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The Drivers Behind Blockchain Adoption: The Rationality of Irrational Choices: Euro-Par 2018 International Workshops, Turin, Italy, August 27-28, 2018, Revised Selected Papers

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There has been a huge increase in interest in blockchain technology. However, little is known about the drivers behind the adoption of this technology. In this paper we identify and analyze these drivers, using three real-world and representative scenarios. We confirm in our analysis that blockchain is not an appropriate technology for some scenarios, from a purely technical point of view. The choice for blockchain technology in such scenarios may therefore seem as an irrational choice. However, our analysis reveals that there are non-technical drivers at play that drive the adoption of blockchain, such as philosophical beliefs, network effects, and economic incentives. These non-technical drivers may explain the rationality behind the choice for blockchain adoption.
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The Drivers Behind Blockchain Adoption:
The Rationality of Irrational Choices
Tommy Koens?and Erik Poll
Radboud University, The Netherlands
tkoens@cs.ru.nl, erikpoll@cs.ru.nl
Abstract. There has been a huge increase in interest in blockchain tech-
nology. However, little is known about the drivers behind the adoption
of this technology. In this paper we identify and analyze these drivers,
using three real-world and representative scenarios. We confirm in our
analysis that blockchain is not an appropriate technology for some sce-
narios, from a purely technical point of view. The choice for blockchain
technology in such scenarios may therefore seem as an irrational choice.
However, our analysis reveals that there are non-technical drivers at play
that drive the adoption of blockchain, such as philosophical beliefs, net-
work effects, and economic incentives. These non-technical drivers may
explain the rationality behind the choice for blockchain adoption.
Keywords: blockchain, distributed ledger, technical drivers, non-technical drivers
1 Introduction
Blockchain technology has received a huge interest ever since its inception in
the cryptocurrency Bitcoin [22]. Indeed, on a global scale companies and gov-
ernments [27] are looking for applications of this technology [13]. Cryptocur-
rencies, in particular Bitcoin, are the best-known and most successful scenario
where blockchain technology has been adopted, but many other applications of
blockchain have been proposed, such as supply chain management[28], identity
management[15], and smart energy grids [29].
However, the justification for using a blockchain in many of these scenarios
is unclear. Indeed, many papers have argued that using a blockchain is not the
best – or not even a good – solution for particular scenarios [17]. This has led
to the proposal of methodologies for deciding if blockchain is an appropriate
solution for a given scenario, from a technical point of view [25,39]. However,
non-technical drivers are not typically discussed in most of the computer science
literature. In this paper we try to look beyond this technical view, and we also
consider the non-technical drivers behind the choice for blockchain in real-world
scenarios.
?Supported by ING.
To do this, we consider in Section 3 three real-world scenarios in which
blockchain technology is used, namely, the cryptocurrency Bitcoin, the identity
management solution uPort, and a supply chain scenario for agricultural prod-
ucts, namely table grapes. Here we also identify and analyze the drivers behind
the adoption of blockchain for these scenarios. We distinguish four categories of
drivers: technical properties, philosophical beliefs, network effects, and economic
incentives. Furthermore, we discuss the appropriateness of blockchain technology
for each scenario. We argue that using a blockchain is not an appropriate solu-
tion for some of the scenarios if we only take a technological perspective. This
may seem that using blockchain in these scenarios is an irrational choice. Based
on this analysis, Section 4 discusses the non-technical drivers that may explain
blockchain adoption. Here we argue that there is a rationality behind blockchain
adoption if we also take non-technical drivers into account. Section 5 discusses
related work, Section 6 future work, and Section 7 summarizes our conclusions.
2 Background
This section provides a generic description of blockchain technology and intro-
duces the decision model by W¨ust and Gervais [39] for determining if blockchain
technology is appropriate for a particular scenario.
The novel part of blockchain technology is having a consortium of unknown
participants to reach consensus [26]. Typically, participants in blockchain tech-
nology consist of users and miners. At any time, a user may propose a new
state of the ownership of a token by means of a transaction. A transaction, con-
tains at least the sender’s account, the receiver’s account, the number of tokens
transferred, a timestamp and a signature of the sender.
Miners propose new ledger states, but only after having solved a crypto-
graphic puzzle. The idea here is to prevent multiple, different ledger states being
proposed. The participant who first solves the puzzle is allowed to propose a new
state of the ledger. Miners propose new ledger states by collecting user transac-
tions and proposing these as a set, called a block. Since the unique identifier of
the previous block is included in the new proposed block, a chain of blocks is
created, hence the term blockchain.
Blockchain may be useful in a scenario which contains certain properties.
Therefore, to determine if blockchain is an appropriate technology for a partic-
ular scenario, several blockchain decision models have been proposed.
2.1 Blockchain Decision Models
ust and Gervais [39] proposed a model to determine if blockchain technology is
appropriate for a particular problem. Several such models have been proposed,
as discussed by, for example, Meunier [20]. We chose the model of W¨ust and
Gervais because it provides a detailed description of the decisions that have
to be made, leaving less room for misinterpretation. Their model consist of a
decision tree based on the following scenario properties:
(a) Storing state. Refers to the need of storing data that may change both in
volume and in content over time.
(b) Number of writers. Multiple writers (also known as miners) must be present,
that have a common interest in agreeing on the validity of the stored state.
(c) Is there a Trusted Third Party? A Trusted Third Party (TTP) is a cen-
tralized entity that could manage changes and updates the state. A TTP, if
present, may also control who can read the state stored.
(d) Are all writers known? This refers to knowing the identity of all writers.
(e) Are all writers trusted? When writers are trusted, they are expected not to
behave maliciously. When writers are not trusted, they may behave mali-
ciously.
(f) Public verifiability of state. This property determines who may read the state
stored on the blockchain, and verify the integrity of the ledger.
Based on these six properties, the model determines one of four possible solutions
as the best solution for the scenario:
1. Permissionless blockchain. Anyone may join the network and read from the
state stored, and write to the blockchain.
2. Public permissioned blockchain. A limited set of participants may write to
the blockchain. Anyone may join the network and read the state.
3. Private permissioned blockchain. A limited set of participants may join the
network, and write a new state. Only this set can read the state.
4. Don’t use blockchain. This end state is reached when one of the properties
(a), (b), (c), or (e) above is not met.
3 Scenarios
The following paragraphs present three scenarios in which blockchain is used. We
chose these for two reasons. First, these are real-life and representative scenarios
where a blockchain is used. Second, these scenarios are generally well known to
be related with blockchain technology. For each scenario we propose a set of
blockchain adoption drivers (see Table 1, page 4) and we group these drivers
into:
Scenario properties. These drivers, (a)-(f) above, focus on the rationale for
using blockchain from a technological perspective.
Philosophical beliefs. These drivers focus on the rationale for using blockchain
based on the participants’ beliefs.
Network effects. Here we propose drivers where existing participants influ-
ence new participants in using blockchain technology.
Economic incentives. These drivers are based on financial gain, or preventing
potential financial losses, by one of the parties involved in the scenario.
The scenario properties are inherent characteristics of a scenario, which we con-
sider technical properties. The other three driver categories are more about pref-
erences or motivations of the participants, which we consider non-technical prop-
erties. This categorization is important because it allows us to determine what
drives blockchain adoption.
Table 1. Blockchain technology adoption drivers
Category Drivers Bitcoin uPort Supply Chain
Scenario properties Storing state • •
Multiple writers • •
Can not use TTP
Writers unknown • •
Writers untrusted
Public verifiability • •
Philosophical beliefs Will not use TTP
Decentralization need • •
Enhanced privacy • •
Alternative system • •
Political reasons
Network effects Driven by community
Curiosity • •
Cool to use • •
Economic incentives Marketing product • •
Selling mining equipm.
Selling consultancy • •
Charging for platform
FOMO • •
Alternative investment
3.1 Scenario 1 - Bitcoin
Scenario description. In Nakamoto’s work [22] a decentralized payment system is
envisioned. The essence is to have a consortium of unknown participants achieve
consensus [26]. To achieve this, Bitcoin uses a public permissionless blockchain,
allowing anyone to participate.
Each participant owns one or more Bitcoin accounts. An account is identified
by a public cryptographic key, and managed by the corresponding private key.
Each account may hold a number of tokens, which represent a value, and can be
seen as ’coins’. Coin ownership can be transferred by transactions. A transac-
tion, in principle, contains the account of the sender, the account of the receiver,
the number of coins transferred, and the signature of the sender. Transactions
created by participants are collected by other participants called miners. These
miners independently solve a moderately-hard cryptographic puzzle. The miner
that solves the puzzle first, obtains the privilege to propose a new state of ac-
counts, based on the transactions collected. A miner proposes a new state by
presenting a sequence of transactions called a block. Note that only miners may
write to the blockchain. Each block holds the hash of its previous block, linking
all blocks into a block-chain.
Scenario properties. This scenario has all the properties for the use of blockchain
to be the right solution according to the scheme of W¨ust and Gervais: we have
to store state, there are multiple writers, there is (by design) no Trusted Third
Party (TTP), the writers are unknown and untrusted, and the state should be
publicly verifiable. In other words, the properties of this scenario provide a clear
technical rationale to use blockchain.
Philosophical beliefs. Bitcoin’s pseudonymous inventor Nakamoto states that
’What is needed is an electronic payment system based on cryptographic proof
instead of trust’ [22]. Clearly, Bitcoin is specifically designed not to have a TTP.
Also, many of its participants are motivated by political reasons to use Bitcoin
[30]. For example, when national governments prevented WikiLeaks from receiv-
ing donations by blocking credit card transactions [33], Bitcoin could be used
as an alternative payment system to circumvent these restrictions. Furthermore,
given the pseudonymous nature of all accounts in Bitcoin, payments are more
privacy-friendly than centralized bank payments.
Network effects. Bitcoin has received considerable media attention in the last
few years [13,21,37]. This causes a network effect, where people consider Bitcoin
’cool to use’ [3]. Also, at this point in time several issues remain which hinder
global adoption, such as scalability [4], high transaction fees, price volatility and
energy consumption [23]. These problems are hard to solve, which has led to a
growing academic interest in blockchain technology to tackle them [32,40].
Economic incentives. Several companies have a direct economic interest in the
success of Bitcoin. As miners nowadays need special dedicated hardware, hard-
ware vendors supplying this hardware have a clear economic interest in the
success of Bitcoin. Furthermore, many companies, including established firms
and young startups [35], offer blockchain consultancy services, some of which
are related to Bitcoin. These companies also have a strong economic incentive,
namely to sell consulting services.
Finally, given the broad global attention to blockchain technology, there is
the fear of missing out (FOMO) [34]. This may lead to that some parties buy
bitcoins, as well as other cryptocurrencies, to mitigate the risk of having missed
the bandwagon when it turns out the technology becomes a success. For example,
public media has extensively reported on the rise of the value of Bitcoin. This
triggered other, new participants to also invest in Bitcoin, as these participants
also hope for a profitable investment in Bitcoin. Indeed, uninformed participants
consider Bitcoin as an alternative investment [13]. However, as Bitcoin is not
backed by any government nor gold, these investments are fueled largely by
speculation.
3.2 Scenario 2 - uPort
Scenario description. This second scenario addresses an identity management
solution. Such solutions aim to facilitate the management of identifiers, authen-
tication, personal information, and the presentation of this information to other
parties. Typically, in these solution schemes, a trusted identity provider such as
a government, issues attributes to a participant. These participants store their
attributes on their mobile device. This allows a verifying party such as a retailer,
to verify the validity of the attributes issued.
Several companies (e.g. Consensys, Evernym, and IBM) advertise their block-
chain-based identity solution. Here we focus on uPort [36] by Consensys. uPort
is an identity management solution that uses the Ethereum blockchain [38] for
so-called account recovery. In this account recovery process the user reclaims
ownership of a unique number, called a persistent identifier (PI). This then al-
lows participants to easily (re-)obtain attributes from issuing parties, by proving
ownership of this PI.
The uPort app allows a device, such as a smart phone, to connect to a
specific smart contract on Ethereum. This contract contains a unique number
represented by the PI, which is linked to the participant’s public key. When, for
example, the device holding the attributes and private key is lost, a participant
may prove to be the owner of the PI. Ownership of this PI is proven by requesting
multiple trusted parties to state that, indeed, the participant is linked the unique
number, after which the user can link a new public key to the PI. Currently, uPort
seems to be the only identity management solution that offers recovery of a PI.
Scenario properties. In this scenario, state in the form of a smart contract is
stored on the publicly verifiable Ethereum blockchain. From a participant per-
spective, all writers to the contract holding the persistent identifier are known,
since these are the parties (e.g. friends or government) trusted by the partici-
pant. In this scenario the owner of a smart contract, including its trustees, can
write to the contract. Furthermore, a centralized party, for example the issuing
party of the attributes, could store the unique number related to the attributes
of a participant. Therefore, following the model of W¨uset and Gervais, there is
no technical rationale to use blockchain technology in this scenario as all writers
are trusted.
Philosophical beliefs. The mission of uPort states that “we believe that everyone
has the right to control their own digital identity” [36]. Blockchain technology
offers a platform that can be used by everyone and, therefore, using a blockchain
is in the interest of uPort. From a company perspective, offering such a platform
is based on principles that drive uPort, such as company purpose, economic
principles, and social impact. However, from a technical perspective there is no
need to use blockchain for the unique number recovery, as explained above.
Network effects. Blockchain technology offers multiple functionalities, such as
storing of data, reaching consensus, and an audit trail. As companies often won-
der how blockchain functionalities can benefit their company, curiosity may have
played a role in blockchain adoption in this scenario.
Economic incentives. The uPort app points to a perceived single source of truth,
the blockchain. When more participants would adopt the uPort app, uPort would
gain more exposure, recognition, and funding. Still, the need for blockchain tech-
nology can be questioned. Ethereum, despite its novel design, currently con-
tains several issues such as scalability [4], energy consumption [23], and lack
of decentralization[12]. Instead, an independent group of trusted third parties
could be used to manage the unique identifier of the smart contract. However,
blockchain technology is also a marketing tool to arouse interest in a product
[3] which in this scenario is the identity solution, or to arouse interest in an
organization [1] [2].
3.3 Scenario 3 - Agricultural Products Supply Chain
Scenario description. In this third scenario a public permissioned blockchain
called Hyperledger Fabric by IBM [5] is used. This blockchain tracks certificates
in a supply chain of table grapes. In this scenario [11], a farmer in South Africa
produces organic grapes, and presents such a claim to a certification authority.
This authority issues a certificate to the farm, allowing the farm to certify its
grapes. Grapes are stored in boxes, which are identified by a unique barcode.
To ensure a correct certification process, certification authorities are accred-
ited by an accreditation authority. The certification authority stores the certifi-
cate it receives from an accreditation authority on the blockchain. Additionally,
details of the certification authority are stored on the blockchain, so that anyone
may see which party certified a farm. This entire process is audited. An auditor
may revoke the certificate issued by the certification authority, for example, af-
ter the discovery of unauthorized pesticides [31] being used in the production of
the fruits. An auditor also may revoke accreditations made by the accreditation
authority. Here, both revocation types are recorded on the blockchain.
The grape boxes are shipped to resellers in Europe, after which the grapes
are sold to supermarkets, and eventually to customers. Since it is unknown who
may purchase the grapes, public verifiability is required. This allows all parties
involved to query the blockchain for the validity of the organic certificate. Also,
change of ownership is recorded in the blockchain, and provenance of the labeled
boxes can be determined. From this description we observe that there are mul-
tiple, known writers. However, these writers are not trusted, as can be observed
from the cascading audit trail from farmer to auditor.
Scenario properties. In this scenario the origin and background of the grapes
are stored on the blockchain. Furthermore, multiple writers are present, such as
certificate authorities and auditors. Finally, the state stored must be publicly ver-
ifiable, as consumers verifying the grape origins must read from the blockchain.
Furthermore, in this scenario it is clear that writers are not trusted, because
there exists an extensive audit trail. However, blockchain technology does not
replace the audit trail. In this scenario blockchain technology introduces a decen-
tralized administrative system in which audit findings are stored. In fact, even
with blockchain technology, audits still must be performed to ensure that each
party involved follows the regulations. Although blockchain technology may offer
insight in the entire audit trail, a shared centralized database could achieve the
same. This database could be managed by the highest auditing authority in this
grape scenario, as this is the final trusted party in the supply chain. Therefore,
as there may exists a TTP, according to W¨ust and Gervais [39], there is no
technical rationale to use a blockchain in this scenario.
Philosophical beliefs. In this scenario, blockchain technology is used as an alter-
native to a centralized solution. However, in any solution for this supply chain
scenario, some form of trust is third parties is unavoidable, because trust has
to be placed in auditors that audit the entire certification process. Furthermore,
there is also trust in the shipping company for not changing the content of the
grape boxes. For example, it would be feasible to exchange the contents of the
boxes containing organic grapes with those boxes containing non-organic grapes
during transport. Therefore, in essence, trust is placed in the integrity of the
information stored on the blockchain. All participants rely that the information
on the blockchain is correct only by trusting the auditors.
Network effects. As blockchain is a complex technology, companies may exper-
iment with it by creating proof of concepts. Indeed, the aim of the original
scenario [11] was to provide a proof of concept based on blockchain technology.
As other technologies, such as a centralized database, seem not to be considered,
we assume that the use of blockchain technology is also driven by curiosity.
Economic incentives. It benefits the technology supplier (here IBM) to use
blockchain in this scenario, as it may provide related consulting services. Fur-
thermore, the successful implementation of its technology serves as a platform
for future scenarios. In such scenarios both the technology as well as consultancy
may be provided. We therefore argue that in this scenario blockchain adoption
is also driven by company principles.
Furthermore, in this scenario FOMO may also be a driver for blockchain
adoption. Here, FOMO applies to all parties involved considering the potential
of blockchain technology. However, as other technologies are not considered in
[11], only blockchain seems to offer a solution to track certificates.
4 Discussion
All technical conditions must be met to ensure the appropriateness of using
blockchain, if we follow the scheme of W¨ust and Gervais [39]. However, in the
uPort and supply chain scenarios only some technical drivers are addressed.
Indeed, blockchain is used in both scenarios, despite that there appears to be
no technical rationale to use blockchain, according to W¨ust and Gervais [39].
Clearly, the scenario properties suggested in [39] alone are insufficient in ex-
plaining blockchain adoption.
As can be observed from Table 1, the majority of drivers for blockchain
adoption in each of the three scenarios is non-technical. However, the technol-
ogy supports at least one underlying technical property in a scenario, such as
storing of state. Therefore, we conjecture that blockchain adoption is driven by
a combination of both technical and non-technical drivers.
Furthermore, we observe that in each scenario a TTP could be used. There-
fore, blockchain technology is not needed for any of these scenarios, according to
[39]. However, in the Bitcoin scenario there used to be an underlying academic
problem, namely, how can a consortium of unknown participants reach con-
sensus. Nakamoto [22] aims to answer that question by introducing blockchain
technology. Therefore, a rationale exists to use blockchain in the Bitcoin scenario.
5 Related work
Although several models exists to determine technology acceptance, the Tech-
nology Acceptance Model [8] is most employed [7]. Blockchain technology and
the Technology Acceptance Model (TAM) are discussed in, for example, [10],
[3]. TAM is used to determine technology adoption based on two major con-
siderations, perceived usefulness and perceived ease of use by the intended user.
Depending on the research domain, TAM has been extended with other consid-
erations such as ’perceived playfulness’ for the web acceptance, and ’perceived
user resources’ in bulletin boards systems [14]. In our work we distinguish four
considerations (i.e. the driver categories) for the adoption of blockchain.
Debabrata and Albert argue that blockchain may eliminate fraud in supply
chain management [9]. However, eliminating fraud only by using a blockchain
in the grape scenario is impossible. A TTP must remain present to verify the
claims made by the farmers, certification authorities, and accreditation authori-
ties. Here, blockchain cannot replace the trust in human observation of a complex
process.
Seebacher and Sch¨uritz propose that the qualitative aspects of transparency
and autonomy play a role in blockchain adoption [24]. In addition to these two
aspects, in our work we argue that blockchain adoption lies in both the technical
and non-technical drivers, and we identified a total of 20 drivers.
6 Future work
In our work we have shown that technical and non-technical drivers exist for
blockchain technology adoption. Various models have been suggested to support
this decision making process, as discussed in Section 2. These models, however,
do not mention alternatives to blockchain. A further analysis, and a possible
extension of these models is needed to determine if blockchain is appropriate.
Also, trust in a third party appears to be a much broader concept than the
trust a blockchain can offer. In fact, this technology appears to provide trust in
integrity of the data recorded on the blockchain. However, we assume that the
trust needed by a participant goes beyond integrity of data alone. Therefore, it
is unlikely that blockchain can fully replace a TTP. Additionally, the concept
of trust has been defined in many ways [19]. For example, one way of defining
trust is the willingness to depend, meaning that you make yourself vulnerable
to another person in a situation by relying on them [18]. However, these many
definitions also makes that the concept of trust is diffuse, and it is unclear what is
defined as a Trusted Third Party. How blockchain shifts trust, and which types
of trust are affected by blockchain also seem interesting subjects for further
explorationBlock.
Furthermore, additional scenarios that involve blockchain technology could
be analyzed in order to determine the value of blockchain technology over alter-
native technological solutions. Here, possibly more drivers for blockchain tech-
nology adoption may be found. Also, extending this work by adding weights
to the drivers may be part of future work. Adding weight to drivers allow for
determining which driver influences blockchain technology adoption most.
7 Conclusion
Many people have questioned the rationale behind blockchain adoption [6,16]. To
support such claims, methodologies have been proposed to see if blockchain suits
a particular scenario [39,20]. Such methodologies are mainly based on technical
drivers, which are properties inherent to a scenario. In real-life scenarios we see
that sometimes a blockchain-based solution is chosen even if these methodologies
would argue against that.
Given the inherent lack of technical drivers in some scenarios, the choice for
blockchain technology may seem irrational. Our novel insight is that blockchain
adoption may be explained by non-technical drivers, namely philosophical be-
liefs, network effects and economic incentives. These drivers may explain, after
all, the rationale behind blockchain adoption. Our work can be generalized to
other scenarios that involve cryptocurrencies, identity management solutions and
supply chains, as it is likely that similar scenarios contain the same drivers.
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... The network effect is a significant determinant of a firm's blockchain adoption, as stated in the findings. This driver has been explored by Koens and Poll (2018) as significant in blockchain adoption and has been the focus of other technology adoption studies (Beck et al., 2008;Zhu et al., 2002). The driver is similar to the previous blockchain adoption studies' 'business use cases' factor, as the adoption rate usually relies on the existing successful cases in the market (Clohessy et al., 2020;Holotiuk & Moormann, 2018). ...
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