Benefits of the distributed ledger technology.

Arman Sarhaddar on Blockchain on the way from niche to mainstream application

Blockchain 2020: From niche to mainstream application

Blockchain 2020: Last week, a new article by CEO Arman Sarhaddar, inventor of ivault, was published on – a German platform for the latest news on IT, technological innovations and digitalization trends.

The Distrubuted Ledger Technology (DLT), better known as blockchain, is evolving from a niche to a mainstream application. We already noticed this clearly emerging trend at the World Economic Forum (WEF 2020).

This blog entry will provide you, as one of our English readers, with a translation of Arman Sarhaddar’s expert insights and some more facts and figures, you should not miss.

Arman Sarhaddar on Blockchain on the way from niche to mainstream application

New article by Arman Sarhaddar, CEO and Founder of Vault Security Systems AG, on Blockchain 2020 auf dem Weg aus der Nische zur Mainstream-Anwendung.

Blockchain 2020: Moving to the next level


Anyone who has ever dealt with the topic of blockchain knows that the technology offers a number of advantages. In B2B business, it provides greater transparency, simplified processes and cost savings. Therefore, it is also relevant for the end consumer – for example, when tracking supply chains and production conditions and providing proof of ownership and product authenticity.

CIO Applications & Blockchain Lösungen: ivault zählt zu den Top 10 Blockchain Solution Providers 2020

Blockchain 2020

Earlier this year we already informed you that CIO Applications from Silicon Valley ranked us as one of the TOP blockchain solution providers 2020 (see certificate). Therefore we can proudly say that we, Vault Security Systems AG, are one of the pioneering companies when it comes to blockchain solutions of the future.

Now that the initial hype about Distributed Ledger Technology (DLT) has subsided somewhat, more and more applications are coming into use.

However, it is also becoming apparent that there is still a need for clarification, and that blockchain solutions cannot always be seamlessly integrated into existing software and processes.


Blockchain 2020: Small enterprises are still hesitant


… but should not wait too long.

The 2019 Bitkom study (see below) on blockchain in Germany found that respondents viewed the technology with suspicion (9 percent) and curiosity (12 percent) at the same time.

It also shows that the size of the company is decisive for whether it has already dealt with the topic in terms of content. Especially in small and medium-sized companies, the blockchain often competes with other technologies for innovation budgets.

The figures below show the application of blockchain and other digital technologies in companies with more than 50 employees:

Bitkom Study 2019

Application of the blockchain 2020. Source: Bitkom Research 2018;

In the figure above you can see the companies’ size and how many percent of these companies already use the blockchain (blue), how many plan to do so (black), whether application is being discussed (dark grey) or not (grey – this is the case for most companies). No answer/no data (light grey).

Decisions are sometimes made in favor of Cloud Computing and Big Data & Analytics, which are already tried and tested more often, as you can see in the figure above. Therefore, there is an increased risk of missing the boat in regard to blockchain technology, especially for SMEs.

After all, catching up later will be much more difficult and time-consuming on a tight budget. Consequently, it makes sense for small and medium-sized companies to take a closer look at the technology now, identifying areas of application.


Cooperation with blockchain specialists makes sense


The Bitkom study points out the strategic approach of companies already using blockchain technology. In addition, most of them are open for consulting and cooperation: Almost two thirds of the companies (63 percent) implement the blockchain together with partners or at least plan to do so.

This decision is particularly important because skilled workers with blockchain competence are still rare, but in great demand. Instead of bringing the expertise in-house, it is therefore more appropriate to work with a specialized partner.

Of course, solutions can still be tailored to the respective needs. A reputable blockchain provider not only supports companies as a technology partner, but also plays an advisory role.


Blockchain 2020: On the way to mainstream application


Despite the hitherto hesitant attitude towards DLT, especially in small and medium-sized companies, the technology is clearly on the way to broad application in very different industrial sectors.

A recent global Deloitte study (see below) on the status of blockchain 2020 shows that something is slowly changing. Decision-makers no longer see the technology as merely groundbreaking and promising, but are now treating it as an important part of their company’s transformation and innovation.

According to the Hype Cycle described by the IT research and consulting firm Gartner, distributed ledger technology is thus out of the valley of disappointment. We are now in a phase, where understanding is increasing and companies are implementing or testing the technology: the slope to enlightenment.

The Deloitte study depicts this development over time:

Deloitte study 2020 blockchain applications

Sources: Deloitte’s Global Blockchain Survey, 2018, 2019 and 2020. Application of the blockchain 2020;

This is blockchain 2020: 86 percent of those surveyed already stated that their company management believes in real efficiency gains through blockchain technology in their own company. Two years earlier, the figure was only three quarters. Similarly, 83 percent believe that their own company will lose a competitive advantage if DLT is not applied (2018: 68 percent).


Use cases should be thoroughly examined


The attitude towards blockchain technology is thus increasingly characterized by a differentiated (a more comprehensively informed) view, while at the same time confidence and optimism are increasing.

Nevertheless, it is crucial to approach the technology in a considered and prudential way, instead of simply adorning oneself with the term. Some proven applications are already being used for example in logistics and supply chain, and can therefore be quantified economically.

In fact, compared to for example the financial industry, the practical implementation in those areas is already further ahead, although less of a prominent topic.

Some applications receive a lot of attention nowadays and are slowly becoming more commonly used. There are numerous possibilities to integrate DLT into your own business model in a meaningful way. Exciting application scenarios exist in various areas, such as: verification (authentication or data verification) or insurance.

The best conditions for a profitable adaptation of blockchain 2020 are provided by companies that approach the topic with openness and willingness to innovate and that acquire the necessary expertise – either through clever recruiting or with a competent partner.

sustainable blockchain solutions for supply chain

Sustainable Blockchain solutions 2020 – Is there any truth to it?

In short: YES! Sustainable Blockchain solutions are just around the corner. The bad reputation of the Blockchain due to its high energy consumption is not entirely justified. Blockchain can even contribute to environmental protection.

Everyone is talking about sustainability. This raises the question: What about Blockchain, the major future technology pioneers  all around the world put their trust in?

Arman Sarhaddar, CEO of Vault Security Systems AG, answers a few essential questions on the topic in a German interview with Industry of Things, a platform for Blockchain experts and upcoming technological innovations.

We summarized these insights for you in this blog entry to show you why Blockchain doesn’t necessarily mean high energy consumption and low environmental compatibility.

Sustainable blockchain solutions: Is it possible to protect our environment and nature with the distributed ledger technology, that has been described as dramatically energy-inefficient.

Sustainable Blockchain solutions: Sustainable economic models are becoming increasingly important for companies and end consumers. But how is it possible to protect our environment and nature by using a technology that has been used almost exclusively for Bitcoin mining, which is horrifyingly energy-inefficient?


1. What is the reason for the Blockchain’s
bad reputation concerning sustainability?


ivault’s founder Arman Sarhaddar explains, it is true that Blockchain does not have a good reputation in terms of its environmental performance. This is because, despite growing knowledge, the term is still strongly associated with crypto-currencies such as Bitcoin.

Bitcoin mining activities are indeed energy-intensive: The proof-of-work algorithm (PoW) by which transactions are verified and new coins are generated, involves a very high computational effort. A single transaction now consumes as much energy as 1.5 average American households per day.

This must be viewed critically since there is a lot of mining going on e.g. in China as well. There, the necessary electricity often comes from coal-fired power stations, which is extremely harmful to the climate.

“But Bitcoin is not Blockchain and Blockchain is not Bitcoin!” – Well said, Arman.


2. So, what about sustainable Blockchain
applications OUTSIDE of the crypto world?


Today we can choose from many different algorithms –many alternatives to the PoW algorithm nowadays, which consume less or even net zero energy. Each option has advantages and disadvantages, which have to be weighed up in terms of application as well as environmental compatibility.

Most companies do in fact use these more sustainable Blockchain algorithms. For a company network or a network between known consortium members, the energy-consuming level of protection as with Bitcoin is simply not needed.

So, most Blockchain or distributed ledger technology (DLT) applications developed for businesses can do without the energy-intensive PoW. This requires networks that are not freely accessible like the Bitcoin network, but need permission (permission-based networks).

Instead of a proof-of-work, for example, a proof-of-stake can be used for verification and consensus building – but you don’t need to understand all the technological details in this case, only acknowledge the fact that this reduces computing power and thus reduces energy consumption drastically.

Yet these sustainable Blockchain solutions can still achieve the desired performance.


3. Can Blockchain technology contribute
to environmental protection?


There are many business models that directly address social and environmental problems with SDGs (Sustainable Development Goals). Like any technology, Blockchain can be used for different purposes. In general, it can reduce paper consumption enormously by securely and permanently recording continuously retrievable data.

Sustainable blockchain solutions: energy-saving future technology, carbon-neutral supply chain

Due to its ability to record data unalterably, the Blockchain has a particularly great potential for environmental protection. Currently, it is already being used to record data on the natural environment and to record changes in ecosystems.

Among other things, there are sustainable Blockchain applications for sustainable aquaculture and fish farming, that track distribution, make fish traceable and provide evidence of the companies’ ecological responsibility.

Monitoring the supply chain makes it possible to identify inferior products earlier in the process. The extent of recalls and new production can thus be reduced, which has a positive effect on the greenhouse gas balance and other resources.

Another important issue is counterfeit protection. Counterfeit products are often highly polluting and therefore harmful to the environment. It seems ridiculous to mention that the extent of this is hardly scalable, as there are no legal controls on production and distribution standards in this dubious sector of world trade…


4. What about the social compatibility of sustainable
Blockchain solutions?


Sustainability has not only an ecological dimension. Counterfeit protection and the tracking of supply chains has an ethical component too. Apart from consumer protection, Blockchain can ensure that goods have been produced under responsible conditions.

In the fair trade goods segment, for example, these sustainable Blockchain solutions are gradually being established and guarantee human rights and fair working conditions.

Another aspect is that in some markets up to 70 percent of medicines are counterfeits. An estimated 100,000 people die every year as a result of taking counterfeit medicines. A technology that can prove the authenticity of medical products helps to reduce the risk and potentially minimizes the amount of fatal incidences.

On the other side, Blockchain enables smart contracts that automatically come into force under certain mutually agreed and unchangeable conditions. The “if-then” principle can be used, for example, for automatic payments. Thereby payment delays or misappropriation are not possible anymore.

The entire business world can benefit from more trusting, transparent and direct relationships catalyzed by sustainable Blockchain solutions. This is also in line with the basic idea behind the technology:

In the Genesis block of Bitcoin, inventor Satoshi Nakamoto linked an article that deals with the crash of Lehman Brothers and the start of the financial crisis. A transparent network, in which transactions can be viewed and tracked by everyone, would rule out corruption.


5. What needs to be done to enhance eco-balance
and the image of the Blockchain?


The most important thing is: The public awareness of the difference between the Blockchain technology and crypto currencies like Bitcoin has to increase.

The fact that Bitcoin has a very high energy consumption that exceeds that of countries like Switzerland, for example, is usually being covered by the media to a greater extent than sustainability in the case of other applications of distributed ledger technology.

We need to put more effort into explaining that there are fundamental differences between Bitcoin and other Blockchain applications, which are now slowly being put into practice.

We are already on the right track – the applications that are working for a better world, such as energy savings or waste avoidance, more than make up for their energy consumption. In the future, this balance will continue to improve.

sustainable blockchain solutions for supply chain

This goes to shows that with Blockchain as our main future technology we are indeed on the right way. In times that provoke as much scepticism and doubt as now, it is at least good to know how fast nature can heal itself, when we hit the brakes of co2-emissions and environmental pollution like we were forced to due to coronavirusWith the Blockchain, environmental protection can be further promoted.