Blockchain: a flop or an all-rounder?

In this sense, our (and indeed many other) tech trend scouts were perhaps temporarily bereft of their senses when they declared the platform to be the new holodeck of e-commerce. Hard luck. Now we’re backing the wrong horse. Who’s going to tell the boss? Stop!

Not every technology operated by Digital Village must automatically become the definitive trendsetter for all industries. After all, the bait must not only appeal to the fish, it also needs to fit onto the hook. ComBOTS was also supposed to become the leading online messenger worldwide. And can anyone still remember Lycos? Evidently there’s no great difference between technology, products or services in this respect. Ergo: it’s only a ‘match’ if the technology is suited to the business objectives. Does the potential exist for some kind of platform-blockchain combination?

Ultimately, the latter definitely does have something to offer. For example, it has real potential to replace centralistic transaction systems and to establish new business models in various sectors. But what can it realistically affect within online retailing? How can suppliers, customers and marketplaces profit from blockchain technology? And where would we perhaps not see an advantage?

There are now countless articles available on Blockchain technology. That’s why we’ve listed here, for quick readers and enthusiasts alike, four crude theories based on largely incoherent claims, which Stephan Biallas, a partner at EY, comments on patiently and professionally.

A cautionary theory: thanks to blockchain, online businesses will finally be secure.

Stephan Biallas: Thanks to SSL und TLS encryption, today’s online shopping and banking are already very secure applications. It’s rather that Blockchain expands their effectiveness to include other terrains: firstly with the safeguarding of transactions without an intermediary – i.e. a payment processor or platform/shop operator, and secondly in that the product information is protected against forgery. If the initial input, e.g. the materials and manufacturing details of a textile item, was correctly “entered” into the blockchain and ideally also certified by an external inspection body, its authenticity and counterfeit protection is in no doubt. The same is true for the verification of identities. If, for example, consumers and buyers are mutually identified by means of specific, personal identification features, the blockchain eliminates the possibility of all forms of identity theft through forgery or the theft of this data.

The platform is dead, long live blockchain.

Stephan Biallas: I can’t really see this being a consequence - rather the opposite is true. Blockchain technology will make platform business models even more successful. Fundamentally, blockchain can make many classic intermediaries redundant due to its inherent peer2peer characteristic. For example, those who fulfill their payment obligations to the invoicing party using Bitcoin no longer need a bank to act as an intermediary in the transfer. However it should not be underestimated that many of today’s highly frequented intermediaries are marketplaces, platforms or services which are operated by renowned and trustworthy brands. And these are utilised by millions of users, not least because of their versatile and convenient service landscape. In this respect, platforms should not view blockchain technology as a threat, but rather recognise it as an opportunity to develop new value-adding services and user scenarios on the basis of this technology.

Blockchain is the new darling of marketing.

Stephan Biallas: Why not? Blockchain can build confidence amongst business partners or consumers because it makes it possible to verify the relevance and truthfulness of customer promises proposed by providers. An example: a pair of jeans was manufactured in Asia, and in the process, both the defined social standards and the EU directives were observed with regard to product safety. The jeans were transported to Europe, then packaged, shipped and delivered to the customer’s door, all in a way designed to conserve resources. The whole process can be both documented via blockchain in a way that is secure against forgery and proven end-to-end. Independent certifiers such as the TÜV, Stiftung Warentest or others monitor and confirm the accuracy of the information provided at regular intervals. There couldn’t be more transparency towards the consumer - an aspect which every marketing strategist is obviously happy to use to promote their company’s good image.

CSR ist out: without more nuclear power plants, blockchain cannot be used in e-commerce.

Stephan Biallas: It’s true that the complex algorithms required for the creation of and trade with cryptocurrencies demand huge amounts of energy, which, in the case of Bitcoin, is equal to approximately 12% of Germany’s energy requirements. In a company environment, however, significantly fewer complex and energy-intensive blockchain encryption algorithms are needed. And you don’t need to be a prophet to anticipate the further development of this encryption technology, at least in general terms. Let’s take a look at the development of recording media. From the shellac record, to the CD, to MP3 and streaming – it was always about qualitative improvement yet also compression and increased efficiency. If we apply this to blockchain technology, we can conclude that the energy consumption will decrease further. At the latest with the „Blockchain-enabled platform 2.0“…