What is a Blockchain?

The Blockchain is a distributed and decentralized system. Often also referred as decentralized database or transaction register. Each Blockchain logs, verifies and confirms transactions between stakeholders using a unique hash. A third entity for validation purposes is in comparison to other technical concepts obsolete. This makes the Blockchain an extremely secure and decentralized protocol registration system.

How does a blockchain work?

The easiest way to explain the functionality is to depict it through an example of an order in an onlineshop. User A purchases and pays a product in onlineshop B. This is a transaction and will be documented on all participating computers of a Blockchain. This means that each process or change will be verified through a countless numbers of entities. User A is now the owner of the purchased product after a successful verification. This process is documented and saved within a new Block. This dataset expands therefore the Blockchain. The Procedure will be repeated if A wants to sell the product using the same process. Through these operations a transparent and traceable protocol of all transactions is created. As the verification needs to be made by all participants within a Blockchain and subsequent changes are not possible, any way of manipulation is prevented. Often, in this context, the comparison to a cash register or account book (Distributed Ledger) is used.

Smart Contracts

Smart Contracts are smart and self-fulfilling contracts. They are defined to perform a single action automatically. The Smart Contract triggers as soon as a certain event takes place. No waiting or a manual check is necessary. If for example an electronic car is being charged, a smart contract can be triggered to automatically pay for the charged energy.

Benefits of the Blockchain for businesses

Secure transactions have always been a complex topic in the digital society. Transactions take place everywhere. Whether ordering, payment transactions, tracking, or exchanging data between systems.

Transaction Security

No third entity (man-in-the-middle) is needed for the verification of a transaction. Neither a software, a certificate or a physical entity (bank, notary, clearing center) are necessary to confirm a transaction.


The Blockchain is no centralized system, but a global network. Not a single stakeholder has the whole power over the system, which is though the case for modern cloud solutions. So this means redundant data security.

Security against manipulation

A transaction is validated and document through all participants in a network. Manipulation or deletion is not possible.

Cheaper Transactions

IT costs are lowered significantly through the use of the Blockchain in busiensses. Expenses for transactions or their verification through software and employees are entirely omitted.

Process Automization

By outsourcing processes to the Blockchain and Smart Contracts businesses are able to automate operations. As soon as a condition is met, follow-up processes are triggered automatically.


Due to the nature of the Blockchain, all processes are traceable and documented. For example, legal requirements such as the GDPR can be implemented.

Challenges of using a Blockchain

The use of Blockchain Technology in the corporate environment is not feasible without additional adjustments. Specific challenges are:


Difficult integration into existing IT landscapes: None can be used without extensive customization with existing enterprise systems.


Limited custom scalability: without customization or combination of conventional and Blockchain-based solutions, both data throughput and storage space are limited.


No authorization management: Blockchain systems have no authorization management functionality and do not provide granular access to the stored information.

Use potentials through hybrid solutions

Only the interplay of traditional software solutions and Blockchain Technologies enables companies to find completely new solutions to existing and future problems. Existing software technologies give companies access to the Blockchain and at the same time handle the authorization management. The combination of different technologies also ensures scalability.

Scenario in companies: Implementation of the GDPR

Full traceability of processes is only one of the basic requirements of the GDPR. Companies need to demonstrate in detail what is happening to the data from internal and external users. The Blockchain, as a protocol system in combination with a clear dashboard, helps businesses with this implementation. A decisive advantage over solutions without Blockchain Technology: The immutability of the data enables companies to prove completely to the legislator when, how and where which data was used for which purpose.

All Advantages