Blockchain: from automatic energy bill settlement to payments without banks

6 June 2017 • 4 min reading time

Buying a house without a notary, safely transferring money without a bank, and paying your taxes without having to fill out any forms: Blockchain promises to make all this possible. TNO is playing an important role in the application of this emerging technology in the Netherlands.

A bank and a notary make financial transactions trustworthy because they can examine the finances and identity of the parties involved. Are they actually who they claim to be, and do they actually possess the money they claim to have? Blockchain technology could render these intermediaries superfluous, because the necessary data could be stored online – and not by a single central organization, but by the computers of all the participants in the Blockchain network. Together these computers could form an online distributed ledger that is kept continuously up to date. Transactions done through the Blockchain are potentially more efficient, cheaper, and faster.

“What robots have done for the work floor – much higher productivity per worker – Blockchain is going to do for administrative processes”

Automatic settlement

Blockchain technology has a wealth of potential applications. The best-known of these is currently bitcoin: an online payment system that is independent of the banks. But much more is possible, as Henk-Jan Vink, director of Networked Information at TNO, explains. “A person can have a digital identity, but so can an object, such as a shipping container at the port of Rotterdam. Imagine that a container knew where it had to go, got itself loaded autonomously, and automatically settled the account with the buyer! Blockchain makes this possible. For another example, take the automatic settlement of energy payments. More and more people have solar panels, and Blockchain makes it possible for excess energy capacity to go the next-door neighbour and be paid for automatically, with no need for an energy company to act as intermediary.”

“Transactions done through the Blockchain are potentially more efficient, cheaper, and faster”

Societal significance

It is hard to predict exactly what changes Blockchain will bring, says Egbert-Jan Sol, Program director Smart Industry. “No-one knew that the internet would lead to applications like YouTube, Spotify, and all kinds of social media. It’s the same with Blockchain. Nobody knows which ‘killer’ Blockchain apps are going to change society. But what robots have done for the work floor – much higher productivity per worker – Blockchain is going to do for administrative processes.”

Fraud is made extremely difficult

A Blockchain transaction is only possible when all the computers in the network approve it, based on the data held in a block of transactions. Once all these computers have given their approval, the transaction block is added to the chain of blocks that have been created over the life of the system. Once approved, a transaction cannot be revoked: A blockchain can only be broken with immense difficulty – hence the name. This property ensures that committing fraud is made extremely difficult: any interference with the transaction data held on one computer is never approved by the other computers in the network.

“We are helping to create a favourable climate for Blockchain application development in the Netherlands”

We need 500 Blockchain experts

As promising as Blockchain technology is, it has yet to be widely employed. “The basic technology has a very safe design, but certain aspects need more research,” says Vink. “Aspects like transaction speed and privacy, but also regulation.” This is not to say that the Dutch business world should wait passively until the technology is ripe for large-scale application, explains Vink. “The first to market these services can expect very rapid growth; but if we want to create value, and retain jobs, then the Netherlands should stay in the forefront.” TNO is playing an important role in this, for instance by training Blockchain experts who will soon, in Sol’s view, be indispensable. “By 2020 we will need at least 500 experts who really understand how the technology works. We’re already organizing and training IT people in Blockchain knowledge. For more than three years, together with Interpol we train digital investigators so that they could track crime through bitcoin movements on the dark web. That gave us some early expertise.”

“We’re already organizing and training IT people in Blockchain knowledge”

Bringing players together

Through the Dutch IT TopTeam, TNO collaborates with other research bodies and the business community to work towards the rapid adoption of Blockchain technologies. This has already led to the launch of a Dutch Blockchain Coalition (BC3), which presented its action agenda to the Dutch Minister of Economic Affairs, Henk Kamp, on 30 March. Besides this TNO is also leading experiments in so-called ‘Fieldlabs’ (a good example is the Techruption fieldlab in Heerlen), developing knowledge, and sharing the results with all parties that might need this support in developing applications. “We are helping to create a favourable climate for Blockchain application development in the Netherlands. We see it as TNO’s role to interpret the true value of blockchain: does blockchain really have potential and if so, how and where.” Vink sums up. “Together with BC3 we are thinking ahead about this technology and its consequences for policy and regulation: these are subjects that are better tackled at the national level than by individual companies acting alone. And we are bringing together as many players together as we can, to bring about a mass movement.”

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