Horizon CDT Research Highlights

Research Highlights

Distributed Ledger Technologies: The Socioeconomic Implications of Blockchain Based Trust Across Multiple Economic Sectors

  Symeon Dionysis (2017 cohort)   www.linkedin.com/in/symeon-dionysis

According to the 2019 Gartner's Hype Cycle for Emerging Technologies, Blockchain, the Distributed Ledger Technology (DLT) behind Bitcoin, continues to be within the top trends to dominate the business ecosystem in the next 5 to 10 years [1]. From legacy businesses and financial institutions to start-ups and governments there is increasing interest around this technology with some characterising it as the most influential innovation in the next decades [2] while others dismiss it as a speculative bubble" and a "fraud" [3].

Since its emergence in 2009, a variety of potential applications have been proposed that utilize different forms of Blockchain and Distributed Ledger protocols, either in terms of rearranging existing infrastructures or in terms of creating new economic value. One of the most discussed applications both in industry and academia is supply chain management.

Supply chains globally are in a transition face. On the one hand, the way they have been managed has fundamentally changed on a business level due to globalization and interconnected markets while regulatory compliance (e.g. 2015 Modern Slavery Act) and ethical consumption in the digital age are demanding clarity on business practices and corporate responsibility. Tackling those challenges will require solving some of the current issues in procurement and supply chain management, such as lack of traceability and transparency, risks related with multi stakeholder relationship management as well as regulatory compliance [4].

For many, blockchain solution are the most suitable for tackling these issues since they can enhance transparency by documenting a product’s journey through the supply chain, they can provide a better scalability since, theoretically, any number of people can access them from any touch point, and they can provide better security through the decentralized and immutable nature of the ledger. However, the one key aspect that constantly emerges in both academic literature and industry reports and sums up the advantages of the technology is “trustless interactions”, in the sense that all of the above advantages can facilitate transactions between parties without the traditional safeguards that facilitate trust in such settings.

All these aspects, nevertheless, are yet to be seen not only in terms of the technical development of those systems but also in terms of business and real-world applications as well as user adaption and acceptance. Trust free interactions imply a frictionless economy without uncertainty or risk and the current state of affairs in the blockchain sphere is far from that goal [5]. Hence, the Blockchain proposition of “trustless interactions” does not necessarily imply that they really are or that people will perceive them as such.

Current research on the topic mostly focuses on either the technical infrastructure that is required for the development of these DLT systems or have conducted thought experiments on which parts of the industry this technology can disrupt. Little is yet know regarding which characteristics of Blockchain are most relevant for particular settings and how they need to be designed.

Hence, by combining both qualitative and quantitative data sources, the current project is aiming in answering 2 question:

  1. Are trust-free applications, one of the main propositions of this technology, something that will make Blockchains (and its different implementations) applicable for different business use cases?
  2. How this new form of “algorithmic trust” will be perceived by users and does it differ from “institutional & organizational trust” or trust in a third-party service provider?

References

  1. Panetta, K. (2017, August 15). Top Trends in the Gartner Hype Cycle for Emerging Technologies 2017. Retrieved from: Link
  2. Tapscott, D., & Tapscott, A. (2017). Realizing the Potential of Blockchain: A Multistakeholder Approach to the Stewardship of Blockchain and Cryptocurrencies (White Paper). Geneva: World Economic Forum. Retrieved from: Link
  3. Levine, M. (2017, September 13). Bitcoin Doubts and Buffet Criticisms. Bloomberg. Retrieved from: Link
  4. Capgemini Research Institute (2018). Does Blockchain Hold the Key to a New Age of Supply Chain Transparency and Trust? Retrieved from: Link
  5. Ostern, N. (2018). Do You Trust a Trust-Free Technology? Toward a Trust Framework Model for Blockchain Technology. Paper presented at the 39th International Conference on Information Systems, San Francisco.

This author is supported by the Horizon Centre for Doctoral Training at the University of Nottingham (RCUK Grant No. EP/L015463/1) and Digital Catapult Centre.