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Half of Dutch IT decision-makers can’t explain blockchain technology

IT decision-makers in the Netherlands know that blockchain has significant benefits, but half don’t understand how to apply it

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The Netherlands is not far from a major breakthrough in the use of blockchain technology, despite research revealing a great lack of knowledge on the technology in Dutch companies.

More than half of Dutch IT decision-makers label their own knowledge level of blockchain as sub-standard, with 12% admitting they don’t even know how blockchain works, according to The future of IT report by Dutch software company Topicus.

Despite this, 38% think the technology offers substantial added value to their organisation compared with existing technologies. “Most people who work in IT have difficulty thinking in terms of decentralised structures,” said Daan Dijkhuizen, CEO of Topicus. “They are used to centralising as much as possible and sticking to a single point of truth.”

In particular, large organisations with more than 250 employees that are active in business and financial services have already run blockchain pilots, or are already using them in their existing business processes.

In about one in three business and financial service providers, blockchain projects are being developed – the majority of which are in the exploratory phase. In addition to these companies, there is also a relatively large number of organisations in the industry sector (50%), government organisations (45%) and organisations in the health sector (30%) that are actively involved in blockchain projects, or want to do so in the near future.

But one of the obstacles that still stands in the way of large-scale implementation is the lack of knowledge of the technology. “Our research shows that 53% of the IT decision-makers of Dutch organisations cannot explain blockchain technology,” said Dijkhuizen.

The research revealed that about one in three decision-makers understand the essence of blockchain, and only 2.5% indicate they have very good knowledge of the technology and can apply it.

“Our research shows that 53% of the IT decision-makers of Dutch organisations cannot explain blockchain technology”
Daan Dijkhuizen, Topicus

Investment in blockchain

A good measure of belief in the value of blockchain for the organisations is the degree of readiness to invest money into it. Almost half of the Dutch organisations say they want to invest in the technology in the coming year.

Another reason why the real breakthrough of blockchain is still pending is that the technology is not yet fully mature.

Although a majority of Dutch companies trust blockchain technology, 13% of the organisations do not yet have enough confidence in the technology. For example, they wonder whether the technology is compatible with other organisations and business processes. They are also concerned about risk management and business controls.

Blockchain has many advantages for companies. One of these is that it enables them to set up large administrations much more efficiently. “For example, the blockchain can be extended with so-called smart contracts,” said Dijkhuizen. “These smart contracts offer an alternative to regular contracts, such as mortgage contracts and cadastral data.”

A smart contract is, in fact, a smart layer on top of the blockchain in which you can lay down certain business rules.

“In the healthcare sector, for example, for certain budgets, such as the personal budget, you can specify how and on what basis the money can be spent,” he said.

It’s now checked afterwards whether you have spent the money according to the rules of the Health Care Act and the insurance companies. “This is error-prone and labour-intensive,” said Dijkhuizen. “Why don’t we fix that in advance? That way, the money won’t ever be spent if it doesn’t meet the conditions.”

No more central bodies

Because agreements in the contract are recorded in computer code on the blockchain, they can always be viewed, but it’s impossible to adjust them. This eliminates the need for a centralised intermediary, such as a bank, de Belastingdienst (the Tax and Customs Administration) or het Kadaster (the Land Registry).

“In the Netherlands, we are spoiled for examples, with ‘het Kadaster’ as the central body that registers the ownership of houses,” said Mark Raben, chief technology officer at SAP, during a blockchain meeting in 2017. “But there are also plenty of countries that don’t have a reliable central body to take care of this.”

Choosing such a central body is no easy task. Not only does it have to be certain that the organisation handles the data confidentially and securely – and at the same time gives access to the right parties – it is also important that the organisation will exist tomorrow.

This means the traditional intermediaries and parties which now earn their money in a controlling function in the chain must fear for their existence if blockchain takes off in the Netherlands. “We are familiar with the example of bitcoins, which no longer involve a bank,” said Raben. “But I can imagine it will also have consequences for the music industry and other sectors, for example.”

Meat passport

A good example of the added value of blockchain technology is the recently introduced meat passport in the Netherlands.

The entire chain, from the production of pork from the farmer to the distributor and shop, is registered in blockchain by all parties involved. By recording the complete path of meat in a blockchain in a way that cannot be mutated by other chain partners, the quality and food safety can be guaranteed.

According to the Topicus study, the majority of Dutch organisations that currently use blockchain do so to digitise logistic processes (46%). For example, a leasing company that uses blockchain technology to achieve cost savings by handling the transport and storage of new and used lease cars entirely digitally.

Meanwhile, more than one in five organisations apply blockchain to create auditability and 32% of Dutch organisations use the technology to manage, record or protect their data.

A total of 22% expect to be able to offer better protection against fraud and cyber crime thanks to blockchain. This is partly because blockchain technology enables data storage in a decentralised way, and no single authority or company owns the data, which means this data is not endangered in the event of a cyber attack, for example.

“After all, a network is more resilient than a single point of failure,” said Dijkhuizen.

Read more about the use of blockchain in the Netherlands

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