Blockchain: "The Possible Application Scenarios are Almost Unlimited”

As a technical platform for digital innovations, blockchain is a term currently on everyone's lips – given that, as a cross-sectional technology, it enables transparent and tamper-proof transactions. The application possibilities appear to be practically unlimited. In interview, Stephan Zimprich, eco Director for Blockchain, explains the advantages of the technology and describes some scenarios that have already been tried-and-tested.

Mr. Zimprich, blockchain has become known first and foremost as the technical basis for crypto currencies such as Bitcoin. However, experts envisage far more potential applications and even talk about a fundamental change in the industry. What is your opinion on this?

Blockchain technology is much more than just the basis for virtual currencies. Wherever transactions need to be processed and information needs to be securely documented – for example in logistics, the energy sector, mobility, and eGovernment – then possibilities for its application abound.

The possible use scenarios are almost unlimited. In the first place, blockchain enables direct transactions to take place between two parties who are not personally present without a third party, such as a bank, having to act as an intermediary. So-called “smart contracts” – i.e. programs running automatically on the blockchain – and IoT interfaces enable the almost completely autonomous participation of physical assets in business dealings – such as an autonomously driving car that fills up automatically via smart contracts and books and pays for a service at the appropriate service interval.

In practical terms, however, these future scenarios are still being constrained by a number of obstacles which need to be tackled. As such, the current focus is more on use cases that offer efficiency gains, and less on instantly revolutionizing entire markets.

Blockchain also lends itself well to public administration: Which application cases do you consider to be particularly convincing?

When it comes to public administration, particularly strong scope for blockchain applications exist where registers and certifications are maintained that require an especially high degree of trust – such as the commercial register or the land register. Blockchain can also enable tamper-proof electronic elections or ensure efficient data exchange between authorities – the citizen can remain in control of his or her data at any time and, for example, grant access authorizations which are limited in time and content.

Essentially, innumerable applications are feasible, which would above all allow citizens faster and more efficient access to state services, such as the processing of tax returns and the automated issuing of building and business permits.

In Estonia, much of the public administration's data processing is running on the KSI blockchain system – a consequence of a cyber attack in 2007 that prompted the government to increase IT security.

And what about the retail sector?

I see application scenarios above all in logistics and payment systems. As far as payment is concerned, a blockchain-based payment system can operate on a significantly cheaper basis than traditional intermediaries such as Paypal or credit card providers. In logistics, applications are conceivable that would enable efficient management and control of the supply chain and render the exchange of paper superfluous. However, this would require a deep penetration of the market, as all parties involved in the supply chain would have to be involved.

At the Blockchain Masters in Hamburg in early May, international blockchain experts will meet up with IT decision-makers. What are you particularly looking forward to in view of the varied agenda?

I am delighted that Taavi Kotka, a pioneer of digital development in Estonia, will report first-hand about a country compared against which Germany seems to have stepped out of time. Another highlight for me will be Roman Beck's workshop, which will allow participants by the end of the day to have programmed their first Ethereum app.