Identification and realization of Blockchain Use Cases

Uwe Klötzner
mm1 consulting
Published in
7 min readJul 30, 2019

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After having looked at the blockchain and its chances from different perspectives in the last weeks, we show in this last article of our series how a blockchain project should be approached methodically.

Many experts and decision-makers from innovation areas in different industries are questioning whether one’s own company can benefit from the Blockchain technology and if so, how. The focus of the decision is on the application case. Without the identification of concrete use cases, the basis for an investment decision is usually missing. This usually results in a lack of funds to sustainably develop blockchain projects.

Build up Know-how

Particularly in competition with blockchain start-ups, corporations risk falling behind in terms of knowledge development within the organization. Therefore, it is important to use the expertise of your own employees at the beginning to tap the potential of the technology in your own business area. Above all, decision-makers should have a clear understanding of the added value that results from the use of distributed ledgers. These result from decentralized data storage, which enables manipulation- and fail-safe as well as automatable business processes with minimal trust (DLT taxonomy). A first in-depth discussion of the topic is elementary for the further success of the initiative and causes relatively little costs in the course of the further steps. The decision in favor for or against the active dealing with the technology is not necessarily associated with high costs. This first phase is also a good time to define the expectations towards the technology. After a hype phase in recent years and the current “valley of disillusionment”, it is only right to formulate realistic expectations of the blockchain. In the following steps, we explain how companies can approach blockchain initiatives in a goal-oriented way.

Analyse Ecosystem

The right resources and know-how are crucial for a successful project. The starting point is your own strategic orientation and objectives. Solutions based on blockchain have already been successfully developed in numerous industries, from which you can benefit. It is also important to know which players might attack your own business model with Blockchain.

On the basis of this view of the ecosystem, the evaluation of the internal know-how and the own ambitions the suitable partners are identified and integrated. The aim is to supplement these with established competitors and start-ups with business models in the context of their own core business. At this point, partnerships should also be evaluated, as many ecosystems are already being taken up by active consortia. For an insurance company, for example, an active or passive role in the B3i consortium would be an option. Such a connection ensures that the governance structures necessary for blockchain are adopted and do not have to be built up first, that knowledge can be built up quickly and that a uniform industrial vision can be shared. Thus first decisions can be made regarding the blockchain strategy, partner role and make or buy. In addition, the understanding of the relevant blockchain ecosystems is ensured and well-founded know-how is built up for the build-up/expansion of blockchain projects.

Work out Use Cases

As explained at the beginning, each blockchain initiative begins with the use case. In most cases, companies find themselves either in a situation where they have recognized the potential of the blockchain technology and are looking for a promising use case. Or they have already worked out a use case and now want to check whether the use of blockchain technology really makes sense.

In the first case, a reflexive evaluation should be carried out to determine where currently relevant problems and needs of the customer lie. For this we recommend the use of elements from Design Thinking in a workshop. First and foremost, relevant user groups, partners and other stakeholders as well as their needs should be identified and analyzed. Based on this, user-centered ideas can be developed using blockchain technology. It is important to formulate the objectives clearly and to define the added value for the involved parties.

If a concrete idea or even an application case has already been identified, it must be systematically reviewed. The central question here is whether a blockchain should be used for the planned project and whether the problem can be addressed effectively with blockchain.

Evaluate Technology

In the Blockchain Taxonomy we explain the differences between centralized and decentralized databases as well as between the different types of distributed ledgers. However, the use of blockchain technology does not always make sense. The mm1 Use Case Assessment supports the analysis of blockchain projects by means of a structured questionnaire. In summary, simple indicators can be used to determine whether decentralized data storage makes sense when using a blockchain:

Are several parties involved and can intermediaries be circumvented if necessary?

Is there a need for (more) trust between the stakeholders?

Should assets or rights be transferred between the parties?

Is some degree of data and/or process integrity required?

Within the framework of this technology assessment of the concept developed, further solutions, in addition to blockchain, should be examined. This avoids that projects only arise because of the technology or because of the past hype. A pure automation case is in most cases no reason to use a blockchain. For this, Robotic Process Automation (RPA) or central databases are usually the better solution, since decentralization is always accompanied by a loss of efficiency.

However, if the prerequisites for using a blockchain are fulfilled, there are various ways of implementing the use case. Public and private blockchains sometimes offer very big differences. While Ethereum is the standard for public blockchains in the business context, various consortia such as Hyperledger, R3 or B3i have formed in the area of private blockchains. Currently, such formats offer the advantage that an initial degree of trust is created by centralized instruments, but in the further course of time the cryptographic and decentralized elements of the blockchain achieve efficiency increases with all stakeholders involved.

Public solutions, for example, place more emphasis on data integrity, decentralisation and disintermediation. In contrast, private solutions focus more on privacy and try to create scalable and efficient solutions. For this reason, depending on the use case, it must be evaluated which properties are required and which platform best meets them. In concrete terms, the criteria to be considered should include the quantity structure, desired processing speed and expected operating costs. The data stored on the blockchain and the intended interaction with other systems are important here. A hybrid solution that combines private and public approaches in order to benefit from the respective characteristics could also be useful. It would also be conceivable that an application case would first be mapped in private blockchains and migrated to public constructs with increasing market maturity.

Due to the inefficient performance of decentralized systems, it is also usually useful to selectively use central databases for non-critical tasks. Key questions for the appropriate blockchain architecture can be as follows: Which data should be unchangeable, tamper-proof, private, public, restricted, or freely changeable?

Prototyping, Testing and Learning

Implementation should begin at the latest after clarification of technology and architecture issues. Ideally, the project team should test itself earlier on the first prototypes for the desired solution. An example of this could be the development of a simple Smart Contract. Within one to two days, a first prototype can be created, which at the same time creates an understanding of the application and visualizes the interrelationships.

Today, there are also standardized solutions for different types of blockchain use cases. Existing solutions offer the advantage that they develop a blockchain product within a very short time and already contain decisive added value compared to the centralized alternative. One example is the certification of documents that are to be stored in a public blockchain in such a way that they cannot be changed by anyone. Here, solutions can be developed to market maturity within a few weeks.

With simple and quickly realizable prototypes, iterative solutions can be tested and learnings derived. The experiences gained are important factors for the expansion of the use case: Does the idea work? Does the prototype contribute to the desired goals? How was the cooperation with the selected partners?

All in all, the blockchain technology thrives on cooperation. In reality, however, this is much more difficult than it might have been thought of. Therefore it is necessary to define dedicated teams for certain use cases and to concretize the responsibility for the partner management.

This multi-stage approach structures and simplifies the path from the idea to the realized minimum viable product. mm1 supports you all the way from the generation of ideas through the choice of technology and partners to the realization of your blockchain initiatives. Contact our Blockchain team and work with us on your Way of Success.

This article is part of an article series on blockchain technology. Read more articles from our blockchain team:
1.
Blockchain in 100 words
2.
6 Myths about blockchain
3.
Different types of Blockchain
4.
The token economy
5.
Application areas of blockchain technology
6.
Blockchain use case assessment
7.
Blockchain in the mobility sector (interview, German)
8. mm1 roadmap for blockchain initiatives (this article)

Uwe Klötzner brings 14 years of consulting experience, particularly in service industries (finance, telco, energy). He is an expert in implementing digital transformation of business models and IT landscapes. Uwe has many years of experience in the management of complex programs and projects as well as in the design and optimization of business processes. He reliably delivers projects with structure, binding communication and strong identification.

Raphael Iten is an experienced entrepreneur in sustainability management. Through his experience as a consultant in the insurance sector and platform construction for telcos, he considers and combines different approaches to solutions. In his academic career at the University of St. Gallen, he examines success factors of active Blockchain projects in the insurance industry.

Severin Kranz has worked for several years as a consultant in the Fintech sector and in asset management. Since 2015 he has also been intensively involved with crypto currencies and distributed ledger technologies. Through his Master in Business Innovation at the University of St. Gallen, he has specialized in business model innovations as well as human-centered innovations through design thinking.

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Uwe Klötzner
mm1 consulting

Unternehmer bei Red Heights AG - The Responsible Growth Company