Opportunities and challenges of blockchain in industry 4.0

Denys V. Lypnytskyi

Abstract


Concept of Industry 4.0 includes the creation of cyber-physical systems, capable to decentralized control over production, sales, etc., as well as self-education and self-development. Such systems’ functioning requires similar "smart" technologies for information storing and distributing. Due to decentralization support, ensuring cybersecurity for cryptocurrency and creating environment for “smart” contracts, blockchain was considered as a fast solution. But blockchain’s projection from the narrow scope of digital money to general purpose technology for industry and public sector faced serious difficulties. Some of them can be overcome by partial improving within the present generation of blockchain (e.g. - amending consensus’ algorithms). Others require significant transformations of the core technology, coupling it with other innovations in computer science and industry. Difficulties of transition phase gave rise to criticism and even led to rejections to use blockchain in practice. Then some hybrid solutions appeared, which took only a part of blockchain’s innovative idea (blocks-organized ledger) and implanted it onto old-fashioned technologies (abandoning the idea of distributed architecture). It is offered to consider such solutions as an inferior "quasi-blockchain". The evolution of blockchain has been studied and it has been proven that the development of its decentralized versions is most compatible with concept of Industry 4.0. However, industrial application of such versions, as it is shown in the paper, is hampered by the internal contradictions: blockchain "trilemma" plus inefficient energy use. Prospects for getting out of "blockchain trilemma" impasse have been explored, including some modern innovative solutions, such as the Level-2 protocol (Lightning Network). The evolution scenarios for such innovations are described. A classification, which links blockchain to classical distributed databases and takes into account the logic of their development, is proposed. The most promising fields for blockchain industrial applications, including digital invoices (e-Invoice) and Industrial Internet of Things, are studied. The research, conducted in the paper, has helped to develop a criteria to select and optimize specific blockchain solutions for industrial applications.

Keywords


blockchain; Industry 4.0; distributed leger; decentralization; blockchain "trilemma"; "smart" contracts; consensus algorithms; e-Invoice; Internet of Things; cybersecurity

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DOI: https://doi.org/10.15407/econindustry2019.01.082

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