Blocked Out?

The success of Bitcoin not only prompted numerous other cryptocurrencies, but it also put blockchain in the spotlight for the IT industry. Investors jumped on the bandwagon, companies appointed blockchain managers, and countless studies and pilot projects explored the potential applications. But what remains of the former hype? This article sets out on a surprisingly rocky path in the search for clues about where blockchain is being used today.

A blockchain stores data blocks in a strict sequence. Unlike in a conventional database, these blocks are stored in a chain. In order to detect manipulation, each newly added block contains a checksum of the previous block, while other sophisticated techniques ensure that the entire data chain can be stored in a decentralized or distributed manner.

Blockchain's functionality makes it suitable for accounting: It is tamper-proof and every change can be tracked, like a kind of distributed ledger. Blockchain is also ideal for storing individual tokens that represent passwords, images, or currency units, for example.

For this reason, the financial sector jumped on the blockchain bandwagon. Blockchain is still widely used in finance today, primarily for managing and processing cryptocurrencies. The city of Detroit, Mich., in the US recently made headlines for using blockchain to do this. Starting mid-year in 2025, Detroit will be accepting payments in cryptocurrencies [1], enabling people without bank accounts, in particular, to pay their fees and taxes.

In Germany, IT service provider adesso [2] has collaborated with Frankfurt-based finance technology company SWIAT, using adesso as one of several validators. Independent systems ensure that the blockchain used has not been subsequently modified and that all actions carried out on it comply with predefined rules – in this case with SWIAT's blockchain.

Detroit, adesso, and SWIAT are just three examples from the world of finance. The list of blockchain applications in this area goes on and on. But what about projects outside the financial sector?

Anyone searching the Internet for blockchain solutions will initially find mainly feasibility studies along with a wide range of ideas for potential use cases. The majority of these articles date from around 2019, at blockchain hype's peak. It is from this period that Google still turns up blog posts from large companies raving about blockchain and planning its introduction.

Fresh Fish

Around 2019, the logistics industry was among the first to jump on the blockchain bandwagon. The idea was that it would make it possible to securely track goods, containers, and pallets at any time. Every supermarket customer would then be able to check the blockchain to see which trawler caught the prawns in their delicious prawn cocktail and from which part of the sea. The middlemen in the chain would also always know where their goods were (supply chain management). IBM was looking to empower traceability of fresh food [3] with its Food Trust project (Figure 1).

Figure 1: IBM Food Trust logs the transportation of food.

The idea was that the IBM Food Trust project would also be able to store documents and certificates in the blockchain. Producers and intermediaries would thus simultaneously be able to comply with requirements imposed by governments and environmental organizations. The Food Trust project was used by several large food companies, including Australian vegetable wholesalers Antonello Produce [4].

No Comment

I reached out to IBM to learn more about the current status of the Food Trust project. At the time of writing, I have yet to receive an answer to my request.

Blockchain was a big topic at Deutsche Telekom in 2022 [5], but I also failed to receive a response when I reached out to that company for an update. In 2022, Deutsch Telekom splashed out on the Celo [6], Polkadot [7], and Q [8] blockchain networks through its Telekom Multimedia Messaging Service subsidiary. While Celo and Q focus on financial services, Polkadot attempts to connect different blockchains. In all three projects, Deutsche Telekom provided computing capacity via its Open Telekom Cloud, among other things. How Deutsche Telekom is investing in blockchain today and whether it is still involved in the projects remained unclear due to the lack of a response. However, Telekom MMS [9] now seems to have more or less fully jumped on the AI bandwagon.

Officially Dropped

In 2018, German IT service provider Materna developed a blockchain for the city of Cologne that recorded all processes relating to residents' parking. Both law enforcement officers and citizens were able to ask the blockchain whether a parked car had a parking permit for the parking space currently occupied. If put into use, the solution could have made paper parking permits a thing of the past.

In the same year, Materna presented the Citizen Blockchain Project at the CeBIT trade fair. Citizens were asked to submit data from their air monitoring stations to the blockchain set up by Materna. Materna generated a particulate matter map from the measurement data. The solution rewarded all submissions with tokens. Participants could then use these to make purchases in local stores or an online store. The Citizen Blockchain, which is based on Ethereum, was also geared to support further similar projects. Materna even set up its own blockchain lab for research and implementation.

I contacted the Materna press office to find out what has become of the two projects (information regarding both projects is no longer available on the Materna website [10]), and again there was no response. However, one thing is certain, the city of Cologne continues to issue its legacy resident parking permits, which have to be placed on the windshield.

After all the hype, interest in blockchain seems to have cooled off considerably. With a little patience, however, you can still find blockchain in practical use cases outside the world of finance.

And It's Still Running!

SAP is still actively promoting blockchain technology. SAP also did not reply to discuss how they are using blockchain, but a post on the SAP website mentions a few specific current use cases [11] including Velocity [12], a nonprofit organization that collects school-leaving certificates, diplomas, and other career-relevant information in a blockchain. When an application is submitted, the company looking for a candidate has access to the candidate's current and complete career history. With the help of the blockchain, Velocity looks to ensure, among other things, that no false information is included on an applicant's CV.

Aside from financial applications, adesso uses blockchain as part of adessoDraws [13], an electronic draw system for winning lottery numbers. AdessoDraws selects the random numbers required by betting service providers and transparently logs them in a blockchain, allowing the winning draw to be traceable as well as tamper proof. According to the adesso website, an open source algorithm is used for the draw.

Adesso – but you probably guessed this already – did not provide any information on this or other projects. However, per their website, the company has bundled its blockchain projects in its banking division, making it clear that blockchain is primarily at home there.

Bosch is also actively driving forward several blockchain projects. The company did provide some insights into its blockchain strategy. One area of application is audit-proof evidence management for vehicle fleets, which is important for sustainability reports, among other things. Evidence is kept with the help of public, decentralized identity systems, which in turn are based on a blockchain. This allows the associated EU requirements to be implemented simultaneously. The solution also offers the advantage that information can be verified without having to disclose further data.

Blockchain can also be found in the Matter smart home standard [14]. The Internet of Things (IoT) devices that follow the Matter protocol encrypt their communication. Tamper-proof certificates stored in a blockchain prevent access from devices that have been compromised by attackers.

The software company Krekeler also utilizes blockchain's immutability in Documentchain [15], a blockchain that allows authors and artists to store important information about a file, such as its hash, in an audit-proof manner. In this way, later manipulation of the file or the authorship of an image can be clearly proven. If required, Documentchain can be integrated into your own applications.

Flat Shapes

In addition to ready-made blockchain applications, numerous frameworks and blockchain implementations have sprung up in recent years. Solana [16] provides a complete blockchain platform along with its own protocol. Solana facilitates the development of blockchain applications, but it also focuses on financial transactions and purchasing virtual goods, which primarily means unique digital objects, also known as non-fungible tokens (NFTs). However, companies are not allowed to operate their own private Solana blockchain.

IBM is different: The company offers a blockchain platform [17], IBM Blockchain, that companies can use to develop their own blockchain products. Vertrax and Chateau Software have used IBM Blockchain to track oil and gas deliveries. The IPwe [18] platform, which specializes in patent rights, has used IBM Blockchain to record who owns which patent or intellectual property (IP) and at what time, resulting in a Global Patent Registry (GPR), which, among other things, simplifies the search for patents and their owners.

Open Source Base

IBM did not reinvent the wheel to develop their blockchain platform. In the background, IBM Blockchain uses the open source Hyperledger Fabric framework [19], which is primarily intended for use by large corporations to set up their own flexible blockchains.

The Hyperledger Fabric framework provides the underpinnings for a surprising number of blockchain projects. In fact, Materna also used the framework for its resident parking solution mentioned earlier. Initially developed under the umbrella of the Hyperledger Foundation [20], the Hyperledger Fabric framework is now part of the Linux Foundation's LF Decentralized Trust [21].

IBM Blockchain will also run in a Kubernetes cluster or, to be more precise, on a system with Red Hat's OpenShift. It can either be booked in the IBM Cloud or you can run it in your own data center. IBM Blockchain still appears to be on offer, but the associated tutorial [22] for developers dates back to 2021.

Building Blocks

Two Fraunhofer Institutes [23] joined forces with two chairs at Technical University Dortmund to launch a European blockchain project, Blockchain Europe [24]. Blockchain Europe's members have developed several open source components [25] that allow companies to quickly and easily implement blockchain applications, including Token Manager for storing and managing assets, Authorization Module, and Light Node Service (Figure 2) for connecting physical devices to a blockchain and executing certified transactions.

Figure 2: Among other things, Blockchain Europe provides a construction kit for logistics applications.

These three components were ultimately used to create a blockchain-based document repository. Like IBM, the Blockchain Europe developers drew on existing software, using the Cosmos SDK [26] and the Tendermint [27] framework based on it.

In addition to the digital repository, there were plans to develop further applications (modules), including blockchain-based customs clearance, electronic waybills (e-waybills), and hazardous goods transportation monitoring [28]. The focus on logistics is not surprising, because the Fraunhofer Institute for Material Flow and Logistics (IML), the Chair of Corporate Logistics, and the Chair of Materials Handling and Warehousing were the organizations involved in the Blockchain Europe project.

However, Blockchain Europe has been dormant for around a year. The last publication was a free guide [29] on the development of blockchain-based business models. Customs clearance [30] and the e-waybill [31] were taken over by the Open Logistics Foundation. According to Max Austerjost, project manager at Blockchain Europe, the working group responsible for the e-waybill has rejected the blockchain approach and is looking for "simpler" approaches. The working group for customs clearance, on the other hand, is sticking with the blockchain, but it is currently still looking into funding additional developers.

Future Prospects

Despite the hype having died down, blockchain still seems to be popular. In a survey conducted by the IT industry association Bitkom [32] in fall 2023, blockchain continued to play a role in five percent of all start-up companies in Germany, while 22 percent were still looking into its use. In its press release, the city of Detroit actively called on entrepreneurs to submit ideas for further possible applications for blockchain by mid-December 2024 (no results had been announced at the time of going to print).

Blockchain also has a future at Bosch. In collaboration with Peaq [33], the company is looking to introduce a Decentralized Physical Infrastructure (DePIN) device. This involves decentralized management of transport systems, energy networks, and other physical infrastructures based on blockchain. Together with start-up Fetch AI, Bosch has also set up a foundation to promote decentralized systems based on AI using blockchains and to promote an exchange in the industry.

Bosch has also set its sights on mobility applications. Peter Busch, Director of the Mobility Strategy at Bosch, revealed that blockchain is already being used more widely in other industries, such as the financial sector. In the mobility sector, Busch says that applications are still more of a niche product and that there is often a lack of acceptance of the technology in this sector. With networking in the mobility sector on the rise, Busch sees the potential for products that can fill the gap in the future.

Bosch brings this perspective to the GAIA-X 4 moveID project, part of the publicly funded European GAIA-X cloud infrastructure solution. GAIA-X 4 moveID aims to develop a decentralized digital identity infrastructure for mobility in Europe [34]. Bosch is significantly involved as the consortium leader and also relies on blockchain as a basis.

Conclusions and Outlook

Blockchain has firmly established itself in the financial sector in particular. However, despite the wide range of potential applications and existing (open source) implementations, you still have to search for use cases in other fields. Due to the lack of communication on the part of the companies actively involved here, I can only speculate as to the reasons behind this. It is very likely that there are simply simpler and more established solutions for most use cases.

Max Austerjost cites another reason. He says that experience from various projects has shown that it is not technological feasibility but, instead, governance issues at the companies involved that make it difficult to establish blockchain solutions in practice, especially in logistics. Nevertheless, many companies, and start-ups in particular, still have blockchain on their radar, with some interesting approaches. It remains exciting to see which applications blockchain will drive forward in the future.