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Applications & Implications of Blockchain
Investments in fashionable IT do not make organizations more successful than investments in less fashionable alternatives. Many organizations nevertheless associate with fashionable IT to signal compliance with norms of progress and rationality. These decisions can be risky as they require the ability to navigate hype narratives and fit the new technology into the adopting organization. In this paper, we explore a so far understudied fit perspective: cultural fit between the values attributed to the fashionable IT and those of the recipient organizational context. Through an interpretivist case study of two blockchain projects, we find that cultural sensemaking and dissonance reduction can be important determinants for successful adoption of fashionable IT. Moreover, we identify two recursive paths for how organizations can reduce cultural dissonance. They can adapt their implementation and the narratives surrounding the fashionable IT or they can transform their local or overarching organizational culture.
Current debates on the sustainability of blockchain technology primarily focus on proof of work (PoW) cryptocurrencies. This narrow focus leads to one-sided discussions that emphasize the poor sustainability of blockchain technology. What these discussions neglect is that non-PoW blockchains have much lower energy needs. Current debates also turn a blind eye to the fact that certain blockchain applications could contribute to sustainability. We thus argue for a broader sustainability debate that is both more differentiated and balanced.
Blockchain is no longer just a hype technology, and effective blockchain applications exist in many industries. Yet, few blockchain projects have been successful in Europe’s energy systems. To identify the reasons for this slow progress, we reviewed the recent energy literature regarding the use of blockchain, analyzed industry reports, and interviewed experts who have conducted blockchain projects in Europe’s energy systems. Our analysis reveals eight common use cases, their expected benefits, and the challenges encountered. We find that the expected benefits are often little more than generic hopes, largely outweighed by technological, organizational, and regulatory challenges. The identified challenges are significant and numerous, especially for peer-to-peer trading and microgrid use cases. The fact that few projects have yet provided robust evidence for profitable use suggests there is still a rocky road ahead. Moreover, many use cases appear to require more than just blockchain technology to succeed. In particular, privacy and scalability requirements often call for systems in which blockchains only take a backseat. This realization may be essential for the future use of blockchain technology in energy systems – in Europe and beyond.
Situation faced: The German asylum procedure requires close cooperation and information exchange between various authorities at the municipal, state, and federal levels. Federal separation of competencies inhibits the delegation of process governance to a central authority such as the Federal Office for Migration and Refugees (BAMF). This separation also leads to regional differences as federal laws govern the procedure’s general steps, whereas state laws govern implementation. Moreover, existing solutions for cross-organizational collaboration are limited in terms of flexibility, security, and data quality. As a result, the exchange of certain data on asylum procedures still occurs using Excel spreadsheets and e-mails.
- Tamara Heidi Roth
- Alexander Stohr
- Julia Amend
- Alexander Rieger
Digital technologies play an important role for the delivery of many public services. However, selecting and adopting the ‘right’ digital technologies is often challenging, especially for federally structured governments. Universal factors for successful adoption are hard to establish, and the particularities of federalism, such as the separation of competencies, complicate technology selection. Nevertheless, blockchain technology seems to flourish in these environments. Through a single-case study on the blockchain project of Germany’s Federal Office for Migration and Refugees, we unpack one essential factor for this success: the fit between (cross-)organizational task structure and technological properties. This fit earns the Federal Office’s project considerable credit and traction with stakeholders and partner authorities – not least because it supports the argument that the digitalization of federal systems is possible without ‘digital centralization’ and redistribution of competencies. Our task-technology fit analysis contributes to a better understanding of the adoption of blockchain in the public sector. It also provides the foundation for an extended task-technology fit theory for federally structured, cross-organizational contexts.
Interest in blockchain is growing rapidly and at a global scale. The potential to disrupt various industries is attributed to the emerging blockchain technology. Organizations and institutions have thus begun to examine the emerging the technology and its impact on their businesses. However, researchers and practitioners still lack a systematic approach to understand the potential of blockchain and to develop convincing use cases. We addressed this research gap by applying an action design research approach and situational method engineering to propose a method for the development of blockchain technology use cases. Following this approach, we iteratively evaluate and further develop the proposed method through application in four distinct industries. In a next research step, we now focus on a broader context and evaluate if our existing use case development method is applicable for other emerging technologies than blockchain. By doing so, we seek to broaden our evaluation, generalize our method, and support practitioners and researchers in better leveraging the opportunities of continuous digital transformation.
Blockchain solutions are a promising alternative for use in the public sector when the delegation of process governance to a central authority is not possible or desirable. In particular, blockchain supports the retention of decentralized structures and allows individual authorities to share process information over the blockchain while simultaneously maintaining control over their own data and data repositories. However, the use of blockchain solutions also introduces challenges, such as reconciling blockchain with the General Data Protection Regulation (GDPR). The GDPR demands that blockchain solutions involve clear responsibilities for compliance, rely on specific lawful bases for processing personal data, and observe rights to rectification and erasure. Here, we describe how Germany’s Federal Office for Migration and Refugees managed these challenges and created a GDPR-compliant blockchain solution for the coordination of the German asylum procedure.
The public sector presents several promising applications for blockchain technology. Global organizations and innovative ministries in countries such as Dubai, Sweden, Finland, the Netherlands, and Germany have recognized these potentials and have initiated projects to evaluate the adoption of blockchain technology. As these projects can have a far-reaching impact on crucial government services and processes, they should involve a particularly thorough evaluation. In this paper, we provide insights into the development of a framework to support such an evaluation for the German asylum process. We built this framework evolutionarily together with the Federal Office for Migration and Refugees. Its final version consists of three levels and eighteen categories of evaluation criteria across the technical, functional and legal domains and allows specifying use-case specific key performance indicators or knockout criteria.
Digital transformation involves reconsidering existing processes, establishing new ways of working, and promoting innovative ways of thinking. Moreover, digital transformation can play an important role in improving the fragmented system landscape of Germany’s administration which increasingly poses challenges to municipal, state, and federal authorities. In this context, one of the digital focus technologies is the distributed ledger technology and its most prominent representative: blockchain technology. The use of distributed ledger technology represents a deliberate departure from consolidation approaches, the objective being to mirror the federal structures and principles of Germany’s administration in its digital infrastructure. Blockchain is particularly helpful when it comes to process optimization within federal structures where in-depth communication and close cooperation are required in spite of strong organisational heterogeneity. The German asylum procedure is a case in point. A large number of different federal and state authorities are involved in the asylum procedure. Particularly at the state level, there are various sub-processes at work, which makes central control by a single workflow management system virtually impossible. What the German asylum procedure requires instead is a coordinated approach and a distributed IT solution that distributes process updates to all participating authorities in a secure and speedy fashion that will allow said authorities to initiate coordination measures independently and whenever necessary. Based on a proof-of-concept (PoC), the Federal Office for Migration and Refugees has already confirmed that blockchain technology can provide a very promising basis for such an IT solution. Special potential has been recognised in its ability to establish a common and persistent information status across various authorities with great speed and security. Meanwhile, overcoming trust barriers between authorities is of little importance in the asylum procedure. Now the technology shall also demonstrate its suitability in a pilot project. To do so, a blockchain solution for the Dresden AnkER facility is currently being developed in collaboration with Saxony’s State Directorate. The Federal Office expects the use of this blockchain solution to facilitate an exchange of information in the sub-processes ‘registration, creation of an application file and personal interview’, ‘referral’, and ‘ruling and next steps’. This exchange of information is to be timely and fully digital, significantly minimising the duration of procedures and the expenditure of resources. Meanwhile, security aspects could be considered more efficiently, document procurement could be brought forward to an early point in the process, and repatriation could be organised sooner. As for cases in which asylum is granted, the process of integration could be set in motion faster by way of Page 5 5earlier assignment to the competent municipality. Already, the pilot project is nearing successful completion of the conception phase. In this phase, special attention has been given to the implementation of a system architecture that, in the current assessment of the Federal Office, complies with the relevant data protection regulations. At the same time, a concept for rectification and erasure was developed in order to meet the requirements and rights of data subjects codified in the General Data Protection Regulation. In addition, a governance concept was designed in line with data protection laws in order to regulate the distribution of decision-making powers and responsibilities at the technical and organisational level. The core issues regarding scalability were addressed in a scalability concept. As for the bigger picture, with a view to this being a lighthouse project, the Federal Office saw an opportunity in the conceptualisation phase to work on a multitude of general design principles that apply to the development of blockchain solutions in other areas of public administration. Should this success continue through the development and evaluation phases, various expansion scenarios are conceivable. In the first step, for instance, further sub-processes could be mapped out at the AnkER facility in Dresden. Alternatively, further authorities in the asylum procedure could be included, a measure which in Abstracttime may facilitate a pan-European solution. If applied in the asylum context, blockchain would thus serve as the ‘digital enabler’ of European federalism and may very well constitute a further step towards a united, fully integrated Europe.
Complying with the EU General Data Protection Regulation (GDPR) poses significant challenges for blockchain projects, including establishing clear responsibilities for compliance, securing lawful bases for processing personal data, and observing rights to rectification and erasure. We describe how Germany’s Federal Office for Migration and Refugees addressed these challenges and created a GDPR-compliant blockchain solution for cross-organizational workflow coordination. Based on the lessons learned, we provide three recommendations for ensuring blockchain solutions are GDPR-compliant.
Bedingt durch Deutschlands föderale Strukturen stehen IT-Architekten in deutschen Behörden oft vor großen Herausforderungen. Auf heterogenen IT-Infrastrukturen gilt es, eine Vielzahl an regional unterschiedlichen Prozessvarianten abzubilden. Zudem ist der zwischenbehördliche Informationsaustausch nicht durchgehend digitalisiert und auch nur teilweise standardisiert. Eine der Technologien, die in diesem Spannungsfeld gezielt Mehrwert stiften könnte, ist Blockchain. Gemeinsam mit dem Bundesamt für Migration und Flüchtlinge wurde in einem Proof-of-Concept-Projekt die Einsetzbarkeit der Technologie im Asylbereich untersucht. Die zentrale Erkenntnis aus dem Proof-of-Concept ist, dass eine behördenübergreifende Blockchain-Lösung im Asylprozess zentralen Lösungen im Hinblick auf Integrität, Performanz, Sicherheit und Transparenz überlegen ist.
The Federal Office for Migration and Refugees has thus evaluated to what extent Blockchain can help address these issues and support the establishment of digital identities in the asylum context as well as cross-organisational communication and cooperation. The crucial baseline for this evaluation was a proof of concept project during the first half of 2018. This project commenced with the selection of a use case (“simplified asylum procedure”) and a preliminary evaluation of the suitability of Blockchain technology. Following a positive preliminary evaluation, a mixed team comprised of the Federal Office, the Project Group Business & Information Systems Engineering of the Fraunhofer FIT and a technology partner developed a tailored Blockchain solution. The solution was then assessed based on a Blockchain-specific evaluation framework focusing on technical and functional aspects as well as privacy issues. The proof of concept showed that the use of Blockchain technology could support cross-organisational communication and cooperation in the asylum procedure. In addition, Blockchain could provide an important foundation for the establishment of digital identities and allow an asylum seeker’s procedure to be tracked based on this identity. Admittedly, not all applicable data protection regulations were fully implemented in the proof of concept. However, the findings gained as part of the project provide a promising basis for the development of a Blockchain-based solution for the asylum procedure that complies with data protection requirements. Moreover, the developed concept could scale beyond Germany’s borders. Blockchain-based, transnational management of asylum procedures could therefore become a joint project of the European member states to strengthen cooperation while safeguarding federal structures. This means that Blockchain technology could be the start of digital federalism in Europe (including the asylum procedure).
Das Bundesamt für Migration und Flüchtlinge hat evaluiert, inwiefern Blockchain zur Bewältigung der Herausforderungen des europäischen Asylkontexts beitragen und sowohl die Etablierung digitaler Identitäten als auch die behördenübergreifende Kommunikation und Zusammenarbeit fördern kann. Die Evaluierung begann mit der Auswahl des Anwendungsfalls und einer Vorevaluation der Eignung der Blockchain-Technologie. Nach einer positiven Vorevaluation wurde ein geeignetes System durch ein gemischtes Team des Bundesamtes, der Projektgruppe Wirtschaftsinformatik des Fraunhofer FIT und einem Technologiepartner entwickelt. Im Anschluss wurde das Projekt gemäß eines Blockchain-spezifischen Evaluationsframeworks des Fraunhofer FIT bewertet. Hierbei lag der Fokus neben technischen und fachlichen Aspekten insbesondere auf datenschutzrechtlichen Fragestellungen. Das Proof-of-Concept-Projekt hat gezeigt, dass der Einsatz der Blockchain-Technologie die behördenübergreifende Kommunikation und Zusammenarbeit im Asylprozess unterstützen könnte. Außerdem könnte Blockchain einen wichtigen Grundstein für die Etablierung digitaler Identitäten legen und den Prozessverlauf einer asylsuchenden Person anhand einer solchen Identität nachvollziehbar machen. Zwar konnten im entwickelten Proof-of-Concept noch nicht alle geltenden Datenschutzregelungen vollumfänglich umgesetzt werden. Die im Rahmen des Projektes gewonnenen Erkenntnisse bilden jedoch eine vielversprechende Grundlage für die Entwicklung einer datenschutzkonformen Blockchain-basierten Lösung für den Asylprozess. Zudem könnte das entwickelte Konzept aufgrund der berücksichtigten föderalen Struktur auch über die Grenzen Deutschlands hinaus skaliert werden. Ein Blockchain-basiertes, transnationales Management von Asylprozessen könnte so ein gemeinsames Projekt der europäischen Mitgliedstaaten zur Stärkung der Zusammenarbeit unter Wahrung föderaler Strukturen werden. Damit könnte die Blockchain-Technologie der digitale Enabler des europäischen Föderalismus im Asylkontext sein.
Digitalization promises unprecedented opportunities for public sector institutions to increase the efficiency of current and to introduce new services. One of these opportunities are unique decentral digital identities, which could improve migration and refugee management, simplify the distribution of social services, and improve healthcare systems. A major challenge, however, to the adoption of such decentral digital identities is finding a suitable technological basis. Blockchain might be such a tech-nology. The challenges of introducing blockchain-based decentral digital identities, however, are both significant and fuzzy. To provide guidance on how to overcome these challenges, we provide a detailed exploration of blockchain-based platformization of digital identities and discuss interview insights from refugee and migration management in Germany. We find that blockchain offers promising solutions for unique, decentralized digital identity management. Likewise, we find that implementation in the public sector would entail a range of organizational and technological challenges. Successful adoption, on the other hand, might ultimately pave the way for decentral and efficient e-government services.
Blockchain could transform process management and usher in decentral digital process ecosystems. Such ecosystems present a paradigm shift from central control towards decentral coordination and we increasingly see them appear in various places. Here, we provide our idea of a theory of the emergence of these ecosystems and their theoretical constructs. Our theory builds on a single-case study in the area of digital identities for refugees in Europe.