Visions part 1 the value of blockchain technology

Recently, research in blockchain technology has grown in popularity. Most of these researches have pointed out designing and improving conceptual structures to create digital systems that are more secure, accessible, and effective. Although blockchain offers a wide range of advantages, it also has some pitfalls. This research aims to present an understanding of the properties of blockchain, the advantages, pitfalls, and applications based on blockchain technology. To achieve the goal of understanding blockchain technology concepts, a systematic literature review approach was introduced. Therefore, this research provides a summary of recent studies that have been published in the field of blockchain.

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Adoption of Blockchain Technology: A Case Study of Walmart

The paper is written on the personal title of the author. Much of the academic literature on blockchain Davidson, De Filippi and Potts [], MacDonald, Allen and Potts [], Christopher [] overlooks the very fundamental question for which solution blockchain is a good solution and for which it is not. This paper aims to answer the question for which problems blockchain is a solution, using the rational choice framework to assess how and why blockchain works for some types of transactions, and how and why it does not work for other types of transactions.

The outcomes are visualised below coloured boxes represent the optimal outcome for both actors. This theoretical exercise shows the need for some sort of third party mechanism to prevent that neither party will attempt to defraud the other; it is rational for both parties not to trade at all in a justified fear of being defrauded by the other party. Schematically, this looks like the figure below again; coloured boxes represent the optimal outcome; in this case overlapping.

In this case, Alex and Charlie do not need a third party mechanism to prevent that neither party will attempt to arrive late, because they both maximize their own utility by arriving in time.

The optimal outcomes of both actors are aligned. To fully grasp why the concept of aligning and conflicting interests is so relevant to assess whether or not a blockcahin solution is appropriate or not, consider adding one additional party to the equation Sacha.

Three parties can have a combination of aligning interests among each other. Alex and Charlie failed their FinTech career they were late at the aforementioned congress and start a cow meat business. Assuming a profit margin of 10, the chain looks like this:. The relations between all parties are conflicting in the same sense as the first example.

Now consider that Charlie and Alex conspire against Sacha by adding cheaper horse meat to the cow meat and selling this to Sacha as if it is cow meat. Alex and Charlie split the profit of this conspiracy. The example looks like the chain below, in which the interests of Charlie and Alex are more aligned than in the previous example. In this example, it would not be in the interest of Charlie and Alex to have a third party mechanism to prevent fraud, exactly because their interests are aligned.

The examples below show that a mechanism to increase trust — such as blockchain — only works were interests are conflicting. A blockchain solution itself does not create trust, because the inputs in the blockchain can be wrong in case interests are aligned such as in the last example.

No verification mechanism after this first step will help solve this problem. For example, if the slaughterhouse of the previous example is powerful and semi- monopolist and the farm is small, barely profitable and fully dependent on the one slaughterhouse for its survival, it may be forced into defrauding the chain. The section above leads to the construction of a simplified framework to assess the suitability of blockchain solutions, as shown below. Two examples are tested with this framework: trade finance and food traceability.

An average trade finance process is conceptually close to the process showed in Figure 3 in the interests all parties have, albeit somewhat more complex because a trade flow and a financing flow go into opposite directions. Trade is a classic example of a challenge to overcome distrust — does party A pay first and not having the goods yet, or does party B send the goods first, and pays then? But none of the parties can assume that the interests are aligned, in much the same manner as the trade between Alex and Charlie in Figure 2.

Therefore, parties in a trade finance transactions can be classified as having conflicting interests or, more precisely, each party cannot assume that their interest is aligned with the other party.

Before a blockchain solution, trade companies could upload invoices on different platforms and let financiers bid to fund the invoice, but there was no way to verify if the invoice would get double financed Bermingham Hence, the blockchain very well suits a transactional challenge of trade finance in India. On the other dimension of blockchain suitability, power relations, things are less clear.

Parties with very different power relations may do trade finance transactions with each other. However, given the transactional nature and the often large geographical separation of transacting parties in trade finance, it is not directly clear to what extent a more powerful party can leverage its power to its own benefit.

It can be put in the green quadrant of Figure 5. Their research question is closely aligned to the more conceptual question that his paper poses. The use case involves organic table grapes being produced in South Africa, being certified by an accreditation authority, and they have individual bar codes per box, and all change of ownership is recorded in the blockchain.

This is recorded on the blockchain so anybody validating the certificate is able to see this. Assume that one day, the auditor discovers the use of pesticides in grapes. In a theoretical world, this discovery should be part of the blockchain and the customer would see that one tray of organic grapes is actually not organic.

This is, of course, not what will happen in the real world. The first question to ask is what the auditor will do with such a discovery. From a rational choice point of view, the auditor may do what is in its own interest. But even assuming that the auditor is not a strict rational actor, the answer is far from clear. An opponent of the rational choice framework would probably also come to the conclusion that the auditor may not necessarily report everything he sees — not out of rational considerations but because of cognitive biases Marnet , p that could in some occasions be caused by stress Weick It may be in the interest of both the farm and the auditor to act as if nonorganic grapes are organic interests are not necessarily conflicting between the two; posing a threat to blockchain suitability.

Power relations between auditor and auditee may also be unequal, given that it is business practice that the auditee pays the auditor. In any way, there is no way that the consumer knows the difference between the wrong and a right blockchain as presented below. The suitability of blockchain for food traceability does not score in the green quadrant of Figure 5. Both on the level of interests potentially aligning and on the level of power relations potentially unequal , it is not guaranteed that a blockchain solution would solve the transactional problem posed.

The next section concludes by laying out how a blockchain solution for an unsuitable transactional problem may cause harm, and how to risk assess this. The question posed at the beginning of the paper is now conceptually answered and supported with two real world examples. Blockchain is a suitable solution for transactional problems where all parties in the chain have conflicting interests or rather, cannot assume to have aligned interests and between parties with more or less equal power relations.

The two examples presented in this paper — trade finance and food traceability — fit in the green quadrant and in the red zone of Figure 5 respectively, demonstrating how some efficiency-enhancing solutions may or may not actually be suitably solved by blockchain. The implications of the answer to the question posed in the paper is that the potential implementation of blockchain across any organization should be treated as a risky process.

A framework to assess the suitability of blockchain should first and foremost start with the most critical question — and this is not the efficiency question. It is the question whether or not the very design of blockchain fundamentally contributes to solving a transactional challenge. This question should — at least — be answered by assessing the features of the transactional challenge as presented in the conceptual framework of Figure 5. A worst case scenario would be to trust in the truth of the blockchain because of misunderstanding the limitations of it, much like global banks used relatively simple metrics like Value at Risk in the run up to the global financial crisis as key decision inputs, while these metrics have shortcomings that are not often fully understood Taleb NL EN.

A truth machine? This paper addresses the problem that blockchain is often inaccurately portrayed as a catch-all solution to make all types of transactions more efficient, while it is only suitable for specific transactional problems. The problem is addressed by asking the specific question for which types of transactional problems blockchain is actually a suitable solution, and for which it is not. The paper concludes that blockchain solutions are suitable for transactions between parties with conflicting interests and a similar level of power over each other.

This conclusion is based on the conceptual argument that the types of transactions that benefit from blockchain technology are a function of how blockchain is designed, backed by examples from trade finance and food traceability.

The implications are that any party considering using a blockchain solution to overcome transactional problems should soundly risk manage this process, using at least the conceptual framework presented in this paper. Introduction Much of the academic literature on blockchain Davidson, De Filippi and Potts [], MacDonald, Allen and Potts [], Christopher [] overlooks the very fundamental question for which solution blockchain is a good solution and for which it is not.

Assuming a profit margin of 10, the chain looks like this: The relations between all parties are conflicting in the same sense as the first example. The example of trade finance An average trade finance process is conceptually close to the process showed in Figure 3 in the interests all parties have, albeit somewhat more complex because a trade flow and a financing flow go into opposite directions. Conclusion and implications: risk managing the suitability of blockchain The question posed at the beginning of the paper is now conceptually answered and supported with two real world examples.

Purvis, Katherine, , Blockchain: what is it and what does it mean for development? Subscribe to our newsletter. All rights reserved. Maatwerk website door Omines Internetbureau.

Blockchain in Energy and UtilIties

At Shell, we are leveraging blockchain technology to reimagine current processes, create new value propositions and establish new markets. We are leveraging blockchain technology to reimagine current processes, deliver cost savings, increase efficiencies and drive standardization across our processes and, indeed, across the entire energy industry. We will find new value propositions, particularly in emerging or rapidly evolving markets, by reimagining the operation of end-to-end value chains based on blockchain technology. Additionally, blockchain technology is making it possible to create completely new markets. Shell continues to support and initiate the creation of decentralised ecosystems. From tracking the source of renewable energy to changing the relationship between how energy is produced and consumed, blockchain has the potential to transform the way companies collaborate and interact to accelerate the development of low-carbon energy. Sharing standards and tools for reporting environmental footprint data can increase trust and unlock innovation as companies work towards their sustainability targets and strive to lower emissions across value chains.

CFA INSTITUTE. ALL RIGHTS RESERVED. Contents. What Is a Blockchain? 1. Can Blockchain Make Financial Reporting More Efficient?

The Internet of Value – how blockchain is laying down the rails for a new financial system

Marrs Buch ist eine aufschlussreiche und informative Untersuchung der transformativen Kraft der Technologie in der Wirtschaft des Bernard Marr is a world-renowned futurist, influencer and thought leader in the fields of business and technology, with a passion for using technology for the good of humanity. He has over 2 million social media followers, 1 million newsletter subscribers and was ranked by LinkedIn as one of the top 5 business influencers in the world and the No 1 influencer in the UK. In fact, blockchain is revolutionizing most every industry. Here are just a few of the practical examples of blockchain technology. B2Expand —Based on the Ethereum blockchain they create cross-gaming video games. Guts —A transparent ticketing ecosystem that uses blockchain technology to eliminate ticket fraud and the secondary ticket market. Warranteer —A blockchain application that allows consumers to easily access info regarding the products they purchased and get service in the case of product malfunction.

Blockchain Reading List

visions part 1 the value of blockchain technology

Bobby Allyn. Web3, short for web 3. There's a buzzword that tech, crypto and venture-capital types have become infatuated with lately. Conversations are now peppered with it, and you're not serious about the future until you add it to your Twitter bio: Web3.

As part of our series on innovation, James Chenevix-Trench and Edward Bonsor have embarked on an examination of the potential for blockchain technology and suggest how it might reshape financial transactions and create new avenues for investment. A glossary of key terms and concepts can be found at the end of their article.

Blockchain in accounting research: current trends and emerging topics

In a blockchain, there is no mechanism to correct it - people have to accept it. Everyone is talking about blockchain, the new technology in the FinTech Industry. The concept of blockchain has energized the financial services industry globally. The concept has already brought a disruption in the financial industry. We bring to you the overview, technology, application areas, and use cases of blockchain. Source: Dupress.

The CIO’s Guide to Blockchain

Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network. While blockchain is still largely confined to use in recording and storing transactions for cryptocurrencies such as Bitcoin, proponents of blockchain technology are developing and testing other uses for blockchain, including these:. The primary benefit of blockchain is as a database for recording transactions, but its benefits extend far beyond those of a traditional database. Most notably, it removes the possibility of tampering by a malicious actor, as well as providing these business benefits:. Learn more. As the number of transactions grows, so does the blockchain. Blocks record and confirm the time and sequence of transactions, which are then logged into the blockchain, within a discrete network governed by rules agreed to by the network participants.

In the IATA study “Future of the Airline Industry ”1, Blockchain has been The Blockchain technology comes with bold promises, evidence of value.

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Try out PMC Labs and tell us what you think. Learn More. We provide a deep understanding of how the adoption of this technology could lead to changes in Europe over multiple dimensions, ranging from business to culture and society, policy and regulation, economy, and technology.

Visions, Part 1: The Value of Blockchain Technology

Technological activists are designing blockchains and other distributed ledger technologies to challenge extractive value-accounting and identity management in global capitalism. This paper investigates how the new possibilities afforded through distributed ledger technology make possible an alternative future of generative value accounting and self-sovereign identity practices. The problem with the logic of capitalism is that everything, including healthy social relationships, a stable climate, having meaning in life, etc. Technological activists are rejecting the logic of capitalism and insisting on creating a world where humans and living systems thrive, and therefore are developing new ways to recognize value. Technological systems have shaped accounting in every setting, including the construction of markets, capital raising, algorithm pricing, digital platform services, and corporate organization.

The potential of blockchain in the energy and utilities industry could be transformative. Over the past 12 months we have seen a host of utilities engage with the technology and launch pilots across the world.

Blockchain technology has moved past the hype — and hysteria — of cryptocurrencies and become a technology adopted by industry and governments as a solution for securing and streamlining processes across a variety of sectors. China has been a developer and rapid adopter of blockchain, particularly in areas such as finance, medicine, energy, and supply chains. Emerging technologies such as blockchain, a subset of distributed ledger technology, are not limited to a single region or use case. In pursuit of global competitiveness, China is a significant player in testing blockchain technology as well as implementing legal frameworks, regulations, and government initiatives around it. This working paper examines the country case of China and assesses how it has progressed in its attempts to test, adopt, and implement blockchain technology. While Bitcoin introduced the world to blockchain over a decade ago, the buzz continues around the underlying technology, distributed ledger technology DLT.

One of the questions that has perhaps been central to my own research in blockchain technology is: ultimately, what is it even useful for? Why do we need blockchains for anything, what kinds of services should be run on blockchain-like architectures, and why specifically should services be run on blockchains instead of just living on plain old servers? Exactly how much value do blockchains provide: are they absolutely essential, or are they just nice to have?

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