Blockchain as a basis for web services
Present situation worldwide and in Switzerland
“Blockchains” and “distributed ledgers” are often called “technologies”. Strictly speaking, however, they are lists of cryptographically linked data elements. Blockchains and distributed ledgers display the following characteristics: distributed data storage and validation by means of consensus mechanisms (e.g. proof-of-work and proof-of-stake), auditability and persistence. There are two different types: permissionless (anonymous or pseudonymous users) and permissioned (limited circle of known users). An as yet unsolved issue of the proof-of-work mechanism for permissionless blockchains and distributed ledgers is its high energy expenditure. Alternative consensus mechanisms for validating transactions, such as proof-of-stake, are still at research stage. Going beyond mere data structures, one finds so-called “smart contracts” with semantically interpretable or software readable contents that are able to execute automated transactions.
Various studies estimate the future potential of blockchains and distributed ledgers as high to very high. In a 2018 study, the World Economic Forum (WEF) calculated worldwide efficiency gains of around 1‘000 billion USD for trade finance alone. Other areas of application include logistics (Maersk plans to optimise its container logistics), retail (IBM and Walmart are developing a solution for food safety), insurance (B3i is developing a smart contract solution for insurance contracts), energy (Axpo is developing a solution for peer-to-peer energy markets), transportation (Novotrans stores inventory level data for railway repairs) or public administration (the Netherlands are developing a border control system for passenger data).
Implications for Switzerland
Such applications can also be transposed to Switzerland. Further examples in this country include Modum (pharmaceutical supply chain), Swiss Prime Site (property management and rentals) and UBS (Utility Settlement Coin, trade finance, etc.). Next to improving efficiency, blockchains and distributed ledgers also open up numerous new fields of business, including new services (e.g. digital identity), software development (e.g. new web services or so-called “distributed apps” or “dApps”) and specialist services (e.g. legal). Their successful implementation hinges on at least three critical factors: the availability of talents and their training at institutions of higher education, a well functioning ecosystem of institutions of higher education, established players and startups (with good access to venture capital), as well as a flexible regulatory and legal framework. While Switzerland has a well functioning ecosystem, it needs to catch up as regards the education of talents and access to venture capital.