Our research into the potential applications of blockchain technology has finally been finalised

Blockchain and DLT research

Focusing on blockchain technology - NM Innovation Workshop has launched a research project with its partners to find examples to the technology's business applicability, areas of use and market potential in the framework of an industry collaboration.

OBJECTIVE:

To explore the application environment, technology and sustainable business models.

FOCUS:

Digital identity (eID), self-sovereign identity (SSI), ID management and authentication tools and services, smart grids, automation.

Regulatory and institutional framework of the blockchain/DLT ecosystem

  1. Related organisations.: EBP & EBSI, INATBA, NGI, ONTOCHAIN, EDFA, CEN-CENELEC, ETSI, OIDF, DIF, SIA, ID2020, ID4D, IEEE, ITU-T SG;
  2. Related standards: ISO - IEC, IEEE, ITU-T, W3C.
  3. Trends: circular economy; data sharing and security; finance; peer-to-peer energy trading, e-government, public transport ticketing, ride sharing vehicles; NFT: proof of ownership, authenticity, transfers; typically, in the area of real estate and digital works.
  4. Regulatory approaches and current EU efforts: background technology from the perspective of regulatory challenges; overview of regulatory frameworks; draft MiCA regulation; eIDAS and proposed amendments; EDIR, GDPR; off-chain processing of personal data; encryption of blockchain personal data storage; establishment of codes of conduct and certification mechanisms; development of regulatory guidance.

Key findings:

  1. EU EDIR planned regulation: qualified distributed ledger and wallet providers, respectively self-managed identity service and EU digital identity wallet (by or on behalf of or recognised by Member State – acceptance will be mandatory in specified sectors and where service providers (relying parties) require strong user authentication; including large online platforms).
  2. EU GDPR compliance: type and configuration dependent, only hash will be added to the chain; linking of data and hash pointer can be removed.
  3. 6 "Supervision node" proposal: to perform supervisory tasks in permissioned blockchains.
  4. Main problems: lack of coherent harmonisation and interoperability; need for technological safeguards for high-risk applications (e.g. faulty smart contracts)

Analysis of good practices

  1. Key use cases: non-forgeable civil documents, management of vehicle licensing documents, reliable demand-driven transport, anonymous purchase of e-tickets, automatic enforcement of legal clauses, circular economy ecosystem, local energy communities and surplus production management
  2. EU/EBSI projects; the 3 layers of EBSI; who does EBSI serve; supported use cases: identity (ESSIF), diploma, traceability, shared data evidentiality; SEIP; HIBI. Existing services: e.g. Verified.Me, BlockID

Key findings:

  1. trust in data --> new levels of information sharing --> institutional innovation --> industry transformation.
  2. McKinsey: benefits of blockchain finance: cost reduction (70%), revenue generation; mostly in financial, government and healthcare sectors. E.g. what takes 2-3 working days in the current banking system, takes about 10 minutes in the blockchain.

Examining business and technology models

  1. Technology trends, models: eID/SSI; assessment of DLT/blockchain technologies; identification of industry leaders, partnerships; remote registration/identification technologies; identification of potential competing services (pilots).
  2. Business and service models: is blockchain the best solution for a given business problem? What does blockchain bring beyond previous tools? Sustainability, scalability, size, full life-cycle return on investment, operational aspects; evaluating the solution to the problem against public and market needs (competitiveness enhancer, indirect economic impact - direct payoff), Adaptation to complex stakeholder environment, What is the advantage of a self-sovereign identity-based solution?

Key findings:

  1. eID: the most significant technology today; by 2026 850M citizens will have a mobile identity.
  2. Smart contracts --> automated, managed data sharing --> reduced transaction costs
  3. Much faster prosecution in case of a data breach with blockchain
  4. Benefits of adding a blockchain to services like the CCSSB (Central Governmental Service Bus) in hungary include: real-time workflow support for interoperable cases; a transaction can be initiated at any entry point; increased automation reduces the lead times andemployee involvement for case management; shortens case management lead times; creates transparent, auditable digital processes between relevant public administrations and market players; for financial institutions, reduces customer risk, which can bring favourably priced financial products to the market on the macro level.

We would like to thank the Blockchain Competence Center Ltd., Digital Welfare Nonprofit Ltd., RowanHill Digital Ltd. and Dr. Viktor Vajda Law Office for their contribution to the publication!

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