Interview: The monetary value of blockchain does not come directly from the technology itself, but from the automation it enables

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Natalia Jakubowska, trans.iNFO: How do things look right now with blockchain in Germany? Many people had spoken of a revolution being on the horizon, but it has so far failed to materialise. When will the breakthrough come?

Christian Hammermeister, Founder, Borderless Technologies GmbH: This is a good question that concerns many people. The discussion around blockchain technology was accompanied by a big buzzword: Web 3.

There was a lot of excitement in the US, with people floating the idea that a revolution was imminent. People predicted we’d soon be living in the Metaverse, buying NFTs and much more.

However, the interest rate hike hit last year and the entire startup bubble burst, which significantly impacted the reputation of the blockchain.

In the US, people often get excited quickly, but the enthusiasm can fizzle out just as quickly. Here in Europe, we may be a little slower, but that also has its advantages. It reduces the risk of following hype that turns out to be empty promises. However, potential opportunities are also lost here.

Perhaps the biggest problem was that many thought blockchain would become the next Bitcoin. Startups tried to attract investor interest by claiming to have the next big cryptocurrency.

But often all that was left was an initial coin offering with no real benefit. The focus was too much on the financial aspect, but technology can do much more than finance. Companies like R3 with Corda have recognized this and have specialised in distributed ledger solutions. They didn’t make the mistake of focusing exclusively on cryptocurrencies. These companies are still standing today, while many others have failed.

The hype may be over, but we are optimistic. Now is the time to develop sensible solutions and conquer the European market. It will take a little longer, but we are ready to take the next step.

Is it fair to say there is a lack of understanding about what blockchain really is?

It’s not that people don’t understand how great blockchain is. Rather, the problems lay more on the provider side. Many start-ups, especially from Silicon Valley, focused on introducing cryptocurrencies.

Sure, cryptocurrencies are interesting, but what’s truly fascinating is the automation that blockchain enables. We have the ability to execute secure code, record and validate business transactions, even in complex process chains with multiple partners. But only a few have actually tried it.

Our blockchain solution deliberately avoids cryptocurrencies. We look at the technology solely from a technical perspective. We then ask ourselves what we can do with it and what added value we can offer to our customers.

What are the added benefits of blockchain? What makes the use of this technology in logistics so exciting?

The key advantage is that we can secure process chains by pouring business logic into a piece of code. These are called smart contracts. These can process any data and ensure that the information is distributed and traceable. This is particularly useful for complex process chains such as those typically found in logistics.

In logistics we often have many parties involved, from the buyer to the seller to the freight forwarder. Blockchain allows these parties to come together in a decentralised manner without the need for a central intermediary. This is in contrast to centralised cloud solutions where a platform provider manages the process and controls the data.

I find the idea of ​​making processes decentralised and using blockchain as a mechanism to create trust between parties fascinating. This is a decisive advantage that blockchain offers us.

Cloud solutions have always been accused of lacking security. What about blockchain?

I don’t see the problem with cloud solutions as necessarily being a lack of security, because cloud solutions can certainly be made secure. The real problem lies in the fact that trust is concentrated in a central authority that manages the entire cloud. For example, if this system is hacked, all the data is at risk.

However, what is even more problematic is the data protection concept. Often there is no clear data protection concept with cloud solutions, and those who own the platform have access to all data. This can lead to significant concerns, especially when it comes to sensitive data such as tenders or price negotiations. Blockchain, on the other hand, offers a solution to these problems.

With blockchain, data remains decentralised and under the control of the respective users. There is no central authority that can view all data. Instead, users can decide what data they want to share and with whom. Even in the event of a data leak, the damage remains local because the entire network cannot be hacked; only individual nodes are affected.

What other advantages are there over other technologies?

In addition to data protection, the structure of the network is also a decisive advantage of blockchain. Blockchain is a peer-to-peer network in which participants communicate directly with each other. This allows us to develop a completely different business model where users are not just passive, but can actively participate in the network.

Users can set up their own server, deploy the software on it and thus become part of the network. This is an advantage that not many technologies offer. Our goal is to make these decentralised solutions just as easy to use as central platforms. Only if the technology is easily accessible can it spread widely and develop its full potential.

I understand that the hurdle for technical integration is therefore very low. Is this correct?

Currently, we actually see the hurdles for technical integration as too high. For example, if you want to use a large blockchain solution like IBM’s Hyperledger, you need to be able to set up a server and run a so-called certificate authority.

There is often a lot of open source software made available to you, but it frequently lacks simple instructions and an intuitive user experience.

Our vision is to remove these hurdles and make integration as easy as logging into a platform with an email address and payment information.

And why haven’t others yet come up with the idea of ​​keeping the hurdle low?

In my opinion, this is because in the past the business model was primarily aimed at attracting investors by claiming to be the next big cryptocurrency.

Many promising, but perhaps somewhat “boring” solutions have been lost in this hype. However, there are certainly interesting approaches, both in the B2C and B2B sectors.

For example, in the B2C space, there is the Polkadot ecosystem that is trying to target users with browser extensions and wallets. In the B2B space we have various solutions such as Quorum, R3 Corda and the Hyperledger framework.

How is the topic of blockchain received within the logistics sector? Are there reservations and scepticism?

I’m not really able to give a definitive answer here. I’d be moving out of my tech bubble a little bit

My impression is, and it’s a little sobering for me as a technology enthusiast, people actually aren’t that interested in the technology behind it. Rather, they are interested in what they can do with it.

As soon as we can offer added value, the scepticism disappears. When I explain to people what we can do for them or what benefits our solution offers, I experience a lot of interest and hardly any scepticism.

What financial benefits does blockchain offer to companies?

The financial added value of blockchain does not come directly from the blockchain itself, but from the automation it enables.

If companies are able to automate processes, they can save on personnel costs. For example, let’s look at how many processes, not only in logistics but also in other areas, are still carried out manually using notes and paper or letters.

The digitalisation of these processes alone results in significant advantages. One area that has been particularly well received and that you can implement with smart contracts on the blockchain is the automated tendering process.

Suppose a company wants to transport goods from point A to point B, with certain dimensions and requirements. A group of carriers can apply, submit their offers, and the company can automatically evaluate these offers and award the contract.

Through the use of smart contracts and integration into the blockchain, this process becomes legally secure. Everyone involved can prove that the contract has been awarded and the transaction is transparent and trustworthy.

It is obvious that such automation can save costs. In comparison to manually inquiring from different carriers and obtaining offers, the process is much more time-consuming. As I mentioned in my talk, processing happens faster than you can say the word “offer.” The smart contract requests, evaluates and books the offer automatically. This creates clear added value.

Another advantage of digitising processes through smart contracts is the creation of a digital twin. This creates comprehensive transparency in your own process, as every step can be tracked digitally. This ability to follow the process digitally in the browser offers additional added value.

Is blockchain also a solution for small and medium-sized companies?

We are actively working to develop solutions that are also accessible to small and medium-sized businesses. However, the initial step requires the implementation of smart contracts, which involves a certain amount of development effort.

We are currently in discussions with some smaller medium-sized companies. Interestingly, however, large companies in particular are showing great interest because they have their own IT resources and are willing to provide financial resources for tailor-made solutions based on this technology.

At the same time, we are working intensively on developing standardised smart contracts that can be used for various use cases. This is of particular interest to medium-sized companies as it allows them to save time and resources. An example of this is the automated tendering process: once developed, it can be used by different companies without the need for individual development effort each time.

Our goal is to provide a platform where companies can register and choose from a catalogue of smart contracts that they can deploy immediately. Although we have not yet fully achieved this goal, we are working hard to implement this option as quickly as possible.

Medium-sized companies in particular are very motivated and decisive, so we would like to offer these companies suitable solutions, even if large companies can sometimes be a bit slow.

Do you need specific know-how to implement such technologies?

The issue of know-how within the company is crucial when it comes to implementing such technologies. Currently, the solutions I know of do indeed require a certain level of specialist knowledge.

However, we are working hard to simplify this process so that it will ultimately be as simple as signing up with an email address, setting up a wallet, and deploying smart contracts. We shouldn’t create hurdles and force users to first familiarise themselves with complicated technical topics before they can benefit from the advantages.

As computer scientists, our job is to reduce complexity so that end users can easily and without major hurdles use products that offer them added value. The goal is to create a user experience that is simple and intuitive.

The topic of quantum computing has been hotly debated for some time. There are also opinions that quantum computing means the end of blockchain…

One must differentiate here. Quantum computing means the end of so-called asymmetric cryptography. This discussion started about five to seven years ago and a lot has happened since then.

There are now cryptographic methods that are also secure against quantum computing and have been around for several years. The argument that quantum computers will destroy blockchain may concern certain older blockchain solutions on the market whose cryptography is not quantum secure.

However, when developing our solution, we made sure to only use cryptographic methods that are resistant to quantum computing. Although these methods may require a little more processing power, it is worth the effort to ensure long-term security.

Can you foresee technologies such as AI, blockchain or even quantum computing merging at some point?

When it comes to quantum computing, I’m personally still sceptical about when we’ll see it widely used. These are currently very complex and complex systems that have to be operated at extremely low temperatures of around -200 degrees.

Although I believe in the development of quantum computers, I see more applications in research or in specialised institutions such as secret services that want to crack certain encryptions. It’s unlikely we’ll have quantum computers in our offices like traditional PCs any time soon.

However, certain connections can already be seen with AI and blockchain. For example, AI systems like Chat-GPT are available via APIs, which means they are accessible to end users as a programming interface.

These APIs can be seamlessly integrated with blockchain technology. An example of this is using smart contracts to extract data and using APIs to consume this data in different systems. One could imagine that in the future these APIs will interact not only with traditional databases or ERP systems, but also with AI systems.

For example, a smart contract could extract data and send it to an AI system like Chat-GPT to complete specific tasks. The use cases for this may be limited at the moment, but technically such an integration is certainly possible.

You have often mentioned the topic of decentralisation. Are we fundamentally moving towards decentralisation of digital technology in the logistics industry?

Yes, we are definitely moving towards decentralisation of the logistics industry and I think that is extremely desirable. The increasing spread of decentralised solutions such as blockchain and platform solutions reflects this trend.

Personally, I just have certain concerns about the large centralised cloud service providers. There are a number of aspects that I find problematic about them. The decentralised software solutions, on the other hand, are more in line with our European ideas. Everyone basically has their own server, and the servers communicate with each other.

Why should we put all our trust in a single authority? Why should we centralise everything? I see these decentralised approaches as a bit of an ideological counter-model to cloud providers. I would like to see us in Europe rely more on these decentralised solutions, as I believe they are more compatible with our core values. Topics such as data protection and the right to deletion are easier to implement if the data is stored on our own servers and only leaves them when we want it to.

There are already many promising approaches in this direction. One example is the digital consignment note being developed by the Open Logistics Foundation and the Fraunhofer Institute.

I find such decentralised solutions extremely positive and worth supporting. I have the impression that this trend will increase and I hope that decentralised approaches will prevail over centralised platforms.

But despite all the advantages, decentralised solutions don’t appear to be taking over.

In my opinion, the slow spread of decentralised technologies like blockchain is mainly due to technical hurdles.

Developing and implementing such solutions requires specialised expertise that is not always easily accessible. Often there are open source solutions, but there is a lack of people who can effectively implement and distribute these solutions.

What will the future of blockchain look like in the future?

When it comes to the future of blockchain technology, it is difficult to make precise predictions. However, I assume that we will see a significantly greater spread of so-called business blockchains in the next five years.

These special blockchain solutions solve various problems, especially in industries such as logistics. I am confident that the use of blockchain in logistics will continue to spread and impact other areas of business.

If logistics companies are already using this technology and other companies can join in to automate their processes, this will further encourage adoption and adoption. I expect blockchain technology to establish itself steadily and organically in the market.

Do you have any recommendations or requirements for politicians to advance such technologies more quickly?

When it comes to accelerating the introduction and use of such technologies, I think that politics is not necessarily the only addressee.

However, my recommendation to politicians would be not to act too hastily when it comes to regulation. It is important that we regulate extensively in Europe and think carefully about how we want to use new technologies.

This is particularly true in areas such as artificial intelligence, where Europe has taken a pioneering role in introducing comprehensive regulatory measures.

Nevertheless, we must be careful not to stifle innovation. Too many legal hurdles could make development difficult, especially for start-ups, which are often the driving force behind new developments. A balanced approach is therefore required: allowing innovations and regulating them where necessary.

When it comes to accelerating digitalisation, I think there may be room for improvement in Germany. It could be that we should be a little more courageous to break new ground and give new technologies a chance. It is important that we are open to innovation and willing to test new solutions.

Finally, other than blockchain, which technologies are particularly future-proof for you?

Well, of course I have to agree with the hype about AI. There is no way around it, and I think everyone understands why AI solutions will stick with us in the future.

However, it is important to remember that despite all the hype and buzzwords surrounding technology, it is ultimately the products developed with technology that bring change. An example: Large Language Models are currently very trendy; ChatGPT is one such model.

However, Large Language Models have been around for some time. For example, Google had a product called “LaMDA”. Nobody cared about it at the time, it wasn’t discussed in the media, there were no congressional hearings about whether this Large Language Model would have any negative effects. But ChatGPT just worked better.

People understood how they could use it and why it was cool. And suddenly the hype around AI and Large Language Models started. Ultimately, however, it is the product that makes the difference, not necessarily the technology itself. Technology is initially just a tool that must be used by resourceful and clever minds to create added value.


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