In short: Earlier this week Arman Sarhaddar, CEO and founder of Vault Security Systems AG, published a guest article on a leading German news website on blockchain. Our blog entry will provide you with a detailed summary of the 3 things that are being focused on in his German article here.
Arman wrote, the principle of double-entry bookkeeping was invented over 500 years ago. It was intended to bring more transparency and better traceability. The new method revolutionized accounting and paved the way for global capitalism. However, an intermediary was needed to track and confirm the entries of the two parties involved. Blockchain technology now wants to stand in for exactly this intermediary party.
What has already been implemented and can be described as established in the financial sector, will soon be successfully transferred to any industry that relies on an auditor, certification or intermediary in any process: from accounting and auditing to origin verification and claim handling. They all start to benefit from solutions based on blockchain technology.
It is essential to have the unquestionable assurance of using an authentic product in the case of medicines and medical products or high-priced branded goods – to name just a few applications that have already proven themselves in practice. Blockchain can provide complete traceability of any supply chain, thus giving all parties the necessary security.
1. Not everyone needs detailed knowledge about how blockchain works
The fact that a large part of the population does not have a precise idea of how the distributed ledger technology works is not a problem: it is even a basic principle of the blockchain that its application happens in the background, as a basis on which processes and user interfaces are built on. What is important is not how it works, but that it does work and that it makes things easier, faster and cheaper.
You can read in our last blog entry for example how efficient the ivault blockchain will be in taking action against counterfeiters and the counterfeiting market.
2020 could be the year in which Blockchain is first used on a large scale. Many solutions that improve and innovate processes and methods are ready for the market or will be very soon, as we were able to see at the World Economic Forum (WEF) 2020. There was one jumping point in particular that was discussed among blockchain and IT experts at the annual meeting there: For the technology to be fully adapted, it is crucial that the various solutions become interoperable.
On top of that, the World Trade Organization (WTO) has already outlined the need for interoperability in a position paper:
It states that the blockchain community is aware of the urgency and is actively seeking technical solutions, some of which are now being tested and further developed. Also our impression of the WEF confirms that in the coming years different blockchains, both public and private, will become compatible with each other. The possibilities of a unified blockchain ecosystem will be almost unlimited and will influence every industry sector.
2. Legal hurdles in Europe
Before this happens, the comprehensive application of blockchain technology, especially in Europe, is still facing some hurdles. One of the major challenges lies in the current lack of legal certainty. The fact that data are not stored centrally, but rather decentralized (that is they are distributed in a network of computers), is a core feature and basic requirement of distributed ledger technology.
Once stored, data cannot be changed. This is the main advantage of the technology, because there is no need for a third party in whom all market participants must trust and there is no central storage location that can be attacked by criminals or paralyzed by technical faults. Product safety, information security and cybersecurity are thus provided by blockchain technology.
However, in the EU the right to have stored data corrected and deleted is enshrined in the DSGVO. This collides with the revision security of the blockchain, in which subsequent changes are fundamentally excluded. In Germany, the Federal Ministry of Economics and Technology is aware of the problem and is working with the digital association Bitkom to find solutions. The Swiss Federal Council is also actively working to further strengthen the country as a blockchain center. At the end of 2019, a draft law has already been passed which, among other things, will increase the legal security of the blockchain.
3. Early blockchain training provides a competitive advantage
Not only governments are becoming increasingly aware that blockchain will become a key technology in the future. Companies are eagerly trying to build up expertise in this area as well. It is therefore hardly surprising that blockchain and cybersecurity expertise might be one of the most sought-after applicant qualifications this year. The demand for experts is constantly growing – but university degrees and certificates in blockchain technology are still a rather new thing.
Profiling tools used by HR professionals are therefore hardly able to assess the expertise of specialists, which makes it even more difficult. With external training programs, managers can promote the further training of their employees and build up competencies in-house.
Companies that recognize and meet this need early on will gain a real competitive advantage, especially over American and Asian companies. For this, we must cast off our initial scepticism and open ourselves up to the new technology. To get there, we definitely need more concrete examples of applications to clearly communicate the benefits of blockchain technology.
For less technology-savvy decision-makers, we should focus on communicating efficiency gains rather than dwelling on the technical details. You can read about the use case we are currently working on here. And for more detailed updates, you can listen to what CTO Martin Beyer says about the application here.
Both the individual European countries and the EU are actively working to promote blockchain technology. The need to adapt the legal framework so that Europe can play a pioneering role in this field has been recognized by the legislators. It is up to the decision-makers in companies to build up expertise, identify possible usage scenarios and efficiency gains and take steps to implement these in reality. All in all, if the legislative adjustments and the innovative energy of European companies interlock, Europe will continue to assert itself as a driving blockchain force.