acatech HORIZONS: Blockchain
Blockchain has the potential to fundamentally transform our financial systems, energy markets and public administration. It is one of the most popular themes at IT conferences, while the Federal Government is also currently formulating a blockchain strategy for Germany.
However, the public and policy debate on blockchain technology is still in its infancy.
That is why we have chosen blockchain as the subject of the first publication in the acatech HORIZONS series, in which the Academy explores important technology fields that are already looming large on the horizon, but are still affected by uncertainty concerning their potential impacts.
acatech HORIZONS Blockchain is the first publication in the series and highlights the technological challenges that still need to be overcome before blockchain technology can be widely used.
Executive Summary – 10 key messages about blockchain technology
- The blockchain concept has the potential to become a new basic digital technology.
- Blockchain isn’t synonymous with Bitcoin. There are several different types of blockchain and many ideas about how they might be used.
- The technology is developing rapidly. Nonetheless, there is no guarantee that the high expectations surrounding it will be fulfilled.
- Blockchain isn’t a Silicon Valley technology. The race for technology leadership and leading market status is still on.
- China, Russia and several other countries have already formulated ambitious blockchain strategies.
- Germany must start taking action at policy level if it wants to catch up with other countries in the field of blockchain technology rather than falling further behind.
- A globally competitive blockchain scene has sprung up in Germany, especially in Berlin.
- This community is calling for clarity regarding exactly who it should be speaking to in government and within the relevant authorities. This is even more important than additional funding.
- In the future, government will itself make active use of blockchains. The relevant skills should therefore be developed without delay.
- Blockchain is a team game. Thought leaders in government, industry, academia and civil society must join forces to create a national blockchain strategy.
Disruptive innovations like blockchain technology have the potential to challenge established processes and business models in many different fields of application. Successful models are not confined to Bitcoin in the financial sector – new logistics and e-government solutions are also being established around the world. acatech’s mission is to identify and assess the opportunities and challenges associated with new technologies from an early stage. In the “acatech HORIZONS” series, we have developed a format that analyses these developments in a scientifically robust manner while still communicating them in a way that can be easily understood.
Karl-Heinz Streibich, acatech President
Key features of blockchain:
A blockchain is a series of linked data blocks that are updated over time.
Rather than being stored centrally, a blockchain takes the form of a distributed ledger. All the participants store their own copy and update it regularly.
It is necessary to ensure that all the participants have an identical copy of the chain. First of all, validators (or “miners” in Bitcoin-speak) must propose new blocks. The participants must then agree on which proposed block is actually added to the chain. This is done via a “consensus protocol” – an algorithmic process used to generate agreement on the state of the blockchain.
Cryptographic processes ensure that the blockchain cannot be altered, making the ledger indelible, unforgeable and tamper-proof.
The data stored in the blockchain can be viewed by all the participants. For this very reason, however, content may be stored in encrypted form so that the data cannot necessarily be meaningfully interpreted by everyone. Blockchains thus allow a flexible approach to confidentiality levels.
The use of digital signatures means that forgery-proof information can be stored in the blockchain, providing non-repudiable proof that participants have stored certain data, for example that they have initiated transactions.
Blockchain application examples
Action areas – opportunities to shape the technology’s development
It is still too early to predict with any certainty whether, where and how blockchain technology might become established in our economy and society. What we can say, however, is that Germany needs to decide on a course of action as soon as possible if it wishes to share in the benefits as and when blockchain’s global breakthrough occurs. Germany must formulate a comprehensive blockchain strategy that reflects the wide range of potential applications of this new technology.
Blockchain is a prime example of the cross-cutting nature of digitisation, affecting policy areas that until now had very little to do with digital technology.
Blockchain already has a firmly established place in the strategic technology policy documents of other nations such as China, where it is mentioned in the same breath as artificial intelligence and quantum technology.
Consequently, the formulation of a blockchain strategy would hardly put Germany ahead of the curve – but at least it would help us catch up with our global competitors.
As a large economy with highly regarded regulatory standards, Germany has the opportunity to fill a gap that still exists in Europe.
Top of the German blockchain community’s wish list is for policymakers to recognise the importance of the issue, as well as clarity regarding who to speak to if they are unsure about something or have questions that they are unable to resolve.
After this, the next most important issues for the community include new funding programmes and specific changes to the law.
As well as giving clear political backing to experimentation with this young technology and its potential applications, government could respond to the wishes outlined above through two concrete measures:
- Bringing together German blockchain experts from industry, academia and civil society in an ongoing dialogue with policymakers. These discussions would support the establishment and continued development of a basic regulatory framework.
- The German government should visibly promote its own blockchain pilot projects. These flagship projects would have a high international profile, attracting outstanding people, companies and capital to the German blockchain industry.Furthermore, pilot projects provide government and the relevant authorities with an opportunity to acquire the urgently needed skills that will be required within their own organisations to use what could potentially be a new basic digital technology.
In addition, government should ensure that its own requirements are fed into the development process of commercial blockchains from an early stage, especially those in which the State itself will be a major partner.
acatech HORIZONS: Blockchain publication
Overview: the acatech HORIZONS series
In the acatech HORIZONS series, the academy explores important technology fields that are already looming large on the horizon, but where there is still some uncertainty about their potential impacts. More
See what our blockchain experts have to say
Click on the members of our blockchain expert group to go to their individual interviews. For the full interview series “5 Questions about Blockchain Technology”, click here.
Blockchain project group:
Everyone is talking about blockchain technology. But it is difficult to draw conclusions about it without a deeper insight into the IT side and a basic understanding of how it works. Consequently, acatech’s active engagement in this area is to be welcomed. Our aim is to provide objective analysis and recommendations for policymakers.
Manfred Broy, project group leader
Project group members
- Prof. Dr. Roman Beck
IT University of Copenhagen, BusinessIT Department, European Blockchain Center
- Prof. Dr. Manfred Broy (Project group leader)
Zentrum Digitalisierung.Bayern, Founding president
- Prof. Dr. Helmut Krcmar
TU München, Lehrstuhl für Wirtschaftsinformatik
- Hauke Stars
Deutsche Börse AG, Member of the board
- Dirk Wittkopp
IBM Deutschland Research & Development GmbH, Managing director
- Torsten Zube
SAP SE, Head of Blockchain, SAP Innovation Center Network