Blockchain

Brief Description of Blockchain

Blockchain is a collective term for a digital, decentralized append-only database in which all entries are linked together in a chain-like structure. The technology was first used in the cryptocurrency Bitcoin to securely process payments without a central authority (e.g., a bank) and to display them transparently. The individual links in the chain are called “blocks,” in which individual “transactions” can be stored. Additional transactions are grouped into a new block, which is distributed to all participants in a decentralized network and can be verified by them. Participants are rewarded with small bonuses for verifying new blocks through cryptographic processes. This creates an incentive to verify the integrity of newly generated blocks, ensuring that fraud attempts are detected early. Thanks to its decentralized and anonymously deployable structure, blockchain offers not only integrity and tamper-resistance but also pseudonymity, security, and increased efficiency compared to solutions with a central authority.

Possible Applications

Although blockchain first gained recognition in connection with the cryptocurrency Bitcoin, the technology has found a wide range of applications and is used in very diverse contexts.

Financial sector: In addition to traditional applications in various cryptocurrencies, blockchain can be used for any type of transaction. This includes not only the purchase and sale of goods or securities but also any account transactions or auctions.

Legal sector: Blockchain enables the use of smart contracts, which ensure the decentralized execution of contracts even when different parties do not trust one another. Similarly, legal claims (e.g., copyrights, ownership records) can be documented in an immutable manner and presented transparently. In the art sector, digital artworks or music licenses can be protected against illegal distribution or uncontrolled copying through the use of blockchain.

Business sector: Products can be transparently tracked throughout their entire lifecycle via blockchains. This prevents fraud during resale or service, helps verify product information, and can thus also be used for quality and certification seals.

Public Administration: Blockchain can be used for registering voter ballots, conducting elections, referendums, or for permanent elections (Democracy 2.0). Any administrative processes can be transparently documented using blockchain and thus employed to safeguard against data loss and subsequent manipulation or to combat corruption.

Digital networking: Connected devices in the Internet of Things or smart homes can communicate with one another and interact as a network through the use of blockchain without a central authority. Attempted attacks or corrupt behavior by individual devices cannot lead to a takeover of the network.

Data protection: Blockchain can be used both anonymously and with personal references. This means the technology can also be applied in the field of data protection or for handling sensitive data.

Consulting Services

Fraunhofer SIT offers information as well as customized and independent consulting on blockchain technologies.

• How does blockchain work, and what technologies are available?
• What are the areas of application?
• Which problems can be solved more efficiently using blockchain?
• Which blockchain technologies are suitable for a specific use case?
• What are the advantages and disadvantages of a specific blockchain technology?
• Where should blockchain technologies not be used?
• What alternatives to blockchain are there? 

Fraunhofer SIT offers a comprehensive general introduction to the technology and provides consulting on the possibilities, benefits, and pros and cons of blockchain technologies in specific application scenarios. As a neutral institute, Fraunhofer SIT can also use its expertise in information technology to advise on whether and which blockchain technologies are suitable for a specific purpose and, if necessary, recommend more efficient alternative solutions.