaholdsgreatpotentialandshouldthereforebemonitoredoverthecomingyears.

Inconclusionitcanbestatedthattheblockchainisatechnologythatwillaffectmostifnotallareasofbusinessinsomewayoranother.However,sincetheblockchain’sgreatestpotentialliesinitsabilitytodisintermediateandoptimizeveryspecificprocesses,companiesshouldfirstevaluateexactlywhereand how they could benefit from it andwhether blockchain-based solutions could provide an ad-vantagecomparedtotraditionalones.Ratherthanquickanddisruptive,overalladoptiontothetech-nologyislikelytobemoregradual,startingwiththemostrudimentaryapplicationsandslowlygainingmomentumasthetechnologyitself,individualproducts,aswellasthelegislationsurroundingitim-prove.

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