Blockchain technology is becoming a hot topic for a growing number of industries. Following in the footsteps of the financial sector, industry and public administration are also discovering the opportunities it offers. Stephan Zimprich, Leader of the eco Competence Group Blockchain, describes in an interview where the first applications are working and explains where obstacles still need to be overcome.
Mr. Zimprich, we hear talk of technology, of law & policy, of economic interests. What is actually relevant to the topic of blockchain?
The question of acceptance is incredibly important. Public blockchains – that is, blockchains that are in principle open to all participants – are not controlled by a central authority. Market acceptance is an important criterion here; all parties involved must have confidence that the technology will work. Because in many cases, what is ultimately at play is the transaction of real assets.
Does the decentralized principle of the blockchain act simultaneously as an advantage and a disadvantage?
The distributed network is a key security component of the whole. Once you have a central authority, you basically have somebody in control, and control opens the door to security risks. If your question is then about whether the decentralized system will prevail, the answer is: This depends on the application scenario.
There are certainly application scenarios in which a central authority is not particularly relevant for security, and where no great trust needs to be conferred. In such cases, people are more likely to try out blockchain-based models. But high-security applications require the endowment of a huge amount of trust in the central actors or in the system as a whole.
Which applications will be the first on the scene?
It is easy to visualize blockchain solutions being realized wherever information or assets are transmitted digitally. Where few regulatory requirements exist, blockchain solutions have the best chances of being introduced quickly. Take as an example the area of digital rights management. Think of a digital piece of music. With blockchain technology, you could set up the download so that it automatically includes permissions and writes the usage of those permissions into the blockchain. Thus you would have a very good system for making private copies and controlling their distribution.
The activities of collecting societies also offer fertile application ground. Artists receive royalties for every use of a piece of music, e.g. on the radio or in a disco. In this scenario, the collecting society is notified of each relevant use. At the end of the year, the artist receives a dividend that is calculated on the basis of the corresponding portion of the total income. A blockchain-based technology solution would largely remove the need for the administration within such a collecting society.
In this instance at least, you would not have to clear very high legal hurdles. Which is why I believe that we could very soon see innovative concepts in this field.
Speaking of hurdles: Where do you see the greatest need for action to make the breakthrough a reality?
I see a multitude of technological problems, technical impediments, speed problems, bandwidth issues; so there are still numerous things that we need to get to grips with. However, in view of the current speed of development, I don’t perceive these as representing insurmountable obstacles. Where it becomes more difficult is where legal framework conditions need to be changed.
