In this book, we have provided a comprehensive overview of the phenomenon of blockchain technology, its potential and its pitfalls. Blockchain technology holds significant disruptive potential for changing the way individuals, companies and authorities interact. Although Bitcoin was invented more than a decade ago, the innovative use of the technology that undergirds it has only recently begun and can still be regarded as being in its infancy. However, blockchain technology has to overcome some challenges and shortcomings in the near future for its full potential to be rolled out and for it to outperform existing centralized systems.

Other disruptive technologies, such as the internet, provide a paradigm for blockchain. While the basis of these technologies, the Arpanet, was already in operation in October 1969, it took many years until standards such as TCP/IP were established in 1981, and in 1989 the foundations of the World Wide Web were laid. The first browser was published in 1993 with Mosaic. From this point on, it was only through applications such as email that the internet actually began to be used extensively. Consequently, new, complex technologies that can change or displace the business models of established companies are not necessarily successful in the short term. We are at an early stage of research and experimentation with blockchain. While particular sectors can realize the benefits of the technology faster than others, various challenges still have to be overcome before standards are established and the technology can be applied safely and extensively.

The challenges for blockchain are technical, governmental and regulatory. The technical issues relate to the scalability of public blockchain systems. The price for the decentralization is that processing tasks need to be performed redundantly, as every validator node needs to process every transaction. The securitization of the system using complex consensus algorithms results in low transaction throughput, which makes them less competitive compared to conventional payment services like Visa. Moreover, block formation intervals are comparably long (13 seconds on average for Ethereum transactions, 10 minutes on average for Bitcoin transactions). These features are impractical and hinder its widespread adoption as a means of payment or for the use of time-critical applications.