Current Adoption of Blockchain Technology

23 online. All of this is done either through cryptographic security or Blockchain technology,

ultimately showing that the use cases in the public sectors are many (Tapscott & Tapscott, 2016a).

2.2.4 Use cases in insurance

As in most other use cases for Blockchain technology, customer engagement and storage of personal data on a distributed ledger is a natural starting point. By storing the data on a distributed ledger, one makes sure that personal data is owned by the customers themselves, rather than the insurance company. This might make the onboarding of new customers easier, seeing as the regulatory framework is easier to navigate both for the consumer and the insurance company (McKinsey&Company, 2016a).

Functioning, self-fulfilling smart-contracts, as proposed by Vitalik Butherin in the Ethereum whitepaper (2014), could also provide a basis for automatic handling of claims towards the insurance company. Contracts governed by code are less prone to subjective treatment, which in time may create a more efficient and transparent system for handling insurance claims (Butherin, 2014; McKinsey&Company, 2016a). In effect, insurance contracts governed by code may cause less disputes regarding insurance claims. Furthermore, there is a potential to reduce costs due to the reduction in manual labor needed to handle claims and develop insurance contracts.

Peer-to-peer insurance is also a possible use case in the insurance sphere. An example is drivers of sharing-economy corporations such as Uber and Lyft, who could pool their money and utilize smart contracts to insure each other. Some also argue that traditional insurance companies mainly do tasks that could be done peer-to-peer on the Blockchain in the future, and thus conclude that Blockchain could eventually remove the need for these companies (Shrier et al., 2016).

2.3 Current Adoption of Blockchain Technology

This thesis aims to discover how Blockchain-technology is adopted by Norwegian corporations.

However, looking at existing adoption of the technology at a global scale is relevant to put the

24 thesis in the right context. Blockchain technology is still considered to be in its early stages, however, corporate executives may want to be early adopters of new technology to gain potential competitive advantages. A study by IBM’s Institute for Business Value shows that one third of C-level executives are either considering, or already using the technology (IBM Institute for Business Value, 2017; Cachin, 2016). Examples of corporate adoption is the open source HyperLedger project, instigated by The Linux Foundation, and backed by significant

corporations in finance and technology. The ledger aims to advance cross-industry Blockchain-technology, and create an open-source standard for distributed ledger projects. (Cachin, 2016)

Furthermore, there are examples of public Blockchain adoption. For instance, the city of Zug in Switzerland, has established itself as “Crypto Valley”. The city is already issuing passports connected to a Blockchain, and has altered the financial regulatory framework towards Blockchain companies, in order to attract talent and business in the sphere (Vitaris, 2017). As mentioned, the Republic of Estonia is also a pioneer when it comes to Blockchain adoption.

Public records, including patient journals, are stored on the country’s private Blockchain (Tapscott & Tapscott, 2016a). Most of the current adoption of Blockchain is done by newly formed companies who base their business models solely on solving a problem with Blockchain technology. However, it is likely that we will see an increased number of hybrid business

models, that utilize the Blockchain on top of their existing operations in the future (Crosby et al., 2016).

Lakhini and Iansiti (2017) propose a four-by-four matrix with two dimensions to explain how the use cases for new foundational technologies evolve. The four phases are divided into single-use, localization, substitution and transformation, based on the novelty and the complexity of the application. An application with relatively low novelty and complexity, is typically single-use cases, like payments. The applications in this phase are typically solutions that aim to replace an existing service, such as Bitcoin is for payments. The second phase, known as localization, focuses on applications that are high in novelty, but demands a lower userbase to function. An example of this is a private online ledger. The third phase is substitution where the novelty is low, but the complexity is higher, this is for instance a workaround to existing problems, for

25 instance third-party services which makes cryptocurrencies available as payments. (Lakhani &

Iansiti, 2017).

The fourth phase of technological evolution is where one utilize the new technology to transform the nature of systems that are already in place. Transformation of existing systems usually occur after a technology has been proven and tested through the previous phases. For Blockchain technology, this could be self-governing smart contracts, changing the nature of how humans transact with each other. Considering how traditional companies are based on written and oral contracts, this could change the very nature of how a firm is operating. (Lakhani & Iansiti, 2017).

When we aim to measure Blockchain adoption, we want to look at how corporations are looking to replace or add to their existing operations by implementing this technology. Thus, we are aiming at the transformational phase of technological evolution.

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