While banks and financial institutions are being turned upside down by token infrastructures, things have so far looked rather poor in other sectors. Why blockchain technology has not yet managed to conquer other industries and why the 5G mobile communications standard could change just that.
If you stumble across blockchain technology, 90 percent of the time you will find a use case that revolves around the financial sector. Regardless of whether it is about the Bitcoin course, new DeFi applications or the tokenization of securities. Industrial blockchain applications for the automotive or logistics sector, for example, are currently one thing in particular: a large pilot project. The impression can quickly arise here that blockchain technology does not manage to generate any significant benefit far from the financial industry.
The jump into the cold pool
The added value of blockchain technology for industry is primarily that it increases the potentially feasible exchange between different companies and their software programs and machines. Blockchain applications are primarily applications for “outdoor use”, where you leave the familiar territory and there is great uncertainty.
An infrastructure is created on which data and values can be exchanged that would otherwise only be transferred and processed via intermediaries. By bypassing these central bottlenecks, the degree of technological automation can in turn be increased and new business models can be developed. This sounds interesting at first glance, but it also requires enormous requirements that are currently difficult to map.
Blockchain is not an end in itself
Even if a company shows the willingness to process transactions via a decentralized smart contract infrastructure instead of via the usual service providers, there are often still problems with economic efficiency and the necessary interfaces. Decentralized forms of organization increase the level of complexity, while middlemen can take complexity out.
In order to be able to deal with this complexity, smart software programs and internet-enabled devices are required. Artificial intelligence and the Internet of Things are key technologies for making blockchain applications useful in industry.
If, for example, there is a lack of internet-enabled sensors in the cargo hold that track the cooling temperature and send it to a blockchain, which in turn triggers a contractually stipulated condition if the cooling chain is not reached, then a blockchain solution has only limited advantages. Even if paper freight documents and fax machines are still used at the port where the goods or containers are handled, it will be difficult to enable trade processing via blockchain technology.
Cars don't need a hardware wallet yet
The same applies to the mobility sector, where it currently makes little sense to install car wallets in cars, as Daimler or Porsche are doing in their pilot tests together with the blockchain start-up Riddle & Code. The Daimler blockchain solution “Welcome Home” based on the Ontology Blockchain has not yet been rolled out commercially.
Many blockchain applications are several years ahead of the digitization of our economy. The transactions that are to be processed on a blockchain are not yet taking place in practice. The use of drones and robots, for example, as well as autonomous driving will undoubtedly turn many things upside down in this decade. At the moment we are still at the beginning: a lot of theory, a lot of pilot tests and little commercial applications.
Green electricity and blockchain applications
If an industry is decentralized and autonomous due to AI software, then decentralized and partially autonomous infrastructures are also required, which serve as the basis for the transactions taking place. A concrete example is provided by the energy sector, which is being decentralized through renewable energies.
Instead of just making the generation level decentralized, trading could also be decentralized. Instead of having to be satisfied with the feed-in tariff of the electricity company as the owner of a solar system, the electricity could be freely sold via a smart contract infrastructure - for example to the neighbor next door.
The prosumer - consumer and producer in one - becomes a trader himself. What applies to electricity production also applies to our data. When we drive our cars, we can collect data that we sell on, like electricity.
Game changer 5G
5G network technology is likely to make a decisive contribution to the establishment of decentralized structures. The data exchange should be faster by a factor of 20 and more than with the 4G standard. This should make it possible to transfer more data with less energy consumption. New business models and technology applications that rely on interconnectivity between end devices benefit from this.
In addition to real-time streaming of games or VR applications, autonomous vehicles are a popular example. With the help of 5G, it is currently possible to overcome existing hurdles in order to enable the exchange of autonomous vehicles with one another or with other end devices. Ultimately, pretty much anything that can be attributed to the Internet of Things can benefit from 5G.
More networking, more blockchain
The higher the degree of networking in Smart Home, Smart Mobility, Smart Energy, etc., the more a decentralized smart contract infrastructure is required in order to process and record automated processes and transactions. A single middleman quickly reaches its limits. Especially since the security risks increase with increasing complexity - see single point of failure.
Does 5G technology benefit blockchain technology directly? No. Nevertheless, it contributes to the expansion of the Internet of Things, whose transactions increasingly include the “value levels”. These smart contracts can then in turn be processed via blockchain infrastructures. Blockchain is only an indirect beneficiary of 5G network technology.
Blockchain infrastructures soon to be the industry standard?
It will certainly be another five to ten years before blockchain technology leads to significant changes within individual industries outside the financial sector. This assessment is also shared by the Gartner Hype Cycle for Blockchain Technologies, which sees a plateau of IoT blockchain applications for five to ten years.
Without a higher degree of digitization in business and administration, blockchain technology will also find it difficult to find its way into practice. It will be a while before our vehicles act as nodes and process transactions via car wallets in a blockchain network. Until then, the structural change triggered by blockchain will primarily affect the financial sector. Before that, blockchain industrial applications that also reach the commercial stage of use can only be expected in isolated cases.