IN THE FIELD OF TECHNOLOGYDEGREE PROJECT MECHANICAL ENGINEERINGAND THE MAIN FIELD OF STUDYINDUSTRIAL MANAGEMENT,SECOND CYCLE, 30 CREDITS

, STOCKHOLM SWEDEN 2018

Perceived Affordance and Socio Technical Transition:Blockchain for the Swedish Public Sector

JOHAN R. JONSSON

KTH ROYAL INSTITUTE OF TECHNOLOGYSCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Perceived Affordance and

Socio-Technical Transition:

Blockchain for the

Swedish Public Sector

by

Johan R. Jonsson

Master of Science Thesis TRITA-ITM-EX 2018:407 KTH Industrial Engineering and Management

Industrial Management SE-100 44 STOCKHOLM

Uppfattad görlighet och

socio-teknisk övergång:

blockkedjor för svensk offentlig sektor

av

Johan R. Jonsson

Examensarbete TRITA-ITM-EX 2018:407

KTH Industriell teknik och management

Industriell ekonomi och organisation

SE-100 44 STOCKHOLM

Abstract

The Swedish public sector is under constant pressure to improve processes and services through

further digitalization. Blockchain is a novelty technology which shows promise of enabling

functionalities which are desired within the sector. However, as the technology is still in its infancy,

the practical value it could offer the sector remains unproven. In this master thesis, the

socio-technical transition of the public sector for adopting blockchain is analyzed using the

multi-level perspective framework. The sector is operationalized as an incumbent socio-technical

regime and blockchain as a collection of niche innovations. Affordance theory and the multi-level

perspective are combined to analyze how the perception of blockchain affects the potential

transition pathways. The primary empirical data is gathered through a series of interviews with key

individuals from both the Swedish public sector and blockchain community, as well as from

attending blockchain events. Secondary data is gathered through the review of various types of

literature regarding the topic. The findings of the thesis show that the practical value and

functionalities that blockchain offers and that match the needs of the sector are verification,

authentication, traceability, automating simple logical functions, and digitizing unique value. The

identified conceptual solutions deemed suitable today are: blockchain for identity management,

blockchain for data verification, blockchains for property registers of, e.g., vehicles and real estate,

and external industry blockchains for improved traceability of, e.g., supply chains and sales records.

The thesis also derives recommendations for the public sector indicating that, e.g., active

education, revision of regulation, and international cooperation would further a potential transition

towards blockchain. It also finds that perceived affordances of a technology in its early stages affect

the transition pathways; barriers of entry, number of potential adopting application sectors, the

level of coordination, and the available resources for development are influenced by the

perceptions.

Key-words: blockchain, distributed ledger technology, public sector, digitalization, socio-technical

transition, multi-level perspective, affordance theory, general purpose technology

Master of Science Thesis TRITA-ITM-EX 2018:407

Perceived Affordance and

Socio-Technical Transition:

Blockchain for the Swedish Public Sector

Johan R. Jonsson

Approved 2018-05-29

Examiner Cali Nuur

Supervisor Emrah Karakaya

Commissioner Knowit Secure AB

Contact person Victor Langåssve

Sammanfattning

Svensk offentlig sektor utsätts konstant för påtryckningar gällande fortsatt digitalisering av

processer och tjänster. Blockkedjan är en ny teknologi som påvisar potential att kunna tillgodose

funktioner önskvärda inom den offentliga sektorn. Dock är teknologin fortfarande i ett

begynnande stadie och dess praktiska värde är ännu obevisat. I detta examensarbete analyseras

offentliga sektorns potentiella socio-tekniska övergång till att ta blockkedjor i bruk med hjälp av

multinivåperspektiv-ramverket. Sektorn operationaliseras som en befintlig socio-teknisk regim och

blockkedjor som en samling av nischinnovationer. Görlighetsteori och multinivåperspektivet

kombineras för att analysera hur uppfattningen av blockkedjor påverkar de potentiella

övergångsvägarna. Primära empiriska data samlas in genom en serie av intervjuer med

nyckelindivider från både svensk offentlig sektor och blockkedjegemenskapen, samt även från

deltagande i blockkedjearrangemang. Sekundära data samlas in genom en studie av diverse typer

av litteratur gällande ämnet. Examensarbetets resultat påvisar att det praktiska värdet och

funktionaliteterna som blockkedjor tillgodoser och som passar med offentliga sektorns behov är

verifikation, autentisering, spårbarhet, automatisering av simpla logiska funktioner, samt

digitalisering av unika värden. De identifierade konceptuella lösningarna som bedöms lämpliga i

dagsläget är: blockkedja för identitetshantering, blockkedja för dataverifikation, blockkedjor för

egendomsregister, t.ex. för fordon och bostäder, samt externa industriblockkedjor för förbättrad

spårning, t.ex. av försörjningskedjor och försäljning. Examensarbetet härleder även

rekommendationer till offentliga sektorn, innefattande exempelvis aktiv utbildning, revision av

reglementen, samt internationellt samarbete. Resultaten påvisar även att den uppfattade

görligheten av en teknologi i ett tidigt stadie av innovation påverkar övergångsvägarna in i en regim.

Detta genom att uppfattningarna influerar inträdesbarriärer, antalet potentiella

applikationssektorer, koordinationsnivån, samt mängden tillgängliga resurser.

Nyckelord: blockkedja, distribuerad huvudbok, offentlig sektor, digitalisering, socio-teknisk

övergång, multinivåperspektiv, görlighetsteori, genombrottsteknologi

Examensarbete TRITA-ITM-EX 2018:407

Uppfattad görlighet och socio-teknisk övergång:

blockkedjor för svensk offentlig sektor

Johan R. Jonsson

Godkänt 2018-05-29

Examinator Cali Nuur

Handledare Emrah Karakaya

Uppdragsgivare Knowit Secure AB

Kontaktperson Victor Langåssve

i

Table of Contents

I. List of Figures .......................................................................................... iii

II. List of Tables ............................................................................................. iv

III. List of Abbreviations .................................................................................. v

IV. Nomenclature ............................................................................................ vi

V. Foreword .................................................................................................... ix

1 Introduction ................................................................................................ 1

1.1 Background ............................................................................................................................. 1

1.2 Problematization .................................................................................................................... 3

1.3 Contribution, Delimitations, and Limitations .................................................................... 4

1.4 Thesis Outline......................................................................................................................... 5

2 Blockchain .................................................................................................. 6

2.1 General Overview .................................................................................................................. 6

2.2 Distributed Ledger Technology ........................................................................................... 8

2.3 Cryptography ........................................................................................................................ 11

2.4 Consensus, Authority, and Mining .................................................................................... 15

2.5 Smart Contracts .................................................................................................................... 18

2.6 Use Cases ............................................................................................................................... 20

3 Theory and Frameworks .......................................................................... 27

3.1 Innovation and Technology Adoption ............................................................................. 27

3.2 Affordance and General Purpose Technologies ............................................................. 28

3.2.1 Affordance Theory .......................................................................................................... 29

3.2.2 General Purpose Technology ......................................................................................... 30

3.3 The Multi-Level Perspective ............................................................................................... 32

4 Method ..................................................................................................... 37

4.1 Research Approach .............................................................................................................. 37

4.2 The Collection of Data ........................................................................................................ 37

4.3 Research Quality ................................................................................................................... 42

4.4 Operationalization ................................................................................................................ 43

5 Analysis ..................................................................................................... 45

5.1 The Status Quo and Multi-Level Perspective .................................................................. 45

5.1.1 Landscape and Pressure .................................................................................................. 45

5.1.2 The Public Sector ............................................................................................................. 46

ii

5.1.3 Blockchain as a Collection of Niche Innovations ....................................................... 51

5.2 Perceived Affordances for the Public Sector ................................................................... 54

5.2.1 Blockchain Community’s Perspective ........................................................................... 54

5.2.2 Public Sector’s Perspective ............................................................................................. 57

5.2.3 Perception Comparison .................................................................................................. 60

6 Discussion ................................................................................................ 61

6.1 Blockchain’s Value for the Public Sector ......................................................................... 61

6.2 Recommendations to the Swedish Public Sector ............................................................ 64

6.3 Potential Transition Pathways ............................................................................................ 67

7 Conclusion ................................................................................................ 70

8 List of References ..................................................................................... 73

9 Appendices ............................................................................................... 80

Appendix A – Interview Templates.................................................................................................. 80

iii

I. List of Figures

Figure 2.1 Blockchain: Trust and Value, adapted from Killmeyer, et al. (2017, p. 5) ....................... 6

Figure 2.2 Distribution of Ledgers, adapted from The World Bank (2017, p. 7) ............................. 9

Figure 2.3 Ledger Classification Matrix ................................................................................................. 10

Figure 2.4 Ledger Taxonomy, adapted from Walport (2016, p. 19) ................................................. 10

Figure 2.5 Degree of Decentralization, adapted from Walport (2016, p. 35) .................................. 11

Figure 2.6 Cryptographic Hash Function (Stamp, 2006) .................................................................... 12

Figure 2.7 Merkle Tree Structure, adapted from Franco (2015, p. 118) ........................................... 12

Figure 2.8 Block and Chain Structure, adapted from Nakamoto (2008, p. 3) ................................. 14

Figure 3.1 Technology Adoption, adapted from Rogers (2003) and Moore (2014) ....................... 28

Figure 3.2 Affordance Perception Matrix, adapted from Gaver (1991, p. 80) ................................ 30

Figure 3.3 Diffusion in a GPT Cluster, adapted from Breshanan and Trajtenberg (1995, p. 87) 32

Figure 3.4 Alignment of a Socio-Technical Regime, adapted from Geels (2011, p. 27) ................ 33

Figure 3.5 Multi-level Perspective, adapted from Geels (2002, p. 1263) .......................................... 34

Figure 5.1 The Public Sector as a Socio-Technical Regime ................................................................ 47

iv

II. List of Tables

Table 4.1 Attended Events ...................................................................................................................... 38

Table 4.2 Blockchain Expert and Related Interviews .......................................................................... 39

Table 4.3 Public Sector Interviews ......................................................................................................... 41

Table 5.1 Digitalization Needs of the Public Sector ............................................................................ 48

Table 6.1 Conceptual Solutions .............................................................................................................. 62

Table 6.2 Recommendations to the Public Sector ............................................................................... 65

v

III. List of Abbreviations

AI Artificial Intelligence

CDC Centralized Decentralized Currency

CHF Cryptographic Hash Function

DAO Decentralized Autonomous Organization

DLT Distributed Ledger Technology

GPT General Purpose Technology

ICO Initial Coin Offering

ICT Information & Communications Technology

IoT Internet of Things

MLP Multi-Level Perspective

PKI Public Key Infrastructure

PoA Proof of Authority

PoB Proof of Burn

PoS Proof of Stake

PoW Proof of Work

P2P Peer to Peer

SHA Secure Hash Algorithms

vi

IV. Nomenclature

Affordance A usage of an artifact based on, e.g., physical, psychological, analytical, or computational qualities. Artifact referring to any noun, e.g., a technology.

Artificial Intelligence The ability of machines to understand, reason, and act logically based on the perception of, and input from, the environment.

Bitcoin 1) A cryptocurrency denominated BTC. 2) A public network maintaining a blockchain.

Block A collection of data and inputs gathered and hashed.

Blockchain A chain of blocks linked together by including the hash of the previous block in the following block.

Blockchain Network The distributed network of nodes that together establish consensus.

Blockchain Protocol The protocol dictating the criteria required for entries and blocks to be valid.

Block Height The number of blocks preceding a block in the chain. The genesis has a block height of zero. The full blockchain has a block height of the number of blocks minus one.

Consensus Mechanism The algorithmic function used to achieve network consensus for a distributed ledger.

Cryptocurrency A digital medium of value, i.e., money, which integrity is upheld with blockchain technology.

Cryptographic Hash Function An algorithm that takes a data input of arbitrary size and produces a practically unique output of predefined size.

Decentralized Autonomous Organization

An organization managed by rules encoded on a blockchain using smart contracts.

Distributed Ledger Technology

The technology used to achieve a consensually agreed upon record of entries shared in a distributed network.

Fork 1) A change to the blockchain protocol. 2) A split of the blockchain because of a network consensus disagreement.

Genesis Block The first block in a blockchain.

General Purpose Technology A technology which produces a generic function usable in many different application sectors.

Hard Fork A change to the blockchain protocol lessening restrictions. Requires full network support, otherwise the network splits into two, causing the blockchain to permanently split as well.

Hash Noun) The string produced by a hash function. Verb) The process of entering data into a hash function to produce a hash (noun).

Merkle Tree A sequential structure of cryptographic hashes formed like a tree to produce a Merkle root.

Merkle Root The final cryptographic hash of a Merkle tree, derived from all the data in a block. Used as a header of blocks.

Miner A network node which dedicates computational processing power to create and broadcast valid blocks based on incoming entries. Performs the work in a PoW based network in exchange for a reward.

vii

Mining The process using dedicated hardware to create valid blocks by spending computational processing power, i.e., time and electricity, in exchange for a reward.

Mining Pool A group of miners pooling their processing power to increase the chance of creating valid blocks. Share of reward based on share of contributed processing power.

Multi-Level Perspective A theoretical framework regarding socio-technical transitions. Consists of the three analytical levels of socio-technical landscape (macro), socio-technical regime (meso), and niche innovations (micro).

Multi-Signature A function requiring digital signatures from multiple parties to execute an action.

Node A processing unit, e.g., a computer, which is dedicated to maintaining a blockchain network by validating that entries follow the criteria established in the consensus protocol. Full nodes store the entirety of the blockchain.

Niche Innovations A collection of novelty innovations, groups, and communities surrounding a new technology.

Perceived Affordances The individual’s, or group’s, perceived affordances of an artifact. See ‘Affordance’.

Permissioned Network A distributed ledger network which regulates who can become a node and validator in the network.

Permissionless Network A distributed ledger network which is P2P, i.e., open for anyone to join and become a node or miner.

Public Key (Public Address) The key or address of an entity in a PKI which is publicly visible in the network and controlled by the holder of the private key.

Public Key Infrastructure A type of infrastructure in digital networks which handles the issuing of unique digital certificates or credentials. Allows individuals or entities to verify their identity with the use of public and private keys.

Public Ledger A ledger which content can be read by anyone, regardless of it being permissioned or permissionless.

Public Sector The part of a society or economy which is directly controlled or owned by any level of the government.

Private Key The private key connected to a public key which is used to verify ownership through digital signatures or decrypt messages.

Private Ledger A ledger which content can only be read by authorized parties.

Proof of Authority A consensus mechanism used in permissioned ledger networks to distribute the authority of block proposition and validation to predefined network validators.

Proof of Work A consensus mechanism used in permissionless ledger networks which deters malicious activity by requiring proof that work has been conducted. The enabler of a functioning P2P blockchain network.

SHA-256 A CHF commonly used in blockchains.

Smart Contract An immutable, self-executing program encoded in a blockchain.

viii

Socio-Technical Landscape The macro-level of the MLP framework, i.e., the surroundings of a socio-technical regime, including, e.g., macro-politics, macro-economics, or environmental changes.

Socio-Technical Regime The meso-level of the MLP framework, i.e., the interlinked network of actors, characteristics, technology, and principles of behavior in an established system.

Soft Fork A change to the blockchain protocol which is restrictive, meaning that entries following the new protocol are accepted by older protocol versions.

Technological Lock-in The evolving process of a society’s economic and technological path dependency resulting from a specific technology becoming dominant in a market.

Token A physical or digital object representing some type of value.

Turing Complete The ability of a computational system to perform any type of computation.

Wallet A name for the private and public key pair used in blockchains to store value, commonly in the form of cryptocurrency.

ix

V. Foreword

I wish to dedicate this thesis to all future students about to write a master thesis. It is a tedious and

ambiguous process, which occasionally feels like it is draining your very essence. Do not doubt

yourself, keep your eyes on the prize, and do not underestimate the time it takes to transform

thoughts into text. Do this and all will work out in the end. Best of luck to you all.

I would like to extend my sincerest gratitude to everyone who has helped me complete this thesis.

The interviewees for contributing with their time and knowledge, without them this thesis would

not have been possible. Knowit Secure for accepting my proposal and lending me support and

resources as I needed them. My supervisors for contributing with insights and guiding me during

the work process. Finally, everyone else who has contributed to my work by spending their

precious time to provide me with feedback and support.

Thank you!

Johan R. Jonsson

1

1 Introduction

This chapter aims to introduce the thesis from several perspectives. Section 1.1 presents a

contextual background to blockchain and the Swedish public sector; the intent being to clarify

what is being researched and why. Section 1.2 contains the problematization which aims to

concretize the purpose, the problem formulation, and the research questions of the thesis. Section

1.3 presents the targeted contribution, delimitations, and limitations of the thesis. The aim being

to specify what is, and what is not, focused on. Section 1.4 consists of the thesis outline which

clarifies the structure of the thesis.

1.1 Background

When the computer was introduced it enabled the digitization, storage, and processing of vast

amounts of information. When the Internet was introduced it enabled the global transfer of

information; it essentially revolutionized the way humanity distributes information. Now,

blockchain is on the horizon. Blockchain is expected to improve trust, transparency, and control

of value in a similar way to how the Internet improved the distribution of, and access to,

information (Tapscott & Tapscott, 2016). It has the potential to enable the secure transfer of value,

the personal right to value, and the capability to confirm that information has not been unlawfully

altered. Whilst at the same time reducing - or removing completely - the need to place trust in

others (Swan, 2015; Walport, 2016). Essentially, this means that the need for a trusted third party

to mediate in the exchange of information and value is expected to be diminished.

The Swedish public sector has evolved for hundreds of years and is often considered to be a mature

and stable apparatus. The evolution of the modern public sector has historically been a slow

process with occasional leaps forward due to new innovations. The most recent and major

technological breakthrough came with the computer and Internet revolution. The digitization of

Swedish society’s different parts is an ongoing process that has already created numerous

possibilities. The public sector plays an important role in this and is actively digitizing their services

to improve overall societal management (Regeringskansliet, 2017). However, it is often argued that

Sweden is straggling behind when it comes to the digitalization of the public sector, because of

previous political choices and an abundance of restrictive legacy systems (Statens Offentliga

Utredningar, 2017). In the UN’s E-Government Development Index rankings, Sweden was ranked

number one in 2008, fell to rank fourteen in 2014, and had recovered to rank six in 2016 (United

Nations, 2016). As Sweden strives to be a leader when it comes to e-governance (Regeringskansliet,

2017), action must be taken to reach back to the 2008 ranking as leader. However, it is not a simple

or quick task to make changes and implement innovation in the incumbent socio-technical regime

that constitutes the public sector. The IT systems are intertwined with different solutions and

decisions must undergo lengthy bureaucratic and legal processes before change is enacted (PS13,

PS14&15). There are strict protocols and legal regulations in place to ensure availability and

information safety. Funding for improvements are included in actor budgets but these are kept

tight to reduce the costs for the taxpayers (PS12, PS19).

Blockchain has the potential to be an important part of future solutions for the public sector which

could contribute towards Sweden becoming a global leader within the digitalization of societal

2

management (Cheng, et al., 2017; White, et al., 2017; Atzori, 2017). This would be done by creating

secure, transparent, and immutable solutions tailored to match relevant needs of the public sector.

These needs and solutions could be within the fields of, e.g., identity management, property deeds,

voting, vehicle registration, information networks, tax management, and certificates (Walport,

2016; Swan, 2015; Tapscott & Tapscott, 2016; Kshetri, 2017). However, as one fundamental

reason for creating the blockchain was to reduce, or completely remove, the need for a trusted

mediating third party, interesting questions arise as to the compatibility between the technology

and the state. As the government and governmental agencies are, in essence, mediating third parties

between members of society, it is ambiguous how this new technology fits into the public sector

(Atzori, 2017).

Globally there are several government-run projects currently exploring potential uses of the

technology. These are, however, almost exclusively in an exploration phase and few actual

implementations are live. Most in-use cases being explored concern property deeds, currencies,

identity management, patient journals, and foodstuff (MyungSan, 2018). The circumstances in each

nation are naturally greatly varying. This includes the level of corruption, digitalization, trust for

the state, and the current public sector infrastructure. Sweden, in relation to most other nations, is

a country with low corruption, high trust in public institutions, and a developed digital

infrastructure (United Nations Development Programme, 2016; Transparency International, 2018;

Statskontoret, 2017; SOM-institutet, 2017; Holmberg & Weibull, 2013). The outset and substantial

need for a ‘trust’ technology such as blockchain, therefore, differs greatly from developing

countries where corruption is high, and trust is low. The already high standards are however no

reason to not invest further in this potentially revolutionary technology, especially with the set goal

of being a leader in digital public sector management. The public sector is widely seen as an entity

that is slow to change and adopt new technologies. We are currently witnessing a unique situation

where the public sector is exposed to a technology in its early innovation stages which shows

potential for both efficiency enhancement of incumbent infrastructures and complete disruption

of systems (Kandaswamy & Furlonger, 2018).

In this context, it is important to realize that there is no community consensus on the definition

of ‘blockchain’. The hype around Bitcoin and blockchain has been immense and everyone has

their own definition of what it constitutes (Furlonger, et al., 2017). These definitions vary greatly

in terms of being liberal or strict. Strict definitions argue that blockchains must fulfill certain criteria

to be called blockchains, whereas the liberal definitions are open to using bits and pieces of the

technology suitable for their particular use cases. This has led to a situation where people have

very different views of what a blockchain is and the level of knowledge is still highly diverse both

inside and outside the blockchain community.

A socio-technical transition for the public sector regarding the adoption of blockchain is a potential

outcome for the years to come. The multi-level perspective framework is a favorable tool for

analyzing such transitions (Geels & Schot, 2007). However, as the technology is in such an early

stage of innovation, such a transition has just begun and, thus, cannot be analyzed based on

previous cases. In this thesis, an established way to explore the transition at this stage is based on

the perception of blockchain in relation to its affordances, i.e., what it can be used for (Gibson,

1979). The combination of a multi-level perspective and perceived affordances is a previously

3

uncharted area of socio-technical transition research. It shows promise of being a valid and reliable

analysis tool for technologies in an early stage of innovation. The perception of blockchain’s

affordances is highly divergent both in the public sector and in the blockchain community. In

extension, everyone has different beliefs - and expectations - of blockchain, which affect the

potential transition pathways into the sector. The technology and its adoption are in a state of

infancy that need to be explored further (MyungSan, 2018; Boucher, et al., 2017).

1.2 Problematization

The purpose of this thesis is twofold. Firstly, it aims to analyze how the perception of a new

technology’s affordances affects a potential socio-technical transition from a multi-level

perspective. Secondly, it aims to investigate what potential benefits blockchain could provide to

the Swedish public sector. This includes identifying solutions that bring value by increasing trust,

efficiency, and transparency in the sector, as well as identifying the adoption potential in the sector.

The thesis’ problem formulation can be expressed as follows: the Swedish public sector is

straggling behind when it comes to digitalization if compared to other developed nations’ and

other parts of Swedish society. Blockchain technology has the potential to be an integral part of

future digitalization, but it is currently uncertain what value blockchain has to offer the public

sector. The perception of blockchain’s affordances is a key aspect to potential future investments

in the field. The literature regarding blockchain mainly focuses on technical aspects, potential

disruptiveness, or different potential use cases of the technology (Adams, et al., 2017; Boucher, et

al., 2017; Swan, 2015). The literature on socio-technical transitions has mainly focused on

sustainability and on specific industry sectors such as, steel, water, transport, energy, and sanitation

(Markard, et al., 2012; Wesseling, et al., 2017; Geels, et al., 2016). This leaves three gaps which this

thesis aims to target. First, the gap concerning the potential transition of blockchain into the public

sector based on its perceived value. Second, the gap in socio-technical transition literature

considering the importance of perceived affordances in early stages of innovation. Third, exploring

socio-technical transitions from the aspect of the public sector, rather than a private sector. These

gaps in the literature leave many questions unanswered which would be useful in the understanding

of the different fields. Three specific research questions have been formulated to address this

purpose and problem formulation.

How can the perceived affordances of a technology affect a socio-technical transition in its early stages?

How can blockchain bring value to the Swedish public sector?

What actions are needed from the public sector to enable leveraging on blockchain?

The first one is of a theoretical nature and in line with the first aim of the purpose. The second

two are more practical and in line with the second aim of the purpose.

4

1.3 Contribution, Delimitations, and Limitations

The contribution of this thesis can be divided into theoretical and practical dimensions. The

theoretical contribution that is strived to be achieved is to further expand the field of

socio-technical transitions. This is done by exploring how the perceived affordances of a new

technology in its early innovation stages affect a potential socio-technical transition. In extension

this was conducted by combining the multi-level perspective framework (Geels & Schot, 2007)

with an adapted approach of affordance theory (Gibson, 1979). This combination provides a new

approach which targets the gaps identified in the previous section. Secondarily, the academic

knowledge of blockchain technology is furthered by exploring how it is suitable for the societal

management of highly developed nations. Included in this is the exploration of current needs of

public sector actors that could be satisfied blockchain technology. Furthermore, it contributes to

the knowledge of how a highly developed nation’s public sector actors can further a transition

towards implementing blockchain technology within their digital infrastructures and organizations.

The practical contribution is twofold. First, it attempts to bring clarity to all stakeholders about

the potential of blockchain technology within the public sector, since it is a sphere of technology

that is obscured for many people. Second, it provides advice on how to further a future adoption

of the technology in the sector. The main targeted stakeholders are high and middle level officials

and managers within the public sector, due to the top-down decision-making structures in force.

Further important stakeholders are people working with(in) the public sector, such as public

officials, consultancy firms, or other solution providers. However, an important tertiary target is

the public itself because an enlightened public will, in the end, benefit all of society as the demand

for improvements increases.

In this research, the focus of the outcome is solely on the Swedish public sector. The conclusions

can, however, be interesting and applicable for other Nordic countries due to their similar level of

societal development and values. It could also be applicable within the EU as a desire for further

digital cooperation can be observed in the union. Furthermore, the findings about blockchain as a

technology are universal and applicable globally.

From a blockchain perspective, the set delimitations are blockchain and blockchain-related

solutions, e.g., distributed ledgers, public key infrastructures, cryptographic hash functions, and

smart contracts. Cryptocurrencies are not focused on in this thesis. They are part of the thesis, but

the potential of a new type of monetary system is not because it is a field of research which requires

exclusive focus and resources due to its magnitude. The limitations of this research are the limited

timeframe of the research, which spanned between January and May 2018, as well as the

geographical restrictions for in-person interviews. The potential use of – and transition to –

blockchain, within the public sector is analyzed with a timespan spanning from 2018 to 2025 in

mind. This delimitation was set because the technology is still in a stage of infancy, meaning that

predictions beyond that timespan are highly speculative to an extent of endangering the validity of

the research. It would be much like speculating about e-trade, social media, or smartphones back

in the 1990s when the Internet was in its infancy. However, some futuristic aspects beyond 2025

are presented for the sake of argument and discussion but are in those cases stated as such.

5

1.4 Thesis Outline

This section explains the structure of the thesis by briefly describing each chapter and how the

chapters correlate to each other.

Chapter one presents the introduction to the thesis. The aim is to introduce the reader to the

context and structure of the thesis, as well as to explain the reason why the chosen problem is

relevant. This includes a short background to the topics, the problematization, contribution, and

outline of the thesis.

Chapter two presents the thesis’ findings about blockchain as a technology. The aim is to educate

the reader about the fundamental principles of how the technology functions and what it can be

used for. This understanding is needed to be able to fully grasp the analysis, discussion, and

conclusions of the thesis. It is also important to understand to be able to make correct decisions

regarding blockchain. The chapter explains how the technology works in a comprehensible way to

increase readability for readers that lack previous knowledge about the field. It also elaborates on

the potential use cases that have been found during the research.

Chapter three presents the theory and frameworks used in the thesis. The aim is to provide a

comprehensible presentation of the theoretical concepts applied to the empirical case explored.

The chapter elaborates on the concepts of innovation theory, technology adoption, affordance

theory, general purpose technology, and the multi-level perspective on socio-technical transitions.

Chapter four presents the methods used to produce the thesis and its findings. The aim is to clearly

show the reader how the research was conducted and explain why certain choices were made. The

chapter elaborates on the research approach, data collection, research quality, and the

operationalization of the theoretical concepts.

Chapter five presents the findings and the analysis of the collected data. The aim is to display the

empirical findings by breaking down the collected data in a comprehensible fashion. The data

collected is analyzed using the theory and theoretical frameworks to achieve the most genuine

representation of the empirical case as possible.

Chapter six presents the discussion and synthesis of the thesis’ findings. The aim is to clearly

answer the established research questions and further elaborate on the meaning of the findings.

The main focuses of the chapter include the value of blockchain for the public sector,

recommendations to the public sector, and potential transition pathways.

Chapter seven presents the final conclusions drawn from the thesis research. The aim is to

highlight the key findings of the research as well as to connect them to a broader perspective.

Research areas not covered by this thesis that could be interesting scopes for future research are

also suggested.

6

2 Blockchain

This chapter aims to explain what blockchain technology is and how it functions. It presents the

technology-specific findings of this thesis. These findings need to be understood to enable fully

grasping the analytical parts of later chapters. Section 2.1 presents a general overview with the aim

of elaborating on the concept and history of blockchain. Sections 2.2 through 2.4 aims to explain

the three core technical aspects of the technology: distributed ledger technology, cryptography,

and consensus structures. Section 2.5 elaborates on logic of smart contracts and their usages.

Section 2.6 finalizes the chapter by presenting identified use cases deemed to be of significance.

Note that the exact wording in the definitions applied in this thesis may not coincide with those

of all actors in the community. As the community lacks standards, many words are used

synonymously and often overlap in their meaning.

2.1 General Overview

Blockchain is essentially a radically new way of digitally handling and storing ledgers. It is based

on old technologies and principles that are used in ingenious new synergetic ways to achieve new

features and functions. These older technologies and principles generally relate to cryptography,

distributed databases, and consensus mechanisms (Swan, 2015). These ledgers can contain

identities, ownership rights, currencies, transactions, medical records, certificates, and contracts –

or any representation of value or information that is desirable. A decentralized storage system in

combination with advanced cryptography ensures that the blockchain technology can guarantee

that the registries are kept secure and free from manipulation (Wattenhofer, 2017; The World

Bank, 2017; Iansiti & Lakhani, 2017). Figure 2.1 visualizes, in a simplified manner, the new

blockchain layer of trust and value on the internet in relation to the old information layer.

Data is read, written,

or copied between actors

Value is established or

transferred consensually

throughout the network

Types of Data

• Numbers

• Text

• Images

• Videos

• Music

Trust & Value Layer on the Internet

Types of Value

Intangible

• Currency

• Shares

• Copyrights

• Patents

• Data Integrity

Tangible

• Real Estate

• Vehicles

• Goods

Obligations

• Contracts

• Pledges

Information Layer of the Internet Blockchain: Internet of Trust & Value

Figure 2.1 Blockchain: Trust and Value, adapted from Killmeyer, et al. (2017, p. 5)

7

It is not an exaggeration to claim that most people today think of Bitcoin when they hear the word

‘blockchain’. For many, the two terms may even be considered synonymous (Tapscott & Tapscott,

2016; Swan, 2015). This is far from accurate and the need to differentiate between them is great.

Bitcoin is first and foremost a cryptocurrency, i.e., a digital asset built on a cryptographically secure

and distributed blockchain (Bradbury, 2015). The confusion for many likely comes from the fact

that the Bitcoin network was the first of its kind and still provides the most valuable blockchain

and cryptocurrency network in terms of trade volume and market capitalization to date

(Coinmarketcap, 2018). The technologies behind blockchains have been in development since the

1990’s, but it was with the publishing of Satoshi Nakamoto’s white paper in 2008 about the

theoretical peer-to-peer (P2P) Bitcoin network that it started showing potential for greatness. Note

that Satoshi Nakamoto is a pseudonym to an, as of yet, unknown individual or group. What

differentiated Nakamoto’s theoretical network from previous attempts at digital currencies was the

fact that he proposed functioning solutions to two fundamental challenges: the double-spend

problem and the Byzantine Generals’ problem (Nakamoto, 2008). Simply put, the double-spend

problem is the need to verify that the entity sending value has not already sent it before and the

Byzantine Generals’ problem is guaranteeing the validity of messages sent within the distributed

network (Wattenhofer, 2017).

Since then, the Bitcoin network has expanded exponentially, and in its wake thousands of other

blockchains and cryptocurrencies have been developed. These new blockchains often focus on

solving issues that the Bitcoin blockchain cannot handle. They compete by optimizing solutions

and services for whichever purpose they are created (White, 2017; Adams, et al., 2017; Maull, et

al., 2017; MyungSan, 2018). The second largest blockchain network is currently Ethereum.

Ethereum does have its own cryptocurrency, Ether, but the network was not created solely to be

a cryptocurrency to compete with Bitcoin. What makes Ethereum provide value is the fact that it

was created to be Turing Complete, i.e., able to run any type of programming computation.

Computer code can be interwoven into the Ethereum blockchain to create new unique systems,

networks, and smart contracts on top of the original network (Swan, 2015; Tapscott & Tapscott,

2016). These embedded smart contracts can autonomously execute whatever actions they are

programmed to enforce once certain criteria are fulfilled. You can even create a functioning

cryptocurrency network on top of the Ethereum blockchain, e.g., a Unicoin to be used on

campuses. Smart contracts can be used in the Bitcoin blockchain as well, but the type of

programming is restricted because of how the protocol is constructed. These blockchain networks

are just examples to demonstrate the concept, there are countless others currently active and under

construction. However, it is worth noting that both the Bitcoin blockchain and the Ethereum

blockchain runs on fully distributed public networks. Neither of these are the focus of this thesis,

but they are of importance when it comes to understanding blockchain and its origin.

Three fundamental principles have been identified that keep blockchains safe from hacking in the

form of fraud, theft, and other unlawful changes. These principles are network distribution and

decentralization, advanced cryptography, and lastly a consensus mechanism that ensures network

unanimity. They are all important to understand in order to grasp what blockchain is and how it

functions. Hence, they are presented and explained in the following sections. Smart contracts also

play a major role in why blockchain shows a lot of potential. Thus, they are, along with some

8

identified use cases, also explained in this chapter. However, it is of importance to understand that

there is no general consensus to the definition of blockchain (Furlonger, et al., 2017).

2.2 Distributed Ledger Technology

Distributed ledger technology (DLT) is a core principle of a blockchain network (European

Central Bank, 2017; Maull, et al., 2017). However, many people refer to blockchain when they are

essentially talking about DLT. DLT is one central part of blockchain, but an abundance of

technical solutions can be built on DLT and achieve similar advantages to blockchain without

them actually being blockchains (Walport, 2016; The World Bank, 2017). Therefore, the terms are

often bundled together and used interchangeably. In this thesis, the definition of a blockchain is

rather strict but still flexible. In some cases, what here is referred to as blockchain may be argued

to fall solely under DLT when the strictest definitions are used. This is of minor importance as the

focus of the thesis is not of a strictly technical nature. Of note is that blockchain has also

highlighted the potential of DLT which is positive for that technology’s development, as stated by

expert interviewees. To most, it does not matter exactly what specific technology is used, as long

as the solutions provide value.

DLT is a further development of distributed databases. Distributed databases have long been used

to spread information in closed systems for, e.g., access or redundancy reasons. These systems are

controlled and regulated through one or more central master databases (The World Bank, 2017).

What differentiates DLT from distributed databases is the fact that the responsibility for database

management is shared by all nodes in the system, i.e., participating computers or servers upholding

the shared ledger. The ledger information, i.e., data, is exactly the same on all nodes. These nodes

are naturally spread out both geographically, authorially, and influentially (Seidel, 2017; Scott, et

al., 2017). This leads to a network where there is no single point of failure, e.g., in the form of a

central server. The harm from a hacked or malicious node is therefore minimal as additions to the

ledgers must be accepted in the system through common consensus. Nodes can also go offline for

any amount of time and simply rejoin the network as long as they download the latest version of

the ledger (Tapscott & Tapscott, 2016). The consensus protocol is predefined, and the consensus

mechanisms vary depending on the reason for the ledgers existence and are built upon different

cryptographic solutions.

Permissionless Networks

There are currently two main types of networks built on DLT based on the node participation

access model – these are permissionless networks and permissioned networks. In permissionless

networks, anyone with the necessary hardware and internet connection can join the network and

become a node to confirm and validate the integrity of the ledger and new entries. Since the

network is permissionless the code is always open source (Boucher, et al., 2017; Nakamoto, 2008).

In a permissioned network, permission to become a node must be given by the owners of the

network or through network consensus, depending on the ledger protocol. A visualization of the

different types of networks is displayed in Figure 2.2. Which nodes have the right to propose new

entries to the ledger also varies. In a permissionless ledger, every node also has the authority to

propose new entries in the ledger. The advantages in this lie in the fact that there is no need for a

trusted third party. The authority is hence distributed and rests completely on the network as a

9

community (Seidel, 2017; Tapscott &

Tapscott, 2016). The ledger is immutable,

completely transparent, and accessible to all.

The main disadvantages are the lack of control

and the high energy consumption needed to

maintain the system. There is no one to turn to

if something goes wrong and further

development is restricted through the need of

majority consensus (Adams, et al., 2017).

Permissionless ledgers usually must be built as

complete blockchains to handle technical

issues that are otherwise hard to solve.

Permissioned Networks

In permissioned ledgers there are many

different models for determining which nodes

have the authority to propose new entries. This

is also predefined and decided by the owners

or by network consensus. The advantages of

this is that a certain level of control over the

network can be achieved whilst still gaining

DLT benefits while utilizing more efficient

consensus mechanisms with lower costs and

environmental impact (Scott, et al., 2017).

Information can be spread efficiently and with

the certainty that it has not been changed since

its entry. Permissioned blockchains can hence

be constructed in ways that remove the

speculation aspects present in permissionless

blockchains (Atzori, 2017; Berke, 2017).

Transparency to everyone with access to read

the ledger is also achieved, making auditing

easy. The disadvantages are mainly connected

with the fact that trust must be placed in the

actors hosting the nodes that maintain the

network. The host must be trusted to have

genuine cause and incentives to uphold the

integrity of the ledger and not make, e.g., false

or malicious entries. Permissioned ledgers do

not necessarily need to be complete

blockchains and many DLT benefits are made

available even without the complete

immutability ensured by blockchain.

Distribution of LedgersCentralized Ledger

Permissioned Distributed Ledger

Permissionless Distributed Ledger

The entire ledger is held by all network nodes. Anyone

can join the network and become a node. New entries

are broadcast and accepted if network criteria are

fulfilled. Malicious or unlawful entries are denied.

Trusted central party maintains a master database. Parties

keep local databases that are verified by comparing with

master database.

The entire ledger is held by all network nodes. Only

trusted parties allowed as nodes. Entry acceptance

criteria kept simple since nodes are trusted.

Figure 2.2 Distribution of Ledgers, adapted from The

World Bank (2017, p. 7)

10

Public and Private Ledgers

The second important way to distinguish between ledger types is by the readability access model -

these can be public ledgers or private ledgers (Boucher, et al., 2017). Public ledgers are just that,

public. Anyone with an internet connection can access, or download, the ledger to read it for

whatever purpose they may have. Permissionless ledgers are by logic also always public. This

concept is clarified because of the importance of knowing the difference between permissionless

and public. Private ledgers are kept private, only predefined parties are given access to read what

is registered on the ledger. This could, for example, be actors in a supply chain, an industry

consortium, or a governmental agency. The

main reason to keep the ledger public is to allow

for complete transparency which heightens

trust from the public (Killmeyer, et al., 2017). In

many cases the trust of the public is irrelevant

and the trust between, e.g., industry actors can

be increased through mutual transparency

(Kandaswamy & Furlonger, 2018). In private

blockchains, controlling who has access to what

information has many benefits concerning

privacy. A matrix of the different ledger types is

shown in Figure 2.3 and the taxonomy of when

what type of ledger is desired is visualized in

Figure 2.4. Note that the classification of

distributed ledgers is the same as for

blockchains.

Public permissionless ledgers, or just

permissionless ledgers, were first successfully

introduced by the Bitcoin blockchain

(European Central Bank, 2017; Adams, et al.,

2017). They are by many considered to be truly

revolutionary with full disruptive potential as

they allow for system networks where the

central or third party actors are made

completely irrelevant. Cryptocurrencies built on

permissionless ledgers do, as an example, allow

for financial systems completely independent of

banks. It is the first type of currency, except

perhaps shell currency, which is not issued or

backed up by a nation state through a central

bank (Senate Canada, 2015). One major

disadvantage of permissionless blockchains is

currently that they practically have to be based

on a highly energy inefficient consensus

mechanism called proof of work, making the

maintenance costs high and arguably

Distributed Ledger Taxonomy

Many

Anyone

Owners and

trusted

stakeholders

Anyone, by

untrusted

consensus

OneNumber of

ledger copies?

Who can access

the ledger?

Who maintains

the ledger

integrity?

Traditional

Database

Permissionless

Ledger

Permissioned

Public Ledger

Permissioned

Private Ledger

Owners and

trusted

stakeholders

Figure 2.4 Ledger Taxonomy, adapted from Walport

(2016, p. 19)

Ledger Classification Matrix

Op

enRestricted

Res

tric

ted

Node Participation

Acc

ess

to R

ead (Public)

Permissionless

Ledger

Open

Public

Permissioned

Ledger

Not

Applicable

Private

Permissioned

Ledger

Figure 2.3 Ledger Classification Matrix

11

environmentally unsustainable (Adams, et al., 2017). Proof of work is explained further in section

2.4.

Public permissioned ledgers maintain the full transparency aspects which allows for a public

scrutiny and auditing. They can be used to allow heightened trust for a system whilst still

maintaining control, which is consensually shared between network actors. Private permissioned

ledgers enable transparency and efficient information sharing between actors in a closed system

where public scrutiny is undesirable. External auditing can still be achieved by allowing the auditor

read access. The degree of decentralization for the different ledger types is visualized in Figure 2.5.

2.3 Cryptography

Cryptography is one of the core principles upon which blockchain technology is constituted (Swan,

2015). It is a very broad and intricate field within computer science which often requires high level

expertise to understand even partially. This section aims not to go into any depth in the matter,

but rather present the key cryptography concepts used in blockchain technology and explain them

in a simplified manner. The purpose of this is to highlight why it is important and what it enables

since this is key to understanding why blockchain is useful. The concepts that are presented are

cryptographic hash functions, public key infrastructures, Merkle trees and lastly the blockchain

structure is explained.

Hash functions have many usage areas, e.g., within sorting, mapping, finding, verifying, or

encrypting data. The general function is to take an arbitrarily large input string of data - e.g., text,

pictures, documents, files - and with an algorithm produce a string of data of predefined size

(Stamp, 2006). This process is called hashing and the new string of data is called a hash. It usually

consists of a string of alphanumeric characters. If the same input is entered into the hash function

several times, the underlying algorithm will always produce the same hash. However, two different

inputs can produce the same hash.

Cryptographic Hash Functions

Cryptographic hash functions (CHF) is a subset of hash functions and is a fundamental pillar of

modern cryptography. CHFs fulfil a set of principles which makes them suitable for cryptographic

usage (Franco, 2015). The first one is that they are deterministic, i.e., they produce hashes which

are practically infeasible to reverse in order to generate the input. The only way to find the input

would be by guessing and trying every possible input. The second is that even the slightest change

in the input data will produce a completely different hash (Stamp, 2006). The third is that the risk

of two inputs producing the same hash must be inconceivably small. Figure 2.6 visualizes the

Degree of Decentralization

Centralized Decentralized

Classic Central

Ledger

Private Permissioned

Ledger

Public Permissioned

Ledger

Public Permissionless

Ledger

Figure 2.5 Degree of Decentralization, adapted from Walport (2016, p. 35)

12

process of hashing using the CHF SHA256.

SHA256 is a common CHF which is, for

instance, used in the Bitcoin blockchain

(Tapscott & Tapscott, 2016).

Merkle Trees

When using CHF’s, there are several ways of

making the handling of them easier and more

efficient. For blockchain, one important way to

do this is by using Merkle trees. The structure

of a Merkle tree is visualized in Figure 2.7.

Merkle trees are essentially a succession of

hashing hashes collectively, to produce a final

hash, the Merkle root (Franco, 2015). Each initial input can be considered leaves on a tree. The

hashes of these inputs are then the input for the next hash, the branches of the tree. This process

continues until all branches are connected in a final hash. This structure allows for the secure and

efficient verification of the inputs in sizeable

data structures. Full nodes in a blockchain

network will run the entire blockchain with all

of the entries, transactions, and hashes

included. It is not necessary for all nodes in the

network or for someone who just wants to

confirm a transaction to run the entirety of the

blockchain (Franco, 2015). These nodes can,

with the help of these types of structures,

maintain only the part of the chain they need

and then request any extra data from a full

node, should they need it.

Public Key Infrastructures

Public key infrastructure (PKI) is the collective name for the processes and technology involved

in a system for digital certificates using public key encryption. There are many different types of

encryption, key generation, digital signing, and hash functions used in PKIs (Stamp, 2006). The

purely technical aspects are not explained here, but common techniques used are, e.g., RSA and

elliptic curve cryptography (Franco, 2015). Public key encryption has two components that are

connected, a private key and a public key that both consist of a long string of characters. The

private key is only known to the owner of the key pair and the public key is visible publicly in the

system. The two keys are mathematically connected, and it is unfeasible to derive the private key

from the public key. The public key can be considered a public address to the owner. The key pair

generally enables two functions – authentication and encryption. The private key is used to

cryptographically authenticate that the owner was indeed the sender of a message, which can be

proven by anyone with the paired public key. This is essentially a digital signature. The public key

is used as an address to which messages are sent, as well as to encrypt messages which are only

decryptable with the paired private key (Stamp, 2006). If the private key in the pair is lost, the

public key typically becomes useless (Tapscott & Tapscott, 2016).

Merkle Tree

HGHHAB HEFHCD

HABCD HEFGH

Merkle Root - HABCDEFGH

Inputs A-H

A B C D E F G H

H = Hash

HE HFHC HGHD HHHBHA

Figure 2.7 Merkle Tree Structure, adapted from

Franco (2015, p. 118)

Cryptographic Hash Function

“Quis

custodiet

ipsos

custodes”

SHA256

Input Hash

71424805AC8

EC1C92009F

E2225583C516

39A456783B38

C18A0E6ED3

A1E2A2835

Fingerprint of input

(practically unique

hash)

Any type of

data, file,

document, etc.

Cryptographic

Hash Function

SHA256 is one of

many hash

functions

Figure 2.6 Cryptographic Hash Function (Stamp,

2006)

13

In a blockchain supporting cryptocurrency, a key pair is called a wallet. The messages sent are in

the form of transactions (other information can often be added as well). The cryptocurrency in the

wallet is directly linked to its public address in the blockchain (Franco, 2015; Swan, 2015). Money

sent to the wallet is directed at the address. Money can only be sent from the wallet to another

address with the signature provided with the private key. This means that if the owner has kept

her private key safe, only she can send money from the wallet. As blockchains are (mostly)

completely transparent, everyone in the system can see exactly how much a wallet contains, as well

as from and to whom each transaction is made. This effectively means that most blockchains are

not anonymous, but rather pseudonymous (Tapscott & Tapscott, 2016). In the same way as

cryptocurrency is attached to a public address, so can other information be, e.g., verifiable hashes

of documents, health journals, or tokens representing property, products, or services (Swan, 2015).

These can be controlled in the same way using the key pair. Meaning they can be spent or given

access to with the private key, encrypted if the information is sensitive. The messages sent do not

necessarily have to be directed towards an individual’s address either, as an example a hash of a

signed document could be added to a block for verification purposes only.

In a permissionless blockchain these key pairs are created by the owner herself as there is no

trusted central issuer of keys. A fundamental issue in these types of blockchains is that if a key is

lost, there is no way to recover anything connected to the public address. In permissioned ledgers

this role can be consensually granted to a trusted party, e.g., a governmental agency or marketplace

provider. Here there can be solutions put in place where the impact of a lost key could be severely

reduced, since permissioned ledgers allow for more control, as explained by expert interviewees.

If sufficient proof of ownership can be provided there are possibilities to return the assets to the

owner. This naturally has both advantages and disadvantages, but if governed well, safety and

efficiency benefits are possible.

The Chain of Blocks

The namesake of blockchain is the structure of the ledger as a chain of blocks. Transactions or

other entries are grouped into blocks for technical reasons, the main ones being network

synchronization speed, transaction speed capacity, ledger size, and scalability. The chain structure

comes from the fact that the blocks are chained together with the use of cryptographic hash

functions (Nakamoto, 2008). Each block of information is hashed separately to create a unique

hash, if any content is changed in the block, the hash would change. The linking of blocks is

enabled by including the previous block’s hash in the following block. This means that if any

information in any of the blocks in the chain is altered, it will change the hash of that block,

effectively exposing the change instantly as none of the following blocks hashes would match

(Nakamoto, 2008). The blockchain structure is visualized in a simplified manner in Figure 2.8, the

entries are usually also hashed together in Merkle trees to allow for storage and verification

benefits. The block structure also slows the network down which allows nodes to synchronize

more easily and handle more entries. If each transaction was handled separately, it would be

practically impossible to keep a synchronized and unanimous ledger on the nodes because of

network and validation latency.

In each block the time is included, this enables the timestamping of blocks as hash then also

includes the time. New blocks proposed to be added to the blockchain will generally be denied if

14

the timestamp is considered to be invalid based on chosen time span criteria (Nakamoto, 2008).

In permissionless blockchains this time span is generally rather wide to safeguard against network

latency, whereas in permissioned blockchains this is likely much stricter as parameters can be

controlled more efficiently. Particularly in permissionless blockchains there is also a nonce, i.e.,

random string of characters, included in each block, the nonce is a vital part in the consensus

mechanism proof of work, which is explained in section 2.4.

The first block in a blockchain is called the genesis block (Tapscott & Tapscott, 2016). The genesis

block contains the original protocol and has no previous hash to add to its own hash. The number

of blocks preceding a block in the blockchain is called the block height, hence the block height of

the entire blockchain is the number of blocks minus one. As the block height grows so does the

security and immutability of the previous blocks, since all the blocks after a block would need to

be remade and validated should anyone attempt to tamper with an entry in that specific block.

Block 500 is, as an example, more secure than block 1000 as it has 500 more blocks that need to

be revalidated if it were to be changed. The genesis block is hence the most secure in this aspect

as it has the most blocks chained after it. In extension this means that the newest blocks are the

most vulnerable in the chain (Swan, 2015).

Double Spending and the Byzantine Generals’ Problem

The two issues concerning a P2P digital currency that Nakamoto (2008) successfully addressed in

the white paper about the bitcoin network was double spending and the Byzantine generals’

problem (Nakamoto, 2008). Double spending is the issue of value being able to be spent twice.

Before the blockchain, any digital value could easily be copied and sent twice, much like an email,

unless a central authority like a bank kept track of all transactions. Blockchain solves this problem

by combining the unique owner addresses from the PKI, the public decentralized transparent

administration, and the chain of blocks connected with hashes containing the hash of the previous

block, all the entries ever made, and a timestamp. This all works fair and well, but then the

following issue is then how to make sure there is consensus in the distributed uncontrolled network

where there are no trusted communication channels, i.e., the Byzantine generals’ problem

(Wattenhofer, 2017; Franco, 2015). This is where the network consensus mechanism plays its role

together with the previously mentioned functions. In permissionless networks this is usually

handled with proof of work to add a new block to the chain, i.e., proving that valuable work has

been spent. In permissioned networks many other potential consensus mechanisms are viable.

Network consensus will be further explained in the following section.

Previous

HashTime Nonce

Entry Entry …

Block n

Previous

HashTime Nonce

Entry Entry …

Block n+1

Block and Chain Structure

Content of

block n is

hashed. That

hash is part of

the next block,

linking them

together.

Figure 2.8 Block and Chain Structure, adapted from Nakamoto (2008, p. 3)

15

2.4 Consensus, Authority, and Mining

Network consensus is a must for blockchain networks to function properly. The programming

code that a blockchain networks runs on, also known as a blockchain protocol, dictates how

consensus is achieved (Wattenhofer, 2017; Tapscott & Tapscott, 2016; Nakamoto, 2008).

Consensus

Consensus is essentially the agreement of what the ledger currently comprises, as well as what

blocks are allowed to be added to the blockchain. The consensus protocol generally dictates the

technical criteria needed to be fulfilled by entries and blocks to be valid (White, 2017; Swan, 2015).

These criteria can include, e.g., entry or block size, entry structure, valid result from consensus

algorithm, double-spend checks, and signature confirmation. The protocols differ widely between

permissioned and permissionless blockchains, and also depending on what value or information it

is made for, e.g., identity, health journals, or cryptocurrencies. In permissioned blockchains the

authority to propose new entries in blocks is regulated. Some or all network actors can be allowed

to initiate entries and the same goes for proposing new blocks, as explained by expert interviewees.

There could, for instance, be one or more master nodes who are the only actors allowed to propose

new blocks. The blocks then also have to be validated by all or a majority of the other network

nodes to be accepted in the blockchain. These nodes given authority are called validators. These

consensus mechanisms are usually network unique but could fall under the terms proof of

authority (PoA) or federated consensus (Kandaswamy & Furlonger, 2018; Berke, 2017). This

essentially means that whoever has the authority to propose blocks and whoever must agree that

they are valid are contractually regulated between the network actors. Contractually in the

blockchain protocol, but almost certainly also in physical contracts to safeguard against judicial

issues, according the interviewed experts.

In permissionless blockchains, there are no restrictions concerning who has authority to initiate

transactions or propose new blocks (Walport, 2016). Consensus on what entries and blocks should

be valid is defined in the protocol and network majority decides what is accepted. When

transaction or information entries are initiated, they are broadcast to all nodes in the network

(Bradbury, 2015). Valid entries are accepted by the nodes and spread further in the network and

invalid ones are rejected (European Central Bank, 2017). The nodes that want to confirm new

entries and compete in producing the next valid block are called miners. When these nodes have

gathered entries and built a valid block containing them, they broadcast the proposed new block

in the network. If the block is indeed valid it will be accepted. Whichever blockchain is valid and

the longest is the one that will be accepted as the current one in the network. Since many entries

are often broadcast simultaneously, with each transaction the initiator can attach a small fee to

entice miners to include their transactions in the next block (Boucher, et al., 2017; Maull, et al.,

2017). This becomes a simple supply and demand system where the fee will go up if there are many

transactions waiting to be cleared. This can become problematic when the transaction capacity of

the network is limited as low transaction fees are one of the initially proposed benefits of

blockchains (Nakamoto, 2008).

Mining and Proof of Work

In permissionless blockchains, the as of yet only practically viable consensus algorithm is proof of

work (PoW) (Swan, 2015). There are other proposed theoretical consensus mechanisms for

16

permissionless blockchains, but currently the ones in use are in the end all dependent on a PoW

system. PoW is generally a function with the intention of deterring unwanted behavior in a system

such as spam or denial of service attacks (Atzori, 2017; Wattenhofer, 2017). This is achieved by

making service requests in the system cost some amount of work, i.e., value. By extension this

means it costs time and energy to produce the value used in the system (Tapscott & Tapscott,

2016). Shell currency systems are arguably an early kind of PoW system where work was required

to acquire the shells from the seabed (The World Bank, 2017). Proof that work has been performed

is needed for the value to be accepted. This means that the work also needs to be confirmable, in

the case of shell currency this would be done simply by making sure the shell was indeed a shell

and not a rock. This was viable as no way existed for making reliable fake shells. A key factor in

such a concept is the asymmetry between the amount of work needed in relation to the value

gained, as well as the ease of confirmability. Supply and demand equilibriums dynamically develop

so that the work needed corresponds to the value gained, otherwise inflationary or deflationary

trends appear. If a shell currency system is flooded by cheaply imported shells, inflation of shell

value is imminent. In the same way a steep reduction in shell supply will deflate the value of the

shells.

Blockchains functioning on a PoW concept are constructed based on two principles. The first

being that utilizing the blockchain, e.g., transacting, costs value, making any spam attempts

expensive. The second is that performing the task of verifying entries and proposing new blocks

requires work, which is rewarded with value in the form of digital tokens, i.e., cryptocurrency

(Nakamoto, 2008; Franco, 2015). The work is conducted in the form of processing power, i.e.,

spending time and electricity (energy), to make the necessary computations. This process is called

mining, which is an allusion to gold mining. Instead of the work put in being rewarded in a precious

metal, it is rewarded in ‘digital gold’, i.e., cryptocurrency (Adams, et al., 2017). Mining basically

functions in the following way: the miner that first manages to produce a valid block based on the

incoming entries is allowed to add an additional entry rewarding themselves with a predetermined

amount of cryptocurrency. Therefore, the system is of a competitive nature where all miners

compete for the reward. This results in a supply and demand system with two base influencing

factors: the value of the cryptocurrency (reward) and the number of miners (competing

computational power) (Nakamoto, 2008). Since the networks want to keep the time between

blocks under control, the amount of computational power (hash rate) needed to validate a block

is controlled by increasing or decreasing the difficulty of validation. The control mechanisms are

predetermined within the blockchain protocol. Otherwise blocks would be validated with ever

increasing or decreasing speed as miners increase or decrease the aggregate computing power

depending on the value of the reward (Boucher, et al., 2017). The validation difficulty is controlled

by changing what characteristics the blocks’ hash must have to be accepted. This is where the

nonce in each block plays its part. Miners hash the content of their proposed block with different

nonces until they produce a hash that is valid. The required nonce is completely random and must

be guessed, there is no way of knowing what it has to be (Nakamoto, 2008). The hash criteria are

usually that the hash must contain a predetermined number of consecutive zeros in the beginning

of the string. When difficulty needs to be increased the number of required zeros goes up, note

that this is usually regulated in the protocol based on the average speed of previous block. This

process is often likened with a lottery. The miner that first guesses the right nonce which together

with the block entries produces a valid hash is the winner. Having more computational powers

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means you can guess faster, increasing your chance of winning, much like having more tickets in

a lottery increases your chance of winning (Tapscott & Tapscott, 2016). To increase the chance of

winning, miners gather their computing power in mining pools. Mining pools have a higher chance

of winning as they can muster a higher aggregate hash rate. The rewards of the mining pool are

then split between the miners of the pool, with the share being directly dependent on the share of

computing power contributed (Walport, 2016).

Permissionless PoW blockchains are secure from manipulation since as long as a majority of

network nodes and miners are honest, malicious entries or manipulations are infeasible. To

manipulate the network, an attacker would need to control a majority of the computational power

in the network, this is called a 51% attack (Wattenhofer, 2017; Franco, 2015). If this is done, the

attackers could effectively manipulate what transactions are added to the blockchain as well as

reverse transactions. This is highly improbable as the cost to do this would be immense both in

hardware and electricity costs. Gathering a large enough group of miners to participate in such an

attack is also unlikely as these miners would risk having the value of their cryptocurrency being

diminished if the network would falter and become unstable. The integrity of the blockchain hence

increases as the network grows and controlling more than 50 % of the miners becomes harder and

more expensive (Nakamoto, 2008).

Alternative Permissionless Consensus Mechanisms

The major downside of PoW is the vast amount of energy needed to maintain the system, especially

when a network grows and the value of the cryptocurrency increases, since more people want to

compete for the rewards (Walport, 2016). Other proposed consensus mechanisms are, e.g., Proof

of Stake (PoS), Proof of Burn (PoB), and Proof of Capacity (PoC). A PoS consensus mechanisms

work on the concept of having an algorithm granting the authority to create the next block to a

network node based on how much value that node has signed up as a stake in the system, i.e.,

proving they have a stake to lose. PoB consensus mechanisms work on the concept of burning

cryptocurrency instead of computational power to mine blocks (Tapscott & Tapscott, 2016). This

effectively burns the resources of the miner, but as of yet the currency burned is always based on

a PoW concept. PoB is hence currently used as one way to bootstrap a cryptocurrency on top of

another cryptocurrency. PoC works on the concept of the designation of memory or disk space to

prove that one is invested in the network. It functions much like PoW but instead of supplying

computing power you instead supply storage capacity (Ateniese, et al., 2014; Dziembowski, et al.,

2015). These are a few examples of proposed consensus mechanisms, but there are currently few

blockchains utilizing them. PoW is the prevalent consensus mechanism in a majority of, if not all,

permissionless blockchains.

Blockchain Forks

A fork is the term used when a change in the blockchain protocol is implemented or there is a

consensual dispute as to which block of the same block height is the correct one. Essentially the

blockchain’s end is forked into different directions (Boucher, et al., 2017). There are two possible

outcomes from this, the first being that one of the forks wins and becomes accepted in the entire

network. The other fork is then made completely irrelevant and any transactions or information

in those blocks are gone. A soft fork is, in a simplified explanation, a change to the protocol which

restricts the ruleset and stays within the legacy structure. It is therefore compatible with nodes and

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miners running legacy versions (Boucher, et al., 2017). Soft forks are not disruptive to the system

and enables smooth protocol updates if a majority of the network is in favor of it. Hard forks are

however changes that are not compatible with legacy versions of the protocol. This means that if

the blockchain is to be updated to the new protocol, the network needs to be in complete

consensus to start implementing the update. If there is a dispute in the network as to how to

develop the blockchain further, the community is likely to split into two networks (Tapscott &

Tapscott, 2016). The first network would contain the miners and nodes still running on the legacy

protocol and the second network the ones running on the new protocol. Note that the two

blockchains will be exactly the same up until the block where the fork occurred. However, from

that point onward the networks and blockchains are completely separated. This has happened

many times in the Bitcoin network, resulting in alternate Bitcoins such as Bitcoin Cash, Bitcoin

Gold, and Bitcoin Diamond. Owners of wallets containing bitcoins prior to the fork will, hence,

be the owner of both the legacy coins and the new coins, e.g., bitcoin and bitcoin cash.

The most commonly occurring fork is however when miners running the same protocol propose

two different blocks to be added to the chain that are both valid. As they broadcast their

proposition to the network, latency will cause different parts of the network to accept the two

different blocks. Once a node has accepted a block it will reject the new proposition coming in for

a block of the same block height (Nakamoto, 2008). This causes a sort of competition between

the forks as to which one will become the one to further build on. This is solved by defining that

the longest valid fork chain of valid blocks will win. If a miner that accepted one of the blocks

finds the next valid block, that chain will be longer and hence accepted by all nodes. These forks

can naturally grow to a length of several blocks depending on verification speed of the network.

But as finding new blocks takes different amounts of time, one fork will eventually become longer

and prevail. In the Bitcoin blockchain it is usually said that a block height of three blocks should

be added to the chain before one can be completely certain that a transaction is not part of a fork

which will eventually be outcompeted (Tapscott & Tapscott, 2016).

The above issues and descriptions of forks are mainly directed at permissionless blockchains

running on a PoW consensus mechanism. In permissioned blockchains the forking, i.e., updating,

of the network can be controlled and process of achieving consensus in the network is much easier

as all the parties are known. There may still be disputes as parties have different reasons and

enticements for being part of the network, but this can be handled through classic negotiations.

2.5 Smart Contracts

Smart contracts are one of the key parts of blockchain technology which gives it potential for

increasing the efficiency of processes. They also enable new types of trust structures and functions.

Smart contracts are generally self-executing pieces of code embedded in the blockchain (Kewell,

et al., 2017; Swan, 2015; Atzori, 2017). They are akin to normal programs and codes, however what

makes them unique are the features enabled by them being integrated in the blockchain. The

blockchain ensures that these smart contracts are immutable and transparent, meaning that

whatever action they are programmed to do will be executed and all stakeholders will be able to

see it. Whatever conditions, rules, or penalties desired can be added just like in a classic contract,

the difference is that the smart contract will also enforce everything automatically (Boucher, et al.,

2017; Lord Holmes of Richmond, 2017). This means that the need for control and enforcement

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services provided by third parties is greatly diminished. Parties will be able to trust the smart

contract rather than the third party (Kewell, et al., 2017). There are many different levels of

intricacy when it comes to smart contracts. From primitive one-step ‘if this then that’ functions to

systems of smart contracts intertwined with the purpose to form completely self-governed

organizations.

Types of Smart Contracts

Primitive smart contracts can be highly effective when it comes to providing value and efficiency.

Two examples of this are multisignatures and time locking (Walport, 2016; Swan, 2015).

Multisignature smart contracts are simply structures where more than one parties are connected

to a contract and a specified number of parties must sign for the action to be executed. The

signature naturally comes in the form of a digital signature with a personal private key. This can

be connected to any desired function, e.g., the release of money or the sharing of information

(Tapscott & Tapscott, 2016). They can be set up with any predetermined signing parameters for

how many of the parties must sign, e.g., 1-of-2, 2-of-2, 3-of-5, or 5-of-5. Time locks on the other

hand can be used to restrict the spending of funds or the release of information until a set time or

block height in the future, or possibly even at the time of certified death. The purpose of this could

be, e.g., the freezing of funds, the release of funding, the release of a testament, the release of funds

to a person coming of age, or the release of an encrypted patent (Tapscott & Tapscott, 2016).

Much more intricate structures can theoretically be formed to create organizations that are

completely autonomous and decentralized, i.e., decentralized autonomous organizations (DAO).

These DAOs have yet to be proven successful in larger scale, but the idea is to let smart contracts

control the allocation of resources in the organization to where they are needed by enticing people

to work on the correct things (Swan, 2015; Tapscott & Tapscott, 2016). There are countless

potential usages for smart contracts, they could theoretically handle most repetitive and logical

tasks, effectively reducing the cost of, e.g., transactions, management, and contract enforcement.

When coupled together in intricate webs, complex managerial and administrative structures appear

where the need for human interaction will be severely reduced. In combination with AI and IoT,

these technologies have truly revolutionary potential (Rich, 2018; Swan, 2015; Tapscott &

Tapscott, 2016).

Applicability of Smart Contracts

The applicability of smart contracts in different blockchains is greatly differentiated. Some

blockchains may not support smart contracts at all, some allow for primitive smart contracts such

as multisignature and time locking, and some are even Turing Complete (Tapscott & Tapscott,

2016). Turing Completeness means that it can run any type of computation that is computable if

written correctly. By extension, this means you can run any type of smart contract you want on it.

However, computations naturally cost energy and running computationally intensive programs will

be costly. In a permissionless blockchain this will burn a lot of the connected cryptocurrency if

not programmed efficiently. In permissioned blockchains you can naturally control to a much

further extent what level of smart contracts will be able to run on it. Examples of use cases are

presented in section 2.6.

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Issues with Smart Contracts

There are also issues concerning the use of smart contracts, many of which come down to the

coding of the contract. There is an immense pressure to ensure that the code is written correctly.

If the code of a smart contract contains bugs or loopholes, there is a high chance that someone

will find these and exploit them (Berke, 2017; Walport, 2016). This could mean the draining of

funds or access to information that should be private. Since the smart contracts are immutable on

the blockchain it is not possible to reverse or change the smart contract once it has been initiated.

This means that a lot of power and responsibility lies in the hands of the programmers. This

problem raises questions as to how to ensure that programmers are indeed doing the right things

(Manski, 2017). Malicious programmers could, as an example, add functions which they could later

exploit once the contract is live. At the same time, it is very hard for people who are not

programmers to control if a smart contract is written correctly. Trust must then be granted to the

issuer of the smart contracts, one must trust that they have not missed anything or added anything

fraudulent that may benefit them secretly (Manski, 2017; Tapscott & Tapscott, 2016). At the same

time, it is hard for the programmers to know all the legal aspects required in contractual processes,

leading to a situation where programmers must become pseudo-lawyers and lawyers need to

understand programming.

Another very important aspect is the choice of criteria for when the smart contract should execute

an action. The metrics used need to be directly linked to the purpose of the contract and also

measurable and readable in a secure predefined way (Swan, 2015). These metrics and criteria also

need to be constructed in a way to not be manipulatable as this would diminish the quality of trust

generated. This is rather easily controlled when it comes to cryptocurrency on the blockchain, as

you can simply set monetary limits to be reached (Tapscott & Tapscott, 2016). But when it comes

to measures such as energy consumption, sustainability, or cost reduction, this becomes much

harder. The importance of coding and providing trustworthy data is therefore high.

The automation of processes currently performed by humans with smart contracts also brings with

it the risk of jobs ceasing to exist, effectively increasing unemployment. This is however something

happening in all of society and does not directly relate to blockchains and smart contracts, but

rather the continuous human process of making things more efficient. Currently, this is seen

mostly in the form of automation through robotization and digitization (Manski, 2017).

2.6 Use Cases

Blockchain is a technology that can be used for general purposes across an abundance of

application sectors. There are countless applications and uses that blockchain enables related to

trust, verification, transparency, immutability, privacy, information sharing, redundancy, value, and

efficiency through automation of logical processes (Kewell, et al., 2017; Boucher, et al., 2017; Swan,

2015). These characteristics diminish the need for trusted third party mediators. In any case where

you need to store information that should be shared and accessible to more than one party, a

blockchain is a viable option. In any case where you have a system of assets or information that

needs to be kept controlled privately but remain distributable, a blockchain is an option. In any

case where you have an agreement between two or more parties which needs to be enforced

efficiently, a blockchain is a viable option. In this section some areas of usage are presented that

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are in some way connected to the public sector. The generic value that blockchain provides are as

follows:

• Trust – Trust in the network reduces need for trust directly between stakeholders.

• Transparency – Entries are accessible for scrutiny to those it is indented for.

• Immutability – No entries can be removed or changed.

• Decentralization of power – Power over the ledger and its information is distributed in the

network.

• Data sharing – Data used by many parties is shared and updated unanimously.

• Value – Tangible and intangible value can be uniquely stored and transacted digitally.

• Redundancy – Ledger is upheld and stored in many nodes, protecting against network

downtime and loss of data.

What blockchains are currently ill-suited for is the storage of large quantities of data. Naturally,

data is stored and continuously added in blockchains. The issue here lies in that each bit of data

added will forever remain in the chain. This means that the size of the blockchain will continuously

increase and the more data is added the faster it will do so. The result being that the file size of the

blockchain would eventually become so big that it is inefficient to store and handle if the growth

is too rapid. Storing huge amounts of exactly the same data in a distributed network is not efficient,

as argued by several expert interviewees. Another issue is the validation of entries and consensual

acceptance of new blocks. The amount of entries per second is limited in a blockchain. How fast

it is depending solely on what type of information the blockchain is created for and what consensus

mechanism is used. When the number of requested entries is higher than the entry speed, the cost

and time for acceptance is increased, which is problematic (Bradbury, 2015; Berke, 2017). This

naturally differs greatly between blockchain models and foremost between permissionless and

permissioned networks. In permissionless networks the effect of latency is one key reason as to

why this is problematic, the blockchain needs time to sync up (Tapscott & Tapscott, 2016). Storage

size is also a major issue as it is desirable to have as many people running full nodes as possible,

increasing size too fast limits this severely. In permissioned blockchains these issues are reduced

but are still important. In permissioned networks the actors would likely have the ability to set up

servers with both better connectivity between each other and more storage capacity. This

scalability of entry speed, achieving network consensus speed, and size of the blockchain are

current problematic areas within blockchain technology. However, there are countless developers

working on this to find new and improved solutions to tackle these issues (Scott, et al., 2017; Maull,

et al., 2017).

Cryptocurrencies

The most commonly known, most widely adopted, and currently most valuable use for blockchain

technology is cryptocurrencies. First and foremost, these are represented by coins in P2P networks

such as Bitcoin, Ethereum, and Ripple (Tapscott & Tapscott, 2016). There are however many

nation states looking into releasing a digital currency with a blockchain base as well, likely in the

form of centralized decentralized currencies (CDC’s), i.e., cryptocurrency on a permissioned

blockchain. The usages and benefits of digital currencies are great; this paragraph aims to highlight

the main ones from a holistic viewpoint. First it is important to understand the difference between

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a digital currency and digital fiat currency. Digital currency has qualities similar to those of physical

cash, like bills and coins. Just like with physical cash, each digital currency entity, like, e.g., a bitcoin,

is unique. This means that the owner of it is the only one that has control over it and there is no

need to trust a third party with handling your money (Sveriges Riksbank, 2017; Camera, 2017;

Adams, et al., 2017). Just like one has control over physical cash, one has control over digital

currency. Digital fiat currency however, like having SEK in a Swedish bank, is a balance system

where you as an individual either are owed or owe money to the bank. You do not own your

money in the bank, you are simply owed money by the bank. The difference is important as it puts

all the trust in the bank to handle and keep your assets safe (Camera, 2017). In a crisis the bank

can simply freeze your assets or if it goes bankrupt you have no control over what happens. An

example being the consequences for Greek and Cypriot citizens when the bank system failed

during the financial crisis. Now there are naturally differences between digital currencies on a P2P

network and one that would be issued by a central bank, but some of the main benefits enabled

are the same. Some being individual ownership, ease of transactions, lower transaction fees,

traceability, faster international transactions, and safeguards from identity fraud (Swan, 2015;

Sveriges Riksbank, 2017). These are all enabled by digital currency, but some cryptocurrency

networks may not be designed with all of them in mind. Even though cryptocurrency has gotten

a reputation of being used by criminals for untraceable transactions, this is not the full truth. Most

cryptocurrencies enable the full traceability of each transaction, making it fully transparent to

government agencies. Following the money has never been easier (Camera, 2017). Physical cash

on the other hand has practically no traceability once it goes into the public, enabling criminal

transactions for millennia. Smart contracts can be used to set up structures where multiple parties

have to sign for the money to be spent. They also enable crowdsourcing where the crowdsourced

money is only released if certain goals are met, otherwise the money goes back automatically to

the contributors. The money can be frozen with time locks for safe keeping or for investment

purposes (Tapscott & Tapscott, 2016). There is an abundance of literature on cryptocurrencies

and related smart contracts for those that are interested, it is currently the most sizeable field within

blockchain technology.

Tokens

Cryptocurrencies are a subset of digital tokens. Tokens on a blockchain generally function the

same way as any asset, they are unique, held by an owner, and are transferable (Tapscott &

Tapscott, 2016). Tokens on a blockchain function the same way as a token in the physical world.

Tokens represent value. The value the token represents can be anything, but in the blockchain

community they are usually divided into three categories, note that these are not strictly official

and can have different legal or community definitions (Cottin, 2018). The first category is currency

or payment tokens, these are generally cryptocurrencies and are used for monetary transactions.

The second is security or asset tokens, these tokens can represent, e.g., physical property, shares

of a company, or the right to financial earnings (similar to bonds, equities, or dividends). The third

is utility tokens, these tokens represent the right to a service or usage of a product (Cottin, 2018).

This could be, e.g., health care, garbage disposal, massage, electricity, or phone service. Even

though payment tokens are meant to be used as currency, all types of tokens can end up being

used as currency if what they represent has value. If they can be traded they can be sold for other

tokens, fiat currency, or services, effectively being used as money.

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In many cryptocurrency blockchains there is the possibility to attach messages on transactions

containing small amounts of metadata. This attached metadata can be made to represent value or

assets just like a token (Walport, 2016; Lantmäteriet, 2016). This method for transferring

information is called colored coins. Colored coins gain the same type of benefits as all information

on the blockchain, the information is immutable, secure and the transactions are fast compared

to, e.g., bank transfers. Cryptocurrencies can usually be divided into very small fractions. As an

example, the smallest unit a bitcoin can be divided into is called a Satoshi, which is one hundredth

millionth of a bitcoin, i.e., BTC 10-8. One Satoshi is current worth around USD 0.00009

(Coinmarketcap, 2018). The transfer of one Satoshi coin that is colored is hence very cheap and

the cost comes from the transaction fee to the miner (Tapscott & Tapscott, 2016). Banks could

for instance set up a system where they color coins to represent international money transfers,

meaning it could clear within minutes rather than days and at a low cost.

Verification of Data

Verification of information is a fundamental use area for blockchains. Since entries in the

blockchain are immutable and transparent, one can always use entries as a verification that

something was added at a certain point in time. This means that a unique fingerprint hash can be

created from a document, file, video, text, etc., and then be uploaded into a blockchain. This hash

can then be used as a reference in the future to prove that the underlying material existed at that

time and has not been changed (Walport, 2016). This is easily proven by hashing the material again,

which produces the same hash as the one on the blockchain if it remains unaltered. It can also be

proven who actually uploaded the hash by signing the entry with a private key. In extension this

has many usages concerning authentication of correctness and proof of sameness. This means that

only the hash of something needs to be uploaded for it to be verifiable, not all of underlying data

and information. No personal or secret data has to be shared and the need for storage size is

diminished. The verification can be used to prove the authenticity of, e.g., ideas, patents,

government documents, contracts, or art (Swan, 2015). Naturally, you need not upload only the

hash, the entire material can be uploaded, either encrypted or not. This does however require much

more space, if not encrypted it is visible to all in the network, and if encrypted you might as well

store it encrypted and somewhere more suitable.

Identity Management

Identity management is a field where blockchains are highly suitable (Bond, 2017). There are many

identity blockchains being developed and these enable many promising solutions. As blockchains

are built on PKI where unique keys are essential, citizens’ identities would simply be represented

by their public key in the network (Miller, 2017). Each citizen in turn would be the owner of the

correlating private key to control their own identity. Any type of information could then be

attached to the identity and the individual would control who has access to read this information

(Sullivan & Burger, 2017). For a Swedish citizen Skatteverket (the governmental tax agency) could,

for instance, attach the individual’s personal number to the identity, containing among other things

the date of birth and gender. The individual could then choose only to disclose that they are above

a certain age at a venue with age restriction. This would be confirmed by Skatteverket without any

other information being shared with the venue, effectively protecting privacy. The information

would not need to be stored on the blockchain, only the verification hashes. The issuer could store

the information, in this case Skatteverket, and upon request confirm the verification hashes with

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those on the blockchain. The system could be designed in a way where any information could be

attached to the identity, such as family bonds, gym membership, driver’s license, certificates,

education, etc. The citizen could even have more than one identity to separate different parts of

their life. For instance, she could create separate identities for, e.g., their private life, professional

life, gaming identity, or a completely anonymous identity for confidential activities, as argued by a

interviewed expert. The issuers of endorsements, such as Skatteverket, would then naturally keep

track to confirm that it is the same person they are endorsing both in their private life and their

professional life.

One key question when it comes to this type of identity blockchain is whether it is should be

provided by the state or not. Whether or not the state issues identities or if individuals create them

themselves is important when it comes to control. The state would naturally have more control if

they issue the identities, but perhaps it is enough that they can control who they endorse for

personal numbers and drivers’ licenses etc. (Eaton, et al., 2018). When individuals issue their own

identity, they are truly the owners of them. Solutions like this build on a sort of distributed

architecture and would not necessarily have to be built on a blockchain if controlled by the state.

The blockchain does however provide the transparency and immutability aspects that are desirable

in hindering identity theft and the creation of fake identities. Even though entries cannot be

reversed, they can always be amended with a new entry, with the newest entry being the valid one.

Estonia currently runs a national identity structure which is not built on blockchain technology,

but which uses the benefits of such a distributed digital architecture. The costs savings they are

reaping through this system are immense (Bond, 2017).

Supply Chain Management

Supply chain management is a field where blockchain also shows a lot of potential (Walport, 2016;

Tapscott & Tapscott, 2016). Supply chains are generally formed by a long chain of actors in which

it is important to keep track of the goods being supplied. It is also a field where theft, dilution, and

fraudulent documentation has been an issue for millennia. Blockchain can be used to track goods

and foodstuff with immutable entries stating the exact origin, quantity, weight, and volume

transparently for all stakeholders to see (Kairos Future, 2017). Any irregularities could then be

found and the exact point in the chain where it took place would be documented. No one in the

chain would be cheated and the government would be able to, e.g., counteract smuggling and the

dilution of foodstuff (Kairos Future, 2017).

Property

Ownership of both physical and intellectual property can be confirmed and validated on a

blockchain. In the end what is written needs to be backed up by the law, but the blockchain

provides secure options for proof of ownership and verification (White, 2017). The governmental

registry for vehicles could easily be recorded on a blockchain, with each vehicles identification

number and license plate being used to create a unique digital token issued by Transportstyrelsen

(governmental agency for transportation), which would then be given to the owner of the car by

connecting it with her identity. When the owner then wants to sell the car, she can simply transfer

the token to the buyer with a smart contract requiring both the seller’s and buyer’s digital

signatures, possibly with Transportstyrelsen also having to confirm the trade or some other witness

for security. If digital currency is used, the price of the car can also be included in the smart contract

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which would not release the token to the buyer until the money is in the wallet of the seller. Should

the car be owned by a couple, the sale would perhaps need to be signed by both of them. A vehicle

information record could also be connected to the token, including, e.g., repairs, accidents, and

inspection results. The same type of process could be viable for property deeds with the issuer of

the property token being Lantmäteriet (governmental agency for property deeds and mapping)

and integrating other stakeholders such as banks and real estate agency firms (Lemmen, et al.,

2017). Another option is that instead of having a token representing the property, the hashes of

documents and contracts in the sales process could be uploaded in the blockchain for verification

purposes. The latter has been explored by Lantmäteriet in a blockchain project (Lantmäteriet,

2016).

Intellectual property such as patents and copyrights are also suitable to secure in a blockchain.

They can easily be hashed and verified. Other more rewarding solutions could, as an example,

include smart contracts where the owner of the intellectual property is rewarded in royalties each

time someone uses their patent or plays their song (Tapscott & Tapscott, 2016). The owner could

then possibly also control the pricing of usage more dynamically with more control. A patent

owner of a medicine could, e.g., make the usage of it free for medicine being distributed in poor

developing countries but take a fair share for usage in the developed world. The distribution supply

chain of this medicine could then be controlled via a blockchain so that the freely created medicine

ends up where it should. An artist would not need a record label anymore and could, e.g., make

his music free on their birthday should they want to. The government could in turn use the

transparency to efficiently know how much tax to collect. The collection could even be integrated

in a smart contract with, e.g., 20 % of the sales being taxed autonomously, as argued by interviewed

officials. Efficiently and securely tracking both goods and services sold is a key feature the

blockchain enables for governmental agencies.

Voting

Voting with the help of blockchain can be highly beneficial because of the unique right to vote

that can be given to each citizen and the easy control of double spending, i.e., casting votes multiple

times. Each citizen could be given a wallet containing one vote token, or simply give the token to

the citizens existing identity (Ølnes, et al., 2017; Tapscott & Tapscott, 2016). This vote token could

then simply be sent to the public address representing whichever choice they want to vote for,

which could naturally be made user friendly so that uninterested citizens do not have to bother

knowing about blockchains and keys etc. This would of course have to be connected to the

physical voting process. If the citizen signs in at the physical voting location a smart contract can

automatically send the coin to an address just saying that the vote was cast physically. Should the

token already be spent via a digital vote, the citizen is denied voting physically. This type of voting

could be done on any type of level of society, from the EU elections and national parliament

elections to municipal or even school elections. This enables a more direct rule of the citizens

concerning matters close to them (Swan, 2015). The students of a school could for instance vote

on trivial matters such as if hats should be allowed indoors. The citizens of a municipality or a

smaller community could, e.g., be given the chance to vote on whether or not to allow barbecuing

in the public park. What types of questions to put up for a vote is of course important to investigate

(Cheng, et al., 2017; Ølnes, et al., 2017). It would be easy to fall under the tyranny of the majority,

e.g., situations where more populous areas always win votes on where to invest municipal money

26

simply because it is more densely populated. The point is that blockchain enables efficient and

logistically inexpensive voting on all levels of society. One issue could however be that it may be

hard to enforce the right to anonymity for the voters, which is essential in a free democracy to

combat all types of political persecution. However, clever technical solutions for this are likely to

be found.

International Cooperation

Blockchain technology is conceptually suitable for international cooperation. The uses could, e.g.,

be the ones described above but on a larger cooperative scale. Blockchain networks enable the

secure, transparent sharing of ledger information and value which are useful on all levels of

international organization (Atzori, 2017). This could be, e.g., on a Nordic level, EU level, UN level,

or completely global without UN interaction. The Nordic countries could, for instance, have a

joint blockchain network for vehicle registration, making the network bigger and more secure, as

well as enabling cross-border vehicles to be controlled easily. The EU could, e.g., set up an identity

blockchain spread out all over Europe which would make the sharing of information about EU

citizens between countries much more efficient. This could include, e.g., driver’s license, health

records, criminal records, or tax records. The UN could, e.g., set up a blockchain for the

distribution of foreign aid to increase the chance of it reaching those in need due to the

transparency enabled. Globally there could be blockchains set up to track the flow of trade and

intellectual property such as music or patents. There are already globally distributed

cryptocurrencies that can be sent to anyone, anywhere, and where transaction speed and fees are

the same for all. No extra charges for transactions are made other than those needed to uphold

the system (Swan, 2015).

27

3 Theory and Frameworks

This chapter presents and explains the theory and frameworks utilized in the thesis. The aim is to

clarify what the analysis and conclusions of the empirical data is based on. Section 3.1 presents a

brief introduction of innovation theory and technology adoption. Section 3.2 elaborates on

affordance theory and on the concept of general purpose technologies (GPT). Section 3.3 finalizes

the chapter by presenting the multi-level perspective (MLP) framework for analyzing

socio-technical transitions. This includes elements such as niche innovations, contemporary

socio-technical regime, the external socio-technical landscape, and transition pathways.

3.1 Innovation and Technology Adoption

Innovations are new or improved solutions, typically regarding a product, process, position, or

paradigm, i.e., the four P’s of innovation. In this sense product includes both physical goods and

services, i.e., the offering. Process relates to the way of producing and delivering the product; this

could be the improvement of a production line, service provision routines, or even the

organization structure of a company. Position regards where and to whom the product is direct;

this could be the marketing to a new customer segment. Paradigm innovations regard changes in

mentality, e.g., change in business models or strategy (Tidd & Bessant, 2013). Innovations can be

categorized in many ways for different analytical purposes. Abernathy and Utterback (1978)

established the distinction between radical and incremental innovations which has been

fundamental in the field. Radical innovations consist of novelty solutions and inventions. These

need to be radically different from incumbent solutions in some way or another. Incremental

innovations, on the other hand, are improvements made to already existing solutions, these are

often much smaller and occur slowly over time (Tidd & Bessant, 2013).

Level of Impact

Another fundamental distinction was made by Christensen (1995) when he set the parameters for

disruptive and sustaining innovations. Disruptive innovations are discontinuous in the sense that

they bring with them changes to the systems and structures in the incumbent market. This often

means that incumbent firms need to adapt to the new setting or risk being outcompeted.

Disruptive innovations are often introduced by new market actors, e.g., startups, with an extensive

advantage towards the incumbents that have largely fixed costs and structures with low flexibility

(Christensen & Rosenbloom, 1995). However, large firms are increasingly aware of this and often

invest a lot to try to be part of the disruptive process. Disruptive innovations are also often radical,

but not always. Sustaining innovations, on the other hand, fit into the existing market and improve

it without much change to the overall systems and structures. These can be both radical and

incremental in nature (Tidd & Bessant, 2013).

Diffusion of Innovation

The next important aspect of innovation is how it diffuses into the market over time. Rogers

(2003) started studying this process in the middle of the 20th century and has developed a model

for how innovations diffuse. The diffusion process of technological innovations is called the

technology adoption lifecycle. In the model the adopters can be divided into five groups depending

on when in time they adopt the technology, these are: innovators, early adopters, early majority,

28

late majority, and laggards (Rogers, 2003; Tidd & Bessant, 2013). Innovators are the first to adopt

and constitute 2.5 % of the market population. The group usually consists of individuals or

organizations who are willing to take high risks, have a strong financial position, are educated, and

are seen as visionaries and enthusiasts. Early adopters constitute 13.5 % of the market population

and tend to be some type of educated opinion or community leader who wants to get ahead of the

majority of the market, with an inclination towards risks but are considered pragmatists. The early

majority constitutes 34 % of the market population and consists of slightly more conservative

people that are still open and proactive towards new ideas. The late majority also constitutes 34 %

of the market population. They are more conservative and less engaged in both the community

and with new ideas. The last group are the laggards, which constitute 16 % of the market

population. Laggards are very conservative and tend to only adopt the technology because the

pressure from the market is high and legacy technology cannot compete anymore (Rogers, 2003).

The accumulated market share of adopters is classically represented by an S-curve. Furthermore,

Moore (2014) offers an addition to the model regarding the diffusion of disruptive innovations.

He proposes a chasm between the visionary innovators and the pragmatic early adopters. He

argues that these groups have the biggest difference in expectations and that for an innovation to

succeed, this is a major boundary that needs to be broken. He argues that to cross this chasm the

innovation needs to fulfill a certain level of functionality and also be marketed effectively (Moore,

2014). The model concepts of technology adoption and the diffusion of innovation are visualized

in Figure 3.1.

3.2 Affordance and General Purpose Technologies

An affordance is a potential way of using an artifact based on its, e.g., physical, psychological,

analytical, or computational qualities (Gibson, 1979; Gaver, 1991; Norman, 2013; Pozzi, et al.,

2014; Leonardi, 2011). An artifact can be anything, e.g., a technology, an object, space, a concept,

a framework, or an entity. A chair, for example, affords sitting, whereas a car affords

transportation. However, it is of importance to differentiate between an artifact’s actual affordance

Technology Adoption Lifecycle, the S- Curve, and the Chasm

Mark

et

Sh

are

%

Time

Ad

op

tio

n R

ate

The Chasm

The S-Curve

100

Figure 3.1 Technology Adoption, adapted from Rogers (2003) and Moore (2014)

29

and the same artifact’s perceived affordance (Gaver, 1991; Beynon-Davies & Lederman, 2017;

Leonardi, 2011). A functional car on a road always affords transportation, but if a human raised in

isolation with no notion of what a car is was presented with one, he would not perceive the car as

having the affordance of transportation because of his lack of knowledge. Hence, an individual’s

or group’s ability to recognize an affordance is irrelevant to the artifact’s real affordances (Gibson,

1979; Ciavola & Gershenson, 2016). This notion is of importance when concerned with the

discovery of new usages for an artifact. This is especially essential when the artifact in question can

be considered a general purpose technology (GPT). A GPT can be defined as a technology that

enables further innovations in a wide area of applications based on the initial technology

(Bresnahan, 2010). An example of a historically important GPT is electricity. The generation,

transfer, and consumption of electricity function based on a basic set of principles. These led to a

new paradigm in humanity’s history through countless enabled innovations electrifying mankind.

These range from the lightbulb and the radio to computers and information technology.

3.2.1 Affordance Theory

The concepts behind affordance theory originated in the scientific field of ecological psychology

and the term ‘affordance’ was coined by the American psychologist James Gibson (1966). The

original definition of affordance concerned the relationship between the environment and an

animal (humans included). To cite the concept author, “The affordances of the environment are

what it offers the animal, what it provides or furnishes, either for good or ill. It implies the

complementarity of the animal and the environment” (Gibson, 1979, p. 127). This was first

developed in relation to an animal’s visual perception of objects or space that leads to perceived

possibilities and ultimately stimulates action (Beynon-Davies & Lederman, 2017; Norman, 2013).

This concept has since been developed and applied to many different fields, such as engineering

design and different information technologies (Leonardi, 2011; Ciavola & Gershenson, 2016;

Maier, et al., 2009; Withagen & Chemero, 2012). For this research, the limited scope of visual

perception is of little value. The first field of interest is the psychological concept of mental

affordances, i.e., mentally constructed beliefs of an artifact’s affordances. The second field of

interest is theories regarding real technological affordances, i.e., the affordances that a technology

actually possesses and the perceived affordance of the very same technology. The original view of

an affordance stimulating action is, in this research, interpreted in an adaptive manner as

stimulating the development and usage of solutions based on technology.

Affordances can be divided based on the perceptual information available about the artifact

(Gaver, 1991). There are four categories of affordances with this division: correct rejection, false,

perceptible, and hidden. The categories are visualized in Figure 3.2. First there is a non-category

of correct rejection, simply meaning that the artifact cannot be used for something, and the

available information does not imply that it can. False affordances are nonexistent but are

perceived as affordances based on the available information. This could as an example be the belief

that a 20th century car can fly because the only information you have about cars comes from

futuristic movies. Perceptible affordances are simply existing usages that are known due to

available information. Hidden affordances are existing usages, but there is not any information or

knowledge suggesting it. These affordances must be discovered and proven to become perceptible

(Gaver, 1991). These categories can be used to classify affordances from the perspective of an

30

individual, a group, or a society. In conclusion,

for humans, the perceived affordances are

highly related to ability, culture, knowledge,

and experience (McGrenere & Ho, 2000;

Pozzi, et al., 2014).

It lies in human nature to alter her

environment and modify the artifacts in her

presence. The purpose of this is naturally to

change their affordances to serve her wants

and needs (Gibson, 1979; Norman, 2013). This

instinct in humans plays a major part of what

drives innovation and discoveries. At the same

time current needs cause selective attention

and heavily influences the perception of affordances of an artifact (Norman, 2013). As an example,

if the need for quick transactions with bitcoins is prevalent, it stimulates the action of modifying

the blockchain protocol to afford quick transactions. This can be related to the technological

lock-in of systems. A technological lock-in is the industry and societal focus on a certain

technology that has established itself in the market. To become established, the technology usually

must outcompete the incumbent technology and other innovative solutions (Arthur, 1989). This

is not necessarily only because of the superiority of the technology, but an outcome influenced by

several factors. An example would be the lock-in of combustion engines in the car manufacturing

industry, which in the early 20th century outcompeted the electrical engine. This has the effect of

focusing most of the research and development on combustion engine solutions and society

adapting to its needs (Arthur, 1989). This included, e.g., building the infrastructure needed for

fueling and maintaining this technology. Technological lock-in heavily influences what hidden

affordances for an artifact are discovered and turned into perceptible ones, as well as what artifacts

are being explored in the first place (Pozzi, et al., 2014).

As argued by Gibson (1979), affordances can be deemed as both good or bad. A technology

however, as argued by Kranzberg (1986), is never good nor bad. Regardless of its usage to cause

harm or good, technology itself is completely neutral. The, by humans, perceived affordances of

the technology are what can be classified as good or bad. A firearm is, for example, completely

neutral in its existence. It is the nature of the perceptible affordance of harming other beings that

can be argued to be good or bad.

3.2.2 General Purpose Technology

There are many ways of classifying technologies in groups and categories. One rather broad

classification framework is to categorize a technology as either a specific purpose technology or a

GPT. Specific purpose technologies are just as the name implies, suited to perform specific tasks,

e.g., a plow which is specifically usable for plowing. In contrast to this, GPTs perform a generic

function, such as, e.g., rotational movement, material properties, or transport, which can be used

in an abundance of different application sectors (Lipsey, et al., 2005; Helpman & Trajtenberg,

1994; Bekar, et al., 2017). The concept of GPTs was developed by economists to better explain

Affordance Perception Matrix

Yes

Yes

No

No

Real Affordance

Per

cep

tual

In

form

atio

n

False

Affordance

Perceptible

Affordance

Correct

RejectionHidden

Affordance

Figure 3.2 Affordance Perception Matrix, adapted

from Gaver (1991, p. 80)

31

and understand the relationship between technical change and growth. The focus was initially on

how certain technologies have historically had immense effect on the growth of society, but the

concepts are highly viable to analyze contemporary technologies as well (Bresnahan, 2010; Bekar,

et al., 2017).

Classifications

GPTs can in turn be classified as a product, a process, or an organizational system. Historical

examples of product GPTs are the wheel, electricity, and the computer. Process GPTs are, e.g.,

the domestication of animals, printing, and artificial intelligence (AI). Organizational system GPTs

are, e.g., the factory system and mass production (Lipsey, et al., 2005). There are somewhat

different definitions of the term, Bresnahan (2010, p. 764) provides a basic definition with three

parts: “a GPT 1) is widely used, 2) is capable of ongoing technical improvement, and 3) enables

innovation in application sectors.” This is a rather broad definition and a true transformational

GPT is argued by Lipsey et al. (2005) to have to fulfill four criteria: “1) It is a single, recognizable

generic technology, 2) it initially has much scope for improvement but comes to be widely used

across the economy, 3) has many different uses, 4) creates many spillover effects.” Based on these

definitions, we can see in society an abundance of potential future GPTs, such as blockchain,

Internet of Things (IoT), and AI; all of which show conceptual potential for many usages in many

application sectors (Brynjolfsson & McAfee, 2017; Ferber, 2013; Swan, 2015). They are in turn

based on established GPTs such as electricity and other information and communication

technologies (ICT).

Another interesting aspect is that GPTs are argued to always be good for society and mankind

from a macro perspective as they stimulate growth (Bresnahan & Trajtenberg, 1995). However,

this is perhaps not always true on an individual level as they disrupt the incumbent market balance

and often outcompete old technologies and jobs (Lipsey, et al., 2005).

The Evolution of a General Purpose Technology

As GPTs are based on generic functions, they often play a critical role not just for specific purpose

technologies, but for future GPTs as well. As an example, the computer is reliant on the transistor

to function, and the transistor is reliant on electricity. GPTs do not simply appear on their own

but are developed and built based on previous technologies (Schaefer, et al., 2014). The

relationship sphere of a GPT and its application sectors is called a GPT cluster. Interesting

network and innovational effects happen within these clusters (Bresnahan & Trajtenberg, 1995;

Bekar, et al., 2017). When a GPT is first developed, it is usually in a very rudimentary form which

has few use cases, the growth rate at this stage is often slow or even negative (Bresnahan &

Trajtenberg, 1995). For it to diffuse and spread to new application sectors, certain thresholds of

functionality must be surpassed. This can be called the first phase and once the threshold has been

reached, the first wave of diffusion happens. In the second phase, the GPT is being used in several

sectors and is hence being improved and developed in many different settings (Helpman &

Trajtenberg, 1994; Lipsey, et al., 2005). An example of this could be the development of steam

engines for steam ships, locomotives, or mining pumps. This leads to an amplifying effect where

new innovative solutions often improve the GPT itself, which in turn diffuses in the cluster to all

application sectors and potentially creates new sectors all together. This would be the second wave

of diffusions where innovation can occur throughout the GPT cluster (Bresnahan, 2010). These

32

innovation complementarities mean that innovations in the GPT can lead improvements in all

application sectors due to the diffusion of information in the cluster network. A visualization of

the diffusion network in a GPT can be seen in Figure 3.3.

Naturally, incremental innovations can spread between application sectors as well, but this has

minor effects on the GPT. After the second wave is when the true growth and economic gains

can be observed, as well as the further invention of new technologies based on the GPT (Helpman

& Trajtenberg, 1996). This diffusion lag from raw invention to productivity can be clearly observed

to become shorter in modern times as ICT allows for much faster diffusion of information.

3.3 The Multi-Level Perspective

Societal change and the evolution of technology are deeply interconnected and usually co-evolve.

The relationship between society and technology can be observed as socio-technical systems. The

MLP framework was developed to act as an analytical bridge between evolutionary economics and

technical studies. This was done to improve the understanding of interactions between

environments, the incumbent market and actors, and innovations (Smith, et al., 2005; Genus &

Coles, 2008; Geels & Schot, 2007). The framework identifies three levels of analytical concepts

that interact in socio-technical transitions of society. On a macro-level, the sociotechnical

landscape, on a meso-level, the sociotechnical regime, and on a micro-level, niche innovations.

The actual transitions are defined as regime shifts and are the result of an aggregation of external

and internal pressures and agencies; external in between levels and internal within levels (Geels,

2010).

Socio-Technical Landscape

Socio-technical landscapes are the external contexts and structures that surrounds the

contemporary regime and niche innovations, i.e., the environment in which the systems function.

Diffusion of GPT-improvements

from Application Sector

General

Purpose

Technology

Application

Sector

Application

Sector

Application

Sector

Application

Sector

Application

Sector

The Diffusion of Innovation

in a GPT Cluster

Main GPT Diffusion

Figure 3.3 Diffusion in a GPT Cluster, adapted from Breshanan and Trajtenberg (1995, p. 87)

33

The landscapes are influenced by, e.g., macro-economics, macro-politics, war, cultural norms,

global warming, or the price of natural resources. The landscape typically changes at a very slow

pace, often in the intervals of decades or longer (Geels & Schot, 2007). However, quick, disastrous

events such as natural disasters or terrorist attacks can influence the landscape abruptly by

influencing the economic or political situation. An example of this could be the 9/11 terrorist

attacks on the United States which affected the global political situation. Developments in the

landscape puts pressure on both the contemporary regime and the niche innovations (Geels, 2002).

Socio-Technical Regime

Socio-technical regimes consist of the contemporary entities, norms, and artifacts, as well as their

aligned activities, which together constitute the very status quo of, e.g., a society or an industry.

These entities are made up of a broad community of social groups, institutions, and market actors

consisting of, e.g., companies, researchers, legal systems, and governmental agencies. The norms

are the result of, e.g., culture, business ethics, or common habits (Geels, 2011; Smith, et al., 2010).

The artifacts can be, e.g., technologies, infrastructure, knowledge, concepts, or processes.

Socio-technical transitions do not occur easily because of the social and technological lock-in

effects that result in predictable development paths (Arthur, 1989; Geels, 2010). The regimes are

dynamically stable and foster incremental innovations in the incumbent system along existing

trajectories, which is visualized in Figure 3.4. Regimes face external pressure from developments

in landscape and niche innovations. They also influence both landscape and niche innovations as

the regime itself develops or transitions. The niche innovations can also be influenced by the

investment in, and the steering of, them through collaborations.

Niche Innovations

Niche innovations are initially technological inventions coupled with social applications that

together form unstable socio-technical structures with poor performance. They are often separated

from the incumbent market and can thus avoid the influence of regular market forces. Within the

small niche networks is where radical innovations are developed, often by startups that dare

Technologies

Culture

Jurisdiction

Users

Actors

Solution

Providers

Alignment of Processes in Dynamically Stable

Socio-Technical Regime

Figure 3.4 Alignment of a Socio-Technical Regime, adapted from Geels (2011, p. 27)

34

challenge the incumbent actors (Geels, 2011; Smith, et al., 2010). The niches act as protective

environments where novelty ideas and solutions have room to improve, grow, and find supportive

structures. Niches are often created through external influences that inspire vision and provide

expectations. Together with the contemporary regime the niches form a system with evolutionary

character. An abundance of potential innovations are produced by the niches, the regime then acts

as a selection environment where only the befitting solutions survive. The innovations usually

adapt and align to produce a dominant design suitable to the regime (Geels, et al., 2016; Genus &

Coles, 2008). As a niche innovation enters the regime, an adjustment occurs, causing a new

trajectory to be set. Openings for innovations in the regime are usually the result of tensions caused

by internal or external pressure (Geels & Schot, 2007). Figure 3.5 visualizes a socio-technical

transition with the fundamental concepts of the MLP framework.

Timing is a rather crucial aspect in the MLP framework. As stated, when pressure and tension is

prevalent enough in the regime, openings for new solutions occur. However, if the niche

innovations are not developed enough, they will not be able to fill the gap. This results in the

regime adapting in another way and the opening eventually closes (Geels, 2005). The nature and

characteristics of the niche innovations also play a major role. They can either be in direct

competition with the incumbent solutions in the regime, or they can be of a symbiotic nature. The

innovations that aim to completely replace the current systems are faced with a lot of resistance.

They must either have solutions that are far superior and find a small opening or find a very large

opening caused by tremendous pressure (Geels & Schot, 2007; Smith, et al., 2005). The symbiotic

Multi-Level Perspective on Socio-Technical Transitions

Time

Socio-Technical

Landscape

Socio-

Technical

Regime

Niche

Innovations

Technologies

Culture

Jurisdiction

Users

Actors

Solution

Providers

External

Influences

on Niches

Socio-technical

regime is “dynamically

stable”.

Elements align and

stabilize in dominant

designs.

New configuration breaks through, taking

advantage of the destabilized regime.

Adjustments occur and stabilization

commences.

Landscape developments

pressure contemporary

regime, which destabilizes it.

New regime

influences landscape.

Small networks of actors support novelties based on

expectations and visions. Solutions and support networks are

developed.

Scale of

Activities

Figure 3.5 Multi-level Perspective, adapted from Geels (2002, p. 1263)

35

innovations on the other hand aim to be incorporated in the current system by providing improved

performance or by solving existing problems. These innovations naturally need a smaller opening

as they cause less disruption in the contemporary regime.

Transition Pathways

There are several different transition pathways that can occur when a regime shift takes place.

What type of path prevails is directly related to the magnitude and abruptness of pressure on the

regime, as well as to the level of innovation development when such an opening occurs, i.e., timing

(Genus & Coles, 2008). The paths are not exclusive and can occur in hybrid variations and in

sequence depending on the parameters of the situation. The types of pathways are called

reproduction process, transformation path, dealignment and re-alignment, technological

substitution, and reconfiguration pathway (Geels & Schot, 2007).

In the ‘reproduction process’ there is no external landscape pressure present. Even if radical niche

innovations are developed, there is little potential for disrupting the contemporary regime. The

regime is stable and there are few and weak incentives to adopt niche innovations. Internal regime

problems and tensions exist but are dealt with internally and with predictable directions. The

innovations that occur are incremental and improve incumbent solutions (Geels & Schot, 2007).

In the ‘transformation path’, there is a modest level of pressure acting on the regime because of

changes in the landscape. This usually happens early on in a disruptive landscape shift and the

pressure causes reactive reorientation by actors in the regime. Should the actors neglect the

pressure, external social groups play an important role in translating the pressures by raising the

awareness and highlighting issues. However, in this early stage of change, the radical niche

innovations are not developed enough to seize the opportunity and opening in the regime. This

causes increased internal tension in the regime and conflicts arise as actors use their internal

resources to adapt to the changes. The result is a realignment of development trajectories, i.e., the

focus of incremental innovations and to some extent the adoption of non-disruptive niche

innovations. These niche innovations are symbiotic and enhance current systems in the regime,

they do not affect the structural architecture. Hence, original actors remain part of the regime, but

the regime as a whole has changed its trajectory and internal relations may be altered (Geels &

Schot, 2007).

In the ‘dealignment and re-alignment’ pathway, the regime experiences a high and sudden degree

of pressure from changes in the landscape. This causes a lot of internal problems and the

dealignment of efforts in the regime. The once stable but dynamic internal structures may start to

deteriorate as actors’ confidence in the system begins to waiver. As in the “transformation path”,

there is no niche innovation developed enough to fill the gap. Over time the regime dissolves from

within as actors lose faith in the incumbent solutions and systems. As the void is left unfilled,

multiple underdeveloped niche innovations come forth to compete for funding and resources.

This is when the re-alignment of the regime commences. The innovations can then co-exist for a

while before one innovation prevails and becomes dominant through technological lock-in. When

a technology becomes dominant the re-alignment process is stabilized, and the actors’

development trajectories become increasingly coordinated. The result is that a new regime emerges

based on new technologies and knowledge. Elements of the previous regime naturally remain, but

36

all parts of the regime must adapt or face extinction as they become obsolete (Geels & Schot,

2007).

In the ‘technological substitution’ pathway, the regime also experiences a high and sudden degree

of pressure from changes in the landscape, with similar problems as a result. The difference in this

case is that the niche innovations have had time to become developed and stable during a longer

time of incremental landscape changes. This means that they are functional and backed up by

support structures, i.e., ready to compete with solutions in the incumbent regime. As the window

of opportunity occurs, the innovation enters the mainstream market. The effect of this is that a

competition for dominance takes place as incumbent actors muster a defense by investing in

improving their solutions (Geels & Schot, 2007).

In the ‘reconfiguration’ pathway, the regime experiences a low degree of pressure which opens up

for symbiotic niche innovations to enter. These innovations are enhancements and do not change

any architectural structures in the regime, hence they are accepted more easily. They typically solve

small scale problems and improve performance of incumbent technologies. So far, the

reconfiguration pathway is the same as the transformation pathway. However, in the

reconfiguration pathway the adoption of the innovation leads to further adjustments as regime

actors start forming new connections between old and new technologies. These further

adjustments in turn lead to new usage patterns and insights that can open up for the adoption of

new niche innovations over time, creating a sequence of adjustments that together with landscape

pressure aggregate into considerable reconfiguration and regime transition (Geels & Schot, 2007).

Response of the Regime

Smith, et al. (2005) argues that this pathway model should be amended with considerations of how

the responses of the regime actors influence the transitional process. The transition pathways are

naturally influenced by how the regime actors respond to both external and internal pressure. They

propose to consider the combination of the level of coordination in the regime together with the

use of internal or external resources. When regime actors are coordinated and make conscious

efforts to counteract amassed and acknowledged pressures with internal resources, an internal

renewal occurs. However, when the regime is exposed to sudden, substantial pressure, and

responds using internal resources, a reorientation of trajectories occurs. Uncoordinated external

pressure, usually realized by startups and other small firms, can cause the regime to have to use

external resources to realign, causing an emergent transformation. Finally, when the regime is

coordinated and plans for transition by adopting external niche innovations, a purposive transition

occurs (Smith, et al., 2005). Geels (2005) does, however, argue that no transitions are planned and

coordinated, but rather that coordination and realignment is part of the transitional process.

37

4 Method

In this chapter, the chosen methods for conducting the thesis research are presented and argued

for. Section 4.1 presents the general research approach with the aim of clarifying what scientific

methodologies were implemented. Section 4.2 elaborates on how the collection of data was

conducted and argues for the choices made in this regard. Section 4.3 aims to argue for the quality

of the research by elaborating on its validity, reliability, and choices of theoretical concepts. Section

4.4 presents the operationalization of the theoretical concepts on to the empirical case being

studied. The aim is to clarify how the theory and frameworks are applied to describe reality in a

valid manner.

4.1 Research Approach

This thesis has a research approach that is mainly qualitative in nature. The reason for this is that

the chosen area of interest requires a deep contextual understanding, as well as that the field of

research is in many ways still in its infancy (Collis & Hussey, 2013). In the status quo,

implementations of blockchain solutions in public sectors are still extremely rare, thus it was not

possible to collect hard data from previous implementations. In extension, this meant that much

of the data gathered had to be soft data, collected through data gathering methods that are semi-

structured (Blomkvist & Hallin, 2015). The research approach can be argued to be a hybrid

between exploratory and explanatory. It is exploratory in the sense of finding out how the Swedish

governmental agencies can transform the public sector to improve the digital infrastructure using

blockchain. It is explanatory in the sense of finding out what the possibilities of blockchain are for

the public sector and what actions need to be taken (Yin, 2014). With the focus being on the

Swedish public sector, the research is also handled as a case study based on Yin’s (2014) definition

that a case study’s inquiry: “(i) copes with the technically distinctive situation in which there will

be many more variables of interest than data points, (ii) and as a result relies on multiple sources

of evidence, (iii) with data needing to converge in a triangulating fashion, (iv) and as another result

benefits from the prior development of theoretical propositions to guide data collection and

analysis”.

This instigated an inductive approach for the research, because of the high chance of the findings

leading to new and unexpected results, which may necessitate the addition or discarding of theory.

An inductive approach generates results that are comprehensive and based on all of the emerging

information gathered throughout the research. As the field of research is uncertain and ambiguous,

an inductive and agile mindset was adopted from the beginning (Blomkvist & Hallin, 2015; Collis

& Hussey, 2013).

4.2 The Collection of Data

The data gathering was mainly conducted in the form of an investigation based on gathering

primary data from expert interviews and by attending subject-related events, as well as through

secondary data from a literature review. This was done to find information that would be analyzed

to identify the potential of blockchain solutions in relation to the needs of the public sector, as

well as the affordance perception of the technology (Collis & Hussey, 2013). This included

38

extensive research about blockchain in books, scientific journals, reports, articles, et cetera. Parallel

to this, data was gathered through seminars and other events within the field of research.

Events

Table 4.1 presents the events that were attended during the research. These events served as a

source of material and experience to get a holistic perspective and knowledge of blockchain and

what the Swedish blockchain community comprises. Throughout the research, events in

Stockholm were searched for through both the Internet and personal contacts made in the

community. Stockholm as a tech hub in Sweden and the Nordics served as an optimal geographic

location for attending events. The events were chosen based on their direct connection to

blockchain from perspectives deemed interesting from a holistic standpoint. Programming events

were avoided as they would not contribute to the focus of this thesis. All relevant events found

were visited to gather the most holistic impression of the community and technology as possible.

Some data gathered at the events is explicitly presented throughout the thesis, but most of the

knowledge gained was tacit and, hence, cannot be expressed in such a way.

Table 4.1 Attended Events

Event, Date Host Speakers Other Information

Blockchain Seminar 23/01/2018

KTH Blockchain Initiative

Christoffer De Geer - BT.CX and Johan Sellström – Carechain.

Seminar about blockchain, cryptocurrency, and its uses in healthcare.

ICOs: Challenges and Opportunities 16/02/2018

Dataföreningen Johan von Hollstein – iCoin Media Lab, Matthew Courtain - Tokeny, and Jens Fri - Cofound.it.

Seminar about blockchain and ICOs. Talks about the functions of ICOs and the future of the market.

Blockchain BOOST 16/02/2018

Transcendent Group and Autoliv

Olaf Schwartz and Jonas Villasmil – Autoliv.

Seminar about blockchain and an application in verifying software authenticity.

Blockchain in Finance 13/03/2018

Stockholm Blockchain and Angelr

Panel: Anna Svahn, Mikael Syding – Future Skills, Sergej Kotliar - Bitrefill, and Erik Vesterlund – Stockholm Blockchain.

Presentations about blockchain in supply chain management, trading, and tracking. Talk about the future of the technology.

BLOXPO Meetup 23/04/2018

BLOXPO Ivan Liljeqvist and Christian Ander. Panel: Johan - Nasdaq, Henrik Olsson - pwc, Sergej Kotliar - Bitrefill, and Erik Vesterlund - Stockholm Blockchain.

Community event with presentations and a panel discussion. Regarding the topics of cryptocurrency, financial instruments, and auditing.

BLOXPO 17/05/2018

BLOXPO 30+ international and local speakers. Representatives from all parts of the blockchain community, from large global tech-firms to local developers. As well as from government officials and opposition politicians.

Europe’s largest blockchain conference (according to hosts). Presentations, panel discussions, and company expos from all parts of the community.

39

Interviews

The interviews were held with blockchain experts, key figures from different Swedish

governmental institutions, and individuals working with the public sector and digital law. The

interviewees’ names have been anonymized to protect their integrity and de-link statements from

their person. The importance of data origin lies not in exactly what specific person said what, but

rather what role and knowledge they possessed. This was also done to avoid any misperception of

stating that a specific person has certain beliefs and knowledge when the full context cannot be

clarified (Swedish Research Council, 2017). Blockchain interviewees are labeled as ‘BC’ and

interviewees representing the public sector as ‘PS’. This is done do make it clear in the following

chapters what type of source the data originated from.

The interviews were mainly semi-structured to draw out in-depth information whilst keeping to

the core questions of interest (Blomkvist & Hallin, 2015; Collis & Hussey, 2013). The interviews

with the individuals from the public sector were initially of a structured approach to glean specific

hard data on the current state and the needs of the public sector, and then transition to a more

open interview to gather other interesting insights. The targeted interview time for each interview

was one hour and this was upheld well with the time differing up to approximately fifteen minutes.

The blockchain interviewees were initially chosen based on their discoverable digital presence in

the blockchain community and to what extent they worked with the technology. Once interviews

had been conducted the following interviews were also based on the input of relevant individuals

from the previous interviewees. This proved to be effective in finding suitable subjects as more

were being recommended with each interview. The recommendations became increasingly

saturated, but new individuals were continuously discovered. The saturation implying that the

recommended individuals were indeed suitable subjects. The public sector interviewees were also

found in a similar manner. First and foremost, they were found based on their experience in

working with the technology, and secondarily based on their position within their institution.

Recommendations from previous interviewees were a key source for finding relevant subjects in

this category as well. Individuals from governmental agencies were found to be of most relevance

and were given the most focus. However, representatives from other parts of the sector were also

included to achieve a holistic intake of sector data. Table 4.2 presents the blockchain related

interviews that were conducted.

Table 4.2 Blockchain Expert and Related Interviews

Number, Date Company/Institution Position/Title Other Information

Interviewee 1 (BC1) 08/03/2018

Swedish Bitcoin Exchange Vice President Four years of experience in the Bitcoin industry.

Interviewee 2 (BC2) 13/03/2018

Blockchain Consultancy Firm, Blockchain Conference/Expo

Co-Founder Blockchain consultant and speaker at blockchain events.

Interviewee 3 (BC3) 14/03/2018*

Large Software and Service Provider

Head of Blockchain Solutions

Four years of experience in company’s blockchain development team.

40

Interviewee 4 & 5 (BC4&5) 23/03/2018

Technical University Associate Professor / Ph.D. Researcher

Research focus on Blockchain 3.0. Advisor to public sector regarding digitalization.

Interviewee 6 (BC6) 23/03/2018*

Management Consultancy Firm, European Cryptocurrency Exchange

Blockchain Consultant, Co-Founder

Over five years of experience in the blockchain industry.

Interviewee 7 (BC7) 29/03/2018

Blockchain Consultancy Firm, Blockchain Education Channel

Co-Founder, Blockchain Educator and Influencer

Blockchain consultant and international blockchain speaker and educator.

Interviewee 8 (BC8) 06/04/2018

Stock Exchange and Financial Solutions Provider

Product Manager Blockchain

Three years of blockchain development experience.

Interviewee 9 (BC9) 06/04/2018

IT Consultancy Firm Head of Digital Law

Lawyer in the field of IT.

Interviewee 10 & 11 (BC10&11) 09/04/2017

Healthcare and Health Data Blockchain Startup

Co-Founders Entrepreneurs working on project with some counties’ healthcare systems.

* Video call interview

The blockchain expert interviews were conducted in a semi structured manner with a composition

of open questions and topics as the basis. The conversations were held in a discussion fashion to

bring forth new information about interesting aspects, experiences, and insights. The topics

included the personal experience and knowledge of the interviewee, their take on possible

solutions for the public sector, the usefulness of smart contracts, potential risks and problems, the

management of identity, technical issues (e.g., lost private keys), what potentials there are for

international co-operations (e.g., Nordics or EU), what the Swedish government and governmental

agencies should do to start working with the technology, and how long it will take to implement

successful solutions. These interviews were conducted in two rounds. The first round included

five interviews and had the originally established topics and questions as the focus. Based on the

data and inputs collected the questions and topics for the second round were slightly modified to

focus more on key aspects relevant to the chosen frameworks, foremost regarding the pressure of

change on the public sector. All the interview templates used can be found in Appendix A. The

field related interviewees were conducted in a similar manner but with focus on the issue from

their field of expertise, e.g., digital law and digital management. Table 4.3 presents the interviews

conducted with key individuals from the public sector. Some of these interviewees had blockchain

experience from previous projects.

41

Table 4.3 Public Sector Interviews

Number, Date Institution Position Other Information

Interviewee 12 (PS12) 16/03/2018*

Lantmäteriet - Governmental Land Registry Agency

Leading Position in Digitalization Development

Leading role in real estate blockchain project ‘Framtidens husköp i blockkedjan’.

Interviewee 13 (PS13) 10/04/2018

IT Consultancy Firm Business Consultant

Works with municipalities and counties with strategy, process development, and digitalization.

Interviewee 14 (PS14) 12/04/2018

Polismyndigheten - Police Agency

IT Security Specialist

Supports police divisions with security in digital systems. General blockchain knowledge.

Interviewee 15 & 16 (PS15&16) 12/04/2018

Skatteverket - Governmental Tax Agency

Development Strategist/ IT Strategist

Have looked into blockchain and produced some concepts of how it could benefit Skatteverket.

Interviewee 17 (PS17) 23/04/2018*

Lantmäteriet - Governmental Land Registry Agency

Lawyer Lawyer working with digitalization questions. Legal advisor in real estate blockchain project ‘Framtidens husköp i blockkedjan’.

Interviewee 18 (PS18) 30/04/2018

Employers’ Organisation for the Swedish Service Sector

Public Affairs Expert

Worked with how ICT solutions can be used within the public sector. Looked at blockchain as part of shared information system.

Interviewee 19 (PS19) 30/04/2018*

Livsmedelsverket - Governmental Foodstuff Agency

Leading Position in Strategic Development

Works with the strategic development of foodstuff control, has looked at blockchain as a potential part of a solution.

Interviewee 20 (PS20) 02/05/2018

Kronofogden - Governmental Debt Collection Agency

Senior IT Strategist Consultant

Works with the strategic IT development and innovation.

* Video call interview

These interviews were first conducted in a structured manner to focus on finding out how the

contemporary systems function, i.e., what information is stored, how the system infrastructure is

built, what work is done with the data, etc. In the second phase of the interviews, a semi structured

approach was adopted, where the concept of blockchain was introduced and potential uses in their

institutions were discussed. An exception from this structure was made in the cases where the

interviewees already had substantial blockchain experience from a public sector project. In those

cases, the blockchain project they had been part of was presented and explained. Available

documentation of the projects had been reviewed by the author prior to the interview. These

project concepts were then compared to the contemporary systems, followed by a discussion of

potential, issues, and other aspects of interest to the field of blockchain in the public sector.

42

4.3 Research Quality

The quality of the research is upheld and ensured by conducting it in a systematic and scientific

manner. That mainly entails working with a logical consistency throughout the work by constantly

remaining impartial and critical of all findings. This was of importance as each individual being

interviewed had biases and provided information based on highly personal experiences and

knowledge. However, this is also a key strength of the chosen method as it allows for the collection

of data from many individual perspectives. In parallel to this, continuous internal and external peer

reviewing of the work was implemented by a corporate supervisor, an academic supervisor,

academic colleagues, and an external advisory board. The external advisory board consists of six

members of the public and its purpose was to enhance the readability and comprehensiveness of

the text. The overall purpose of the reviewing was to acquire an abundance of feedback and

insights from many different sources, in order to maintain an open mindset and not dwell on

negligible specifics.

Validity of the research was pursued by ensuring that the literature review material, events, and

chosen interviewees were aligned with the stated problem formulation, purpose, and research

questions (Yin, 2014). In extension, which means ensuring that the blockchain experts interviewed

are indeed highly knowledgeable in the field. As well as that the public sector interviewees either

had deep knowledge of the incumbent systems or the viability of blockchain, or both. The choice

of interviewing and literature reviewing as data gathering methods did entail points of weakness

due to the issue of inference. Few direct observations could be made this way, causing uncertainty

about whether correct inferences had been made. However, as the technology is in its infancy,

concrete empirical evidence of the technology’s successful practical use cases is extremely rare.

Hence, minimizing the availability of direct observations available, which makes the chosen data

gathering methods the most viable choice at this early stage of technological maturity. To prevent

this weakness from threatening the validity of the research, the number of sources providing data

was made as extensive, given the timeframe. With the purpose of ensuring that the inference was

as accurate as possible every effort was made to examine many rival insights, judgements, and

considerations (Yin, 2014; Collis & Hussey, 2013).

The theories used to analyze the data collected are clearly presented and then used throughout the

analysis and discussion (Swedish Research Council, 2017). The choice of focusing on theory and

frameworks regarding innovation, affordance, GPT, and MLP was based on knowledge gathered

throughout the research process. Affordance theory is applicable because it can be used to target

the area of how people perceive technological affordances. The GPT framework is applicable

because it conceptualizes a broad perspective on technologies enabling usages and innovation in

many application sectors. MLP framework is applicable because it enables the analysis of a

technology as a part of a socio-technical system and its place as a technology driving change in the

contemporary regime. The operationalization of the theories is described in the following section.

The use of these theories will also serve to strive for scientific generalizability of the research (Yin,

2014; Collis & Hussey, 2013). However, generalizability was problematic to validate as the case

focus lies solely on Sweden. It is not viable to confirm the findings on another case due to the

limited timeframe of the research. The findings are also unlikely to be directly valid for other cases

where the boundary variables are profoundly divergent from Sweden, such as in a developing

43

country. However, in more closely related cases, such as Denmark, Norway, Finland, and to some

extent the EU, where the variables are similar, the generalized findings are more likely to be valid.

The ending discussion will also aim to clearly answer the research questions and to fulfill the stated

purpose of the thesis (Blomkvist & Hallin, 2015; Swedish Research Council, 2017).

The reliability of the research is ensured by the thorough documentation of how the work was

conducted. This is done by providing a clear set of references for all the information used, as well

as by making sure the way the data was collected can be clearly followed in the form of, e.g.,

interview templates and a list of events attended (Swedish Research Council, 2017).

4.4 Operationalization

In this section the connection between the theoretical aspects and the empirical observations are

stated. These connections are a fundamental part of the following analysis and are based on the

findings of the research. The purpose of this is to clarify how the theory and frameworks are used

to describe the empirical case as realistically and effectively as possible.

First of all, blockchain is conceptualized as an innovation in an early but differentiated stage of its

development. There are areas of usage where the diffusion of the technology can be observed as

being between the innovator and early adoption stages, such as cryptocurrencies. These areas are

in the process of crossing the diffusion chasm. At the same time there are many industries and

usage areas, i.e., application sectors, which are currently being explored and researched but where

few implementations are actually adopted, i.e., has barely started to diffuse at all. Related to this,

blockchain technology is also viewed as a general purpose technology, meaning it is seen as a

technology enabling generic functions that are usable in many different application sectors. This

means there are a lot of synergies when it comes to discoveries and development since it is being

explored in many different application sectors. Since there is a lot of investment in the field and

the awareness for the technology’s potential is high, once successful implementations reach the

market, the diffusion can be expected to be rapid, both internally in the application sectors but

also throughout the GPT cluster.

Secondly, the Swedish public sector is conceptualized as the focal socio-technical regime and the

blockchain community is viewed as a collection of niche innovations. These niche innovations are,

in turn, divided into many different communities of companies and developers, consisting of

startups, large IT firms, individual developers, and public sector concept projects. The multi-level

perspective framework is used to describe and understand the socio-technical situation of the

public sector in relation to blockchain technology. Furthermore, it is used to analyze the potential

socio-technical transition connecting the current stage of early innovation with the future state

where blockchain is a part of the public sector, including the transition pathways.

Thirdly, in regard to affordance theory, blockchain technology is seen as the targeted artifact. The

purpose of this is to analyze how the perception of blockchain’s affordances in the blockchain

community and public sector is affecting the early stages of socio-technical transition. The theory

is applied in two ways. The first is by using the psychological concept of perceived affordances,

i.e., mentally constructed beliefs about blockchain’s affordances. The second regards real

technological affordances, i.e., the affordances that blockchain actually possesses. Together these

44

two approaches enable an analysis of knowledge gaps concerning blockchain. The original view of

an affordance stimulating action is, in this research, interpreted in an adaptive manner as

stimulating the development and usage of solutions based on technology.

The combined usage of these theories and frameworks provides a unique, novelty concept of

analysis. With the focus on how the socio-technical transition pathways of a novelty innovation

(GPT) are affected by the perception of its affordances.

45

5 Analysis

This chapter aims to break down the complex structure of findings resulting from the investigative

research into comprehensible elements. Section 5.1 presents the status quo of the public sector

and blockchain with the use of the MLP framework. Section 5.2 elaborates on the perceived

affordances of blockchain usable in the public sector, both from the perspective of the blockchain

community and the public sector itself.

5.1 The Status Quo and Multi-Level Perspective

The findings of the status quo are categorized into the socio-technical landscape and pressures,

the public sector, and blockchain as a collection of niche innovations.

5.1.1 Landscape and Pressure

The socio-technical landscape affecting the Swedish public sector is vast. The parts affecting the

sector in relation to blockchain are primarily the macro-societal shift towards digitalization, and

secondarily the new political and security risks that have followed. As most parts of society have

become increasingly digital in the last decades, many interviewees feel that the expectations of

citizens and companies when it comes to service efficiency and effortless interactions have surged

(PS12, PS13, PS18, BC6). Companies that cannot provide easy to use services quickly lose

customers to those that can. However, these expectations are not restricted to the private sector.

When people interact with the public sector they expect to receive the same level of service as a

private company would provide (as was mentioned by the public sector interviewees). At the same

time, the digitalization has brought with it new risks that are becoming increasingly evident and

understood, with an abundance of examples testifying to this. The integrity of data is frequently

compromised as it is insecurely hoarded by large corporations, e.g., the Facebook and Cambridge

Analytica scandal (Lindhe, 2018). Data is leaked because of hacks or carelessness, e.g., as seen in

the Transportstyrelse IT scandal (Transportstyrelsen, 2017). Data may also be used by foreign

powers to potentially meddle in national affairs such as elections (Säkerhetspolisen, 2017). These

issues and changes in the landscape regarding societal expectations and need for data integrity put

external pressure on the public sector to stay up to date regarding their digital technical systems

and services.

There is also pressure coming from blockchain, which in this thesis is considered a collection of

niche innovations. As a specific technology, the hype around blockchain in recent years has been

tremendous. With developers, users, IT companies, influential tech and strategy individuals, and

mainstream media talking and reporting about it, everyone with any interest in the development

of technology will have heard about it (Furlonger, et al., 2017). This has sparked interest in many

working with IT strategy and development, effectively raising external expectations that blockchain

should be explored (PS20, PS14&15, BC8).

46

5.1.2 The Public Sector

The structure and actors in the Swedish public sector are identified as a large socio-technical regime

consisting of an intricate network of actors. Generic needs of the regime are identified to draw

conclusions regarding how blockchain would be a suitable addition to its digital infrastructure.

Structure

The Swedish public sector is a vast network that can be categorized in many ways. When viewed

as a socio-technical regime it can, from a holistic perspective, be considered to consist of an

intricate web of hierarchical decision structures and more or less siloed actors. The democratic

system distributes the power of rule from the people on three different levels, parliamentary and

government, county, and municipal. There are currently 20 counties and 290 municipalities who

simultaneously have to follow parliamentary legislation as well as possess considerable sovereignty

in terms of the right to rule (Sveriges Kommuner och Landsting, 2018). Furthermore, there are

currently 351 governmental agencies working together and independently under the different

levels of political power (Statistiska centralbyrån, 2018). In total, over 200 000 people work for the

state and over a million people work for counties or municipalities in the country (Statistiska

Centralbyrån, 2014), making it a sizable organization which, argued by interviewees, cannot feasibly

be very agile and quick to change. Sizable private companies have the same issues when it comes

to restructuring and change (PS12, PS14&15). The difference is that their funding for change

processes does not come from taxpayer money, giving more room for risky investments and trial

and error. The use of public funds is always more restricted and put under more scrutiny than

private funds, as it comes from the people. For these reasons, and since system failure must be

avoided in the public sector because of the severe consequences to society, many interviewees

argue that slow change in the sector has its benefits (PS19, PS14, BC1).

The authority and influence over decisions is split between politicians, officials, and staff members.

All of these entities use an abundance of differing legacy systems for their digital infrastructures,

solutions, and services. These solutions are either developed internally or provided by varying

private companies. The choice of solution provider or development often commences without

holistic overview and coordination (BC4, PS20). This has, over time, led to a situation where data

and information is uncoordinatedly spread out in siloed databases. There are few overreaching

information standards, leading to a severe restriction in the flow of information (PS19, PS12). A

citizen’s general data must, e.g., be provided multiple times across the sector and it is then stored

in different version in countless databases, meaning low efficiency both for the citizens and the

cost and time for handling the data (PS18).

Concurrently, there are complex legislative and bureaucratic structures in place within and between

these silos, as well as across the entire public sector (PS15&16, PS14, PS20). These structures are

in place for good reason, but they are also often perceived as too excessive, making them barriers

for improvement. They act as barriers to favorable processes, changes, and information exchanges

by making them lengthy, intricate, or sometimes even prohibited (BC9, PS17). The reasons for

their existence are naturally connected to protecting the integrity of the members of society, the

democratic process and structure, proper allocation of tax funds, and the public societal functions.

Of importance is, hence, the balancing of regulations to enable favorable development without

intruding on these societal principles. There is also a strong organizational culture present in the

47

sector, both overall and within the silos which needs to be considered in times of technology

adoption (PS19, PS20, PS15&16). A simple visualization of the Swedish public sector as a

socio-technical regime is shown in Figure 5.1.

Pressure for the implementation and development of new technology is ever present, both from

external and internal sources. The external landscape pressures are, for most of the subordinate

entities, seen as a constant, but soft, pressure which may be picked up and reacted to by engaged

individuals (PS14, PS19). However, it is mainly picked up by higher political levels of the sectors,

e.g., a local municipality or the government, who translate the pressure to more concrete tangible

objectives and goals. These objectives and goals are then distributed throughout the sector,

applying internal pressure on the silos. This is directly observable through, e.g., the government’s

set-up of goals of becoming the leader in e-governance (Regeringskansliet, 2017) and by the

corresponding actions of higher management in the sector to create internal strategies and appoint

digitalization responsibility to positions high up in the internal hierarchy (PS18, PS20).

However, as the public sector does not operate under normal market rules, the dynamic

competition and response to demand pressure is rather unique. Most public sector actors cannot

be outcompeted as they have a monopoly on their specific market (PS20, PS17). Governmental

agencies, such as Skatteverket and Transportstyrelsen, have no competitors, meaning that their

‘customers’ cannot change provider of their respective services. Hence, the demand and pressure

for change on such agencies must come from higher political authority. On a municipal level some

supply and demand systems can be observed. The citizens or companies of a small rural

municipality may, e.g., move if their municipality cannot provide the services they require while a

richer municipality can (PS13, PS20). Political supply and demand is naturally present in the

election process, but the legacy systems and structures are not simply replaced because new

representatives are elected.

The Public Sector as a Socio-Technical Regime

Municipalities

x290

Counties x20

Officials

Regulations

Culture

Data Silos

Organizational

Structures

Legacy Systems

Governmental

Agencies x351

Parliament

Politicians

Solution

Providers

Government

The Public Sector

Power

Structures

Digital Solutions &

Development

Figure 5.1 The Public Sector as a Socio-Technical Regime

48

The public sector has been continuously reactive to these pressures and consequently developed

increasingly sophisticated and effortless digital solutions in most parts of the sector. The awareness

of digitalization is high, but these developments have been conducted in siloed structures, creating

few synergetic benefits in the overall sector (PS13, PS19, PS18, PS14). There are, however, major

differences between actors when it comes to their current situation and how far in the digitalization

processes they have come. Some are, e.g., engaging directly in the innovative forefront such as

Lantmäteriet, and are playing a central role in a blockchain project (PS12, PS17, (Lantmäteriet,

2016)). Others, such as Skatteverket and Livsmedelsverket, have investigated blockchain as a

potential contributor to future solutions and encourage external development (PS15&16, PS19).

And lastly, those like Kronofogden, focus their resources on overcoming issues with problematic

legacy systems (PS20). There is also a considerable difference between rural and urban

municipalities and counties when it comes to available funds and resources. Rural actors seldom

have the same resources to develop their own expensive digital services, as opposed to urban ones.

This is connected to the rural migration mentioned previously, which creates societal gaps.

The lack of information flow and standards is increasingly problematic and most actors in the

sector struggle, to some extent, with restrictive legacy systems (PS12, PS14, PS20, PS15&16).

There is also some internal resistance to technology adoption. However, there is consensus among

the sector interviewees that there is no resistance present caused by ill intent; the individuals

working in the sector are generally positive concerning improvements and want to help in the

process. Some also argue that the resistance to change comes predominantly from inertia caused

by regulations and bureaucracy (PS15&16), whereas others also mention fear and resistance

towards technology adoption as soon as there is realization that one’s own job is threatened by it

(PS19, PS13, PS18).

Needs

There are three pillar perspectives that can be seen as fundamental in the digitalization process:

technology, methodology, and regulation (PS19). Eight current needs of the public sector

concerning digitalization, and hence blockchain, have been identified connecting to these

perspectives, many of which overlap. These are derived from the aggregated knowledge collected

from the interviews. The needs are presented in Table 5.1 and consecutively explained in more

detail. The order of the needs does not entail any sort of weighing of their importance.

Table 5.1 Digitalization Needs of the Public Sector

Needs of the Public Sector related to Digitalization

1. Efficient Flow of Information

2. Verifiability and Traceability

3. Standardization

4. Updated Regulations

5. Clear Instructions

6. Room to Experiment

7. Process Improvement

8. International Collaboration

49

Efficient flow of information. There is a need to enable a more efficient distribution and retention of

information. This need exists both internally between actors in the sector, as well as externally to

the people and private sector.

Verifiability and traceability. There is a need to be able to verify the authenticity of data, e.g.

documents and public information. The authenticity must be ensured securing immutability and

traceability of origin and alterations.

Standardization. There is a need to develop information standards to enable the efficient flows of

information between public sector actors. There is also a need to develop a standardized digital

infrastructure for this very same reason (PS18, PS12, PS17, PS20, PS12). A lot of attention in the

sector is given to the Estonian distributed digital infrastructure, X-Road, as a source of inspiration.

Shared solutions would be especially beneficial to rural municipalities and regions since the burden

of developmental costs and maintenance would be shared by all participants.

Updated regulations. There is a need to revise the regulations that restrict the further digitalization of

the public sector. First, there is the need to ensure that regulations are technology-neutral, as not

to limit the range of tools available for development (PS17, PS15&16, BC9, PS20). Secondly, there

is the need to review the regulations concerning the sharing of information between public sector

actors. A lot of positive synergy effects and efficiency could be gained by enabling improved

information flows, e.g., the health journals between siloed healthcare institutions or the data in the

food supply chain from Jordbruksverket to Livsmedelsverket. Thirdly, there is a need to make

digital signatures legally equal to physical signatures. As more and more contracts and

authorizations occur digitally, digital signatures need full legal power to enable further and deeper

the digitalization of society (BC6).

A specific regulation currently believed to be imperative is the general data protection regulation

(GDPR), which restricts the immutable storage of personal data heavily. Since this regulation has

just been implemented as this is written, it is ambiguous how it will impact various markets. There

is a lot of speculation as to how it will work with blockchain. It should restrict the usage of

blockchain for data storage as personal data has to be erasable, but interviewees agree that this will

not be critical for blockchain as they see it will mostly be used to store hashes of data, not the data

itself. Most agree that the main purpose of GDPR, which is securing the integrity of data for

European citizens, is generally a favorable step in the digitalization of Europe. With blockchain

potentially being an enabler when it comes to controlling one’s own data (PS17, PS18, BC9).

Clear instructions. The development teams in the public sector need clear instructions from the top

as to what areas are to be explored and improved. With clear instructions focus and resources can

be more efficiently allocated (PS19). This should, however, stay at a level where it is not restrictive

concerning how to create solutions and solve problems. The instructions should be what issue to

solve, not instruct on how to solve an issue, i.e., it should not be technology or process specific.

This relates to the following need of room to experiment.

Room to experiment. Public sector actors need to be able to investigate and experiment with new

technology together with the private sector to find the practical affordances it possesses (PS12,

PS14, PS19). Small group and short term pilot and concept projects that do not bind up resources

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are needed to do this. A culture of acceptance towards trial and error is needed to further the

innovative processes in the sector (PS13). However, this is a more or less siloed need; hence the

areas of investigation would be for specific use cases.

Process improvement. There is an overall and general need to make processes more efficient in the

sector. This relates to all other needs and should be approached as a mindset, i.e., lean

management. To achieve leaner processes, solutions need to involve the three perspectives of

technology, methodology, and regulations. Lead times and costs need to be reduced by making

paperwork digital and reducing human interaction as much as possible. Automatization and

process simplifications play a big part in this (PS19, PS20, PS12, PS13, PS15&16).

Education. Increasing the knowledge about the possibilities of new technology is needed in the

sector. This is a need on all levels of organization. All levels of management and decision makers

need to be educated to be able to make the right choices as to where to allocate resources (PS19,

PS15&16, PS14). General knowledge of what problems can be solved and what types of solutions

are available is essential for efficient management. Knowledge among developers also needs to be

shared to enable synergies and reduce the negative effects of working in cut-off silos. Thus,

structures for knowledge sharing and discussing are needed (PS14). Staff members affected by the

new solutions should also be educated as to what is happening and what the new solutions will

entail. Integrating the staff in the change process helps by increasing the understanding of the

process for developers, as well as prepares the staff for the change. This can reduce the fear of job

loss and staff can instead spend their time doing more qualitative work, e.g., interacting with people

rather than crunching numbers (PS13, PS19). However, job loss is likely eminent as new tasks

cannot be found for all staff.

International collaboration. This is not a direct need of the sector, rather a want and realization that

even more efficiency can be achieved by developing standards and solutions with, e.g., other

Nordic nations with similar structures as Sweden, or possibly throughout the entire EU (PS12,

PS19). The larger the sphere of standardization, the more cost and lead times can be reduced. As

Nordic and EU cooperation increases, the need for efficient information flows increase as well.

Areas were also identified where there is not any prevalent need for improvement. The first one is

trust between stakeholders. There are no evident issues of lack of trust between actors in the public

sector. The same goes for the trust of the public towards the public sector (PS13, PS19, PS20),

except for trust towards the police from some parts of society (PS14). The trust need is only

evident when it comes to confirming that the information was indeed issued by a public sector

actor, not towards the actor itself. The second non-need is to achieve full transparency regarding

the works in the public sector. All interviewees from the sector agree that transparency is good

and that the result of processes and spending of tax money should be public. However, they also

believe that full transparency for every single step of processes or action would do much more

harm than good (PS19, PS13, PS15&16). Full transparency would be highly restrictive as people

would be afraid to be the least bit innovative and try new experimental solutions. The fear of public

shaming and personal consequences would be too great. Thirdly, the technology and regulations

are deemed to be secure from an IT regulations and technologies perspective (PS12). The risk of

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data loss is deemed low and leaks of data would likely be caused by lacking methodology as to how

to handle it.

The sector is dynamically stable, and resources are constantly distributed with the aim of tackling

needs like these. For fall 2018, the planned introduction of a digitalization agency is by many

perceived to be a holistic response to these needs (PS15&16, PS19). The response especially targets

the standardization of information, a joint digital infrastructure, and overall alignment of

digitalization efforts. There are also efforts between public actors in progress targeting the issue of

citizens having to enter the same data multiple times called ‘alla uppgifter en gång’ (all data once)

(PS18, BC10&11). The government does issue tasks regarding fields to be researched by

governmental agencies as ‘regeringsuppdrag’ (government tasks). Internal resources are spent, and

external resources are incorporated, to continuously align efforts and react to pressures. There are

also outspoken political proclamations - from both the government and the leading opposition

party - concerning the ambition of making sure regulations are not restrictive regarding digital

technology innovation, whilst at the same time protecting the citizens through ‘healthy’ regulations

(Bolund, 2018; Rosencrantz, 2018).

5.1.3 Blockchain as a Collection of Niche Innovations

Blockchain is a collective innovation which consists of an abundance of different niche

innovations. These niche innovations are mostly conceptually radical but range from incremental

to radical regarding their impact on incumbent systems. They can, thus, be either sustaining or

disruptive innovations. The current level of adoption differs between application sectors and will

likely continue to do so as blockchain can be considered a GPT. These innovative solutions are

developed by different actors both in a global community and in more geographically centered

networks. The community of focus in this thesis is, naturally, the Swedish blockchain community.

Structure

The blockchain community in Sweden consists of a small group of entrepreneurs and companies,

which are relatively unstable and some lacking in support structures. There are small blockchain

consultancy and solution providing firms, e.g., Stockholm Blockchain, Chromaway, and BTCX,

mediating companies connecting interests group, e.g., Kairos Future, large international firms, e.g.,

IBM, Microsoft, and Nasdaq, as well as individuals coming from the public sector who have

worked in projects with community actors (BC1, BC10&11, PS12, BC7, BC8). The community

actors are naturally more or less connected to the global blockchain community with knowledge

and solutions flowing into and out of Sweden. The community and technology are still in an early

stage of innovation, but the global community is a thriving ecosystem of both users and developers

who are constantly developing new affordances leading to the quick evolution of the technology

(Kewell, et al., 2017). The companies which are providing live solutions are still mainly connected

to cryptocurrency, with the cryptocurrency community being the largest. Whereas solutions within

other usage areas are still in a phase of concept and pilot projects (BC2, PS12, BC8, (Kandaswamy

& Furlonger, 2018)).

Progress and Standardization

These niche innovations are currently in a strong phase of evolving and aligning to make them

viable for different markets. An important part of this is the setting of industry standards for the

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technology. These niche innovations target different areas with some being created for a specific

purpose and others being more generalized. Support structures for the technology are being

formed as company and individual connections are made and as knowledge and awareness spreads

throughout the network (Tapscott & Tapscott, 2016; The Linux Foundation, 2018). A noteworthy

observation is that there is a strong interest from incumbent regimes, both private and in the public

sector, for the technology. Collaboration projects between the blockchain community,

governmental agencies, and incumbent private companies are not unusual (PS12, (MyungSan,

2018; The Linux Foundation, 2018; Kewell, et al., 2017). This means that internal regime resources

are spent on developing the technology, as parts of the regimes are indeed acting within niche

innovation communities. A major factor contributing to this is the large scale hype that has

surrounded technology in past years, which directly links to the rise in monetary value of

cryptocurrencies (Furlonger, et al., 2017).

The blockchain community currently lacks generally accepted standards and common practices,

making compatibility and development inefficient. There are several communities and groups of

actors working together to set universal standards to make development easier and to create

synergies. One of the major communities is Hyperledger which is a consortium for blockchain

development that was started by the Linux foundation (The Linux Foundation, 2018). This

consortium consists of a large group of companies ranging from, e.g., blockchain startups,

investment firms, consultancy firms, and large IT firms. IBM is a core member of the community

and is currently in the forefront of blockchain development (BC2, BC6). Hyperledger focuses on

industrial use permissioned blockchains. Another large IT firm at the forefront of blockchain

development is Microsoft. They have however taken a more siloed approach with their own

development community (Microsoft, 2018). In relation to these company approaches, there are

the public P2P communities working on developing the permissionless networks. These

communities are completely open and depend on smaller groups of developers and individuals

with personal interests. The Bitcoin community focuses on the development of blockchain for

ungoverned cryptocurrencies by improving the usability and scalability of the bitcoin network. The

Ethereum foundation focuses on similar solutions as the company communities, but rather on a

permissionless network, i.e., the Ethereum network (Tapscott & Tapscott, 2016).

Perception of Blockchain

When it comes to the perceived generic affordances of blockchain there is broad consensus among

the interviewees. Many agree that blockchain technology is a viable solution to achieving trust,

transparency, traceability, and immutability and, furthermore, that these generic functions are

applicable in an abundance of markets, i.e., it can be classified as a GPT (BC1, BC7, BC8, (Adams,

et al., 2017; Iansiti & Lakhani, 2017; Boucher, et al., 2017)). What divides the community is the

perception of what type of blockchains will be of most value in the future. On the one side there

are those claiming that permissionless blockchains are the true blockchains that will change the

world because they remove centralized power and enable full public transparency (BC1, BC7). On

the other hand, are those that think permissionless blockchains will not be very useful in the end

as there is no way to control them and that they are simply anarchistic in nature (BC3, BC4&5,

BC8). Their beliefs are instead that permissioned blockchains will make incumbent systems much

more efficient by reducing costs and automating processes. Naturally these beliefs exist on a

spectrum, meaning that there are many hybrid beliefs in between (BC2, BC6, PS12).

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Since blockchain can be considered a GPT - and since regimes working in different application

sectors are investing in its development - there is a high probability of it diffusing through niche

accumulation. Meaning that once innovation solutions are developed which are viable to become

part of an incumbent regime, the technology will likely quickly spread between application sectors.

Since the awareness of the technology’s potential disruptive nature is high, the barriers of entry are

kept low, granted that the solutions are developed enough (Bresnahan & Trajtenberg, 1995;

Helpman & Trajtenberg, 1996). The blockchain GPT cluster could support many innovation

synergies between application sectors due to the strong network in the community currently being

formed. Currently, the most evident issues that need solving before this can happen are related to

the handling of lost private keys, making the technology user friendly, both for developers and end

users, ensuring that the solutions are scalable enough to handle growing usage, making sure that

sufficient confidentiality of data is ensured, and that regulations are not broken (BC1, BC7,

BC10&11, BC8, PS17). The community is currently waiting for the breakthrough of a successful

cost saving and large scale application, which is believed to start the adoption of the technology

on a broad scale, resulting in a quick crossing of the gap between innovators and early adopters

(BC2, BC4&5, PS15&16, PS12).

In the community there is general consensus from the interviewees that permissioned blockchains

will be useful to enhance the incumbent regime infrastructure as they are perceived to possess

affordances enabling novelty verification, efficiency, and transparency solutions. The same goes

for related DLT solutions for keeping ledgers the same across a network, with many believing that

hybrid solutions will prevail in the end (BC6, BC2). However, there is a divide as to the importance

of these compared to permissionless blockchains. Some perceive permissioned blockchains to

simply be the next incremental step in the evolution of shared databases which will have low

impact in the end. Permissionless blockchains are perceived by them as revolutionary to the same

degree as the Internet. Whereas permissioned blockchains are on the level of intranets, still useful

but not disruptive (BC1, BC7, (Manski, 2017)). Others argue that in a country of high trust like

Sweden, permissionless blockchains as they are today will be of little value as there is no trust gap

to fill (BC3, BC8), and as the other benefits can be achieved with permissioned blockchains. This

gives rise to the question of whether people would rather trust an uncontrolled permissionless

network or a permissioned network of actors upon which trust has already been placed (BC8).

Another noteworthy perspective is that of permissionless blockchains being one extreme on the

spectrum and a private, completely centralized blockchain being the other extreme, as extremes

are seldom optimal in practice according to some interviewees (BC2, BC8). One of the

interviewees put this in context as:

“Hybrid DLT and blockchain solutions are likely to prevail in the end, extremes are

seldom the most efficient solutions. Just like we have seen that absolute communism and

absolute capitalism are not optimal, we will see hybrid blockchains being more efficient than

100 % centralized or decentralized blockchains.”

There is, however, agreement among the blockchain community interviewees that permissionless

blockchains are more useful in highly corrupt and untrusted nations where the citizens would likely

rather trust a collective of peers rather than the government and private institutions (BC1, BC2,

BC7, BC8). The blockchain community has also managed to gain high level political traction as

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the EU has posted several reports and started collaborations in the field. The EU Blockchain

Observatory and Forum, which is supported by the European parliament, directly encourages the

member states to explore and support the development of blockchain solutions (PS18, (EU

Blockchain Observatory and Forum, 2018)). The Swedish minister of housing and digitalization

has even signed a declaration which declares that Sweden will contribute to this international

collaboration (European Commision, 2018). This is significant as it means the public sector is

pressured both internally from the government, and externally from the community of blockchain

niche innovations at the same time.

It should also be noted that blockchain’s connection to Bitcoin initially caused bad reputation for

the technology. The Bitcoin network has previously been portrayed as delinquent by media

because of the perceptible affordance of allowing criminal transactions to happen (Senate Canada,

2015; The World Bank, 2017). This does not, however, in any way mean that blockchain

technology itself was anything but completely neutral. Just as fiat currencies are not malevolent

just because criminals use cash in their transactions. It is the affordance of criminal transactions

that is unfortunate.

On another note, blockchain, along with other promising digital technologies, is potentially

contributing to an increasingly polarized society in terms of technological knowledge. The

individuals that are highly skilled when it comes to technology are increasingly playing a more

influential and dominant role in the workings of society (Scott, et al., 2017; Atzori, 2017; Manski,

2017). This is a natural progression as humanity moves towards more digitalization and

improvements in technology. However, this shift of power as to who controls the advancements

of society is problematic as the legacy structures of society were created for political power, not

the power that comes with advanced digital technological innovations. In response, regulations

must be revised to fulfill the needs of the modern digital era.

5.2 Perceived Affordances for the Public Sector

This section aims to clearly present how blockchain is perceived based on its affordances for the

Swedish public sector. First, from the perspective of the blockchain community, and secondly,

from that of the public sector itself. Lastly, a comparison of the two perspectives is provided.

The perception of blockchain’s affordances for the public sector is fairly divided among the

interviewees. The basics of the technology is perceived similarly, namely as a technological tool

which affords the keeping of a ledger in which history cannot be altered, is transparent, can be

used for authentication purposes, is shared in a network, and can be used to automate processes

with the use of smart contracts. However, the perceived affordances for how these generic

affordances could be implemented are not homogenous.

5.2.1 Blockchain Community’s Perspective

Within the blockchain community there are different views as to the affordances of blockchain

for the public sector. Key aspects provided by the interviewees are presented, which are just parts

of lengthy discussions.

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BC1 argues that blockchain is not suitable for the public sector as it is structured today. As

blockchains are bad for storing data, they would be highly inefficient for use in the public sector

as the desired information flows would be much more efficient to handle with other database

technologies. The hyped affordances of blockchains in the public sector are generally contributed

to distributed ledger technology and not blockchain. DLT enables efficient digital infrastructures

where information flows are enabled. The use of blockchain for the sector could be to store hashes

in a public chain for verifiability, other than that it mainly just highlights the possibilities of DLT

and other underlying technologies, such as public key infrastructures and cryptographic hash

functions. BC1 believes that a blockchain must be above the law to realize its true benefits,

otherwise the point of immutability is diminished as it is the law that decides what is true, not what

is on the blockchain. Thus, where blockchain provides true value is when it is permissionless.

Those blockchains are also the ones that are revolutionary and disruptive. BC1 expresses some

thoughts as:

“… there is not really a need for blockchain [strict definition] in the public sector, just use

distributed keys [PKI] and distributed databases [DLT] and many efficiency benefits could

be realized […] A real blockchain is not needed in a permissioned network, as there is no

need for an intricate consensus mechanism and the hardware and network speed can be

highly efficient. […] Hash functions are nothing new and can still be used to prove there

has been no tampering.”

BC2 argues that blockchain would be highly usable for the public sector concerning everything

connected to the traceability of money, i.e., how money is spent and by who etc. and for combating

corruption by tracing actions with private keys. Blockchain networks become stronger the bigger

they are, but BC2 argues that, e.g., a permissioned blockchain between the central bank and four

other large banks still provides a large benefit to the distribution of trust and transparency

compared to the closed systems of today. As well as that smart contracts will make many processes

autonomous. BC2 states that the line between DLT and blockchain is not very important and that

the solutions that will prevail will be hybrids where the blockchain functions as a verification layer

for the underlying data. Permissioned blockchains are argued to possess major benefits because of

the ability to handle disputes and errors, as well as responsibility assignment. Vote management,

health journals, and identity management are other affordances BC2 perceives to have high

potential for the sector. BC2 describes some uses for the public sector as:

“An immutable ledger, i.e., blockchain, would be highly efficient in combating corruption.

Imagine tracking the flow of money for, e.g., municipalities, the building of hospitals,

constructing roads, etc. […] Smart contracts would be highly effective in making the

processes efficient and you would be able to see exactly where the money goes, who takes out

money, and who signs the contracts.”

BC3 sees blockchain as a key enabler for allowing citizens to control their own identities and data.

Mainly, the affordance of providing a personally owned identity which information can be added

on to, or retracted from, by issuers such as Skatteverket. The blockchain enables personal

authentication, information verification, and the controlled distribution of one’s own data. BC3

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argues that the blockchain is not needed to track transactions in a central system of trusted actors.

For spreading information, other digital infrastructure technologies are better suited. Another

potential affordance could be the tokenization of public services to, e.g., get a better way to track

who uses what services and how often. BC3 stresses that the important thing is to find a specific

use case where blockchain adds value and that no uses are currently perceived for blockchain for

centrally controlled ledgers.

BC6 argues that blockchain is usable for the public sector when interacting in a system of external

actors with different wants and needs. This could, e.g., be in an industry where competitors,

suppliers, buyers, and a governmental agency set up a network with the goal of sharing public data

in which history needs to be traceable. Internal networks have no need to be on a blockchain.

Blockchain is not usable for private data as it is shared in the system; in those cases, it is simply a

key to unlock or share private information. BC6 also argues that smart contracts currently have

limited usage as they are hard to code unless the function is very generic. Furthermore, the

technology is perceived as close to ready for practical usage in the sector, it is the regulations and

governance that are restrictive at the moment. BC6 describes the current usability and issues:

“The technology is developed enough for many use cases where transaction amounts are low.

Legal and governance issues are currently the most eminent issues that are being worked

on.”

BC7 argues that blockchain is a poor database if you do not need transparency, but if you do its

very good. Hence, all information that should be public should be on a public blockchain. BC7

also argues that blockchain’s most useful affordances are applicable mainly in external systems

where the public sector and other parties have different incentives and there is a need for trust.

The prediction is that permissioned based blockchains will not be interesting in the future as they

are still under some type of central control and this is exactly what blockchain was meant to amend.

Furthermore, it is pointed out that the transparency of blockchain will enable AI and machine

learning to find any patterns of mischief. BC7 elaborates on the uses of permissioned and

permissionless networks:

“Permissioned based blockchains have their place in society today, but in the future the they

will not interesting. […] I think the main uses for permissioned blockchains is

internationally, since this is more decentralized […] The set-up of network nodes will

depend on each unique industry and purpose”

BC8 argues that permissionless blockchains are not viable at all for the public sector as there are

too many issues with dispute and error management. BC8 is of the belief that permissioned

blockchain networks should be set up in networks with external actors with different roles and

incentives. The participants need to have a stake in the system to be trusted to want to keep entries

correct. In each network rules need to be set up to confirm who is responsible for what, that laws

are followed, and what should happen when errors or mistakes occur. However, BC8 also predicts

blockchains could be useful when it comes to verifying documents containing, e.g., laws or rules

by saving the original hashes on a blockchain. Regarding the perceived benefits of permissioned

networks BC8 states:

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“In the end, legal contracts must be formed in the networks stating exactly how it should be

structured and who has what role. In Bitcoin [permissionless blockchains] there is no one to

call or sue when something bad happens. If something goes wrong, we need to know who we

should turn to.”

BC10&11 perceive the affordances of blockchain for the sector to be the enabling of control and

verification of data. Control of the data is afforded to citizens and institutions with the use of

private keys and the data integrity of the data is verifiable as its hash lies on the blockchain. For

the case of health data, both journals and external data can be hashed and then distributed to

doctors when needed. This could solve issues with data being stored inefficiently in silos. Even

though the data would not be stored on the blockchain, it is what keeps the integrity and

distribution of it secure. Furthermore, they argue that DAOs and smart contracts can be useful in

specific situations in the future for public governance, e.g., in a system of controlling self-driving

cars.

The most widely spread perception of permissionless blockchains is that they have no uses for the

public sector today other than to perhaps upload verification hashes in, e.g., the Bitcoin blockchain

to be able to prove that the underlying data has not been altered since the time of upload. This

affordance is, however, also argued to be achievable with permissioned blockchains as well. The

other perception is that permissionless blockchains will be a fundamental part in the future of

public governance as a way of distributing power and achieving true transparency. This is reflected

in arguments that, e.g., the UN will demand full transparency for public records and that smart

contracts will handle and run the blockchain. Permissioned blockchains are generally viewed as a

radical sustaining innovation for the sector, enhancing the incumbent system. Whereas

permissionless blockchains are seen as a potentially disruptive innovation. Naturally, it is easier to

predict and perceive the value of sustaining innovations rather than futuristic disruptive ones.

As for the distribution of nodes for blockchains useful for the public sector, there is majority

consensus that the nodes are hosted by entities that are known and trusted to an extent. Trusted

in the sense that they have a stake in the system and have incentives for keeping it functioning.

Not just anyone should be able to join and be trusted with maintaining the system. Generally, the

gamification of public governance through permissionless blockchains is ill-perceived as it leads

to public services and the rights of citizens being privatized (Atzori, 2017). International

blockchains are perceived to be favorable as the network then grows and there is a larger need for

trust benefits.

5.2.2 Public Sector’s Perspective

In the public sector there is naturally a wide gap in the knowledge of blockchain. This means that

there is an abundance of both hidden and false affordances for blockchain among the people with

little knowledge of the technology. The perspectives from the public sector in this work focus on

individuals working within IT strategy, development, innovation, or digitalization. Some having

worked with blockchain and some who have not. The perceived affordances of blockchain are

diverse in this group even though the generic functions are perceived the same. Key aspects

provided by the interviewees are presented, which are just parts of lengthy discussions.

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PS12 mainly perceived the affordance for blockchain as the verification of document authenticity.

This being achieved by uploading hashes of, e.g., contracts, foremost in a permissioned blockchain

but also possibly in a permissionless blockchain simply to achieve higher security by redundancy.

Efficiency benefits are perceived to be secondary and should not be the reason for implementing

blockchain solutions. The perception is also that it could be used as the verification layer of a

system solution, not the entire solution itself. PS12 also sees potential affordance in combating

corruption through traceability as well as securing identities with blockchain. Blockchain as a

technology is perceived to be useful, but currently blockchain solutions are not applicable as

regulations are too restricting, the private providers are too immature, and the structuring of the

governance model is unclear. In relation to the perception of efficiency and trust, PS12 asserts:

“A lot of people get stuck on the efficiency benefits, but they have not really understood the

reason for using blockchains. […] Blockchain solutions would be a big step in making the

systems more secure and better by enabling the confirmation of authenticity of originals

[documents], it is a major improvement in how we keep ledgers.”

PS13, PS14, and PS20 as individuals with no experience of working with blockchain, had the

general perception of blockchain affording the keeping of immutable, transparent ledgers and

information transfer. They all see the potential of verification possibilities and smart contracts.

PS14 mentioned the possibility of transparently tracking evidence on a blockchain and PS13 the

potential use of smart contracts for municipalities dealing with service providers. PS20 saw the

potential of digitizing unique artifacts, e.g., promissory notes, using blockchain. They stressed the

importance of not trying to push the technology, but rather finding use cases where blockchain

provides value. Their view on the affordance of increasing trust from the public differed. PS13 did

not think the trust perspective provides extra value in Sweden, whereas PS14 saw the potential to

increase public trust towards public information, evidence storage, and police in the field.

PS15&16 perceive blockchain’s affordances for the public sector to be connected to ensuring the

validity and transparency of information coming in from external sources as well as through

automatization using smart contracts. The uses internally in the sector are perceived as limited as

there is no trust issue between sector actors. An affordance could, e.g., be the access to an industry

blockchain which could make the reporting of sales much more efficient to all parties. Smart

contracts could be used to codify the remittance of tax on sales automatically, making that process

quicker and cheaper. The traceability of transactions would be an affordance allowing tax audit

and analysis. Concerning smart contracts PS15 states:

“One interesting use case for smart contracts could be codifying, e.g., the taxation of sales.

They could be made to autonomously execute the transaction of taxes in real time as the sale

occurs. Making the reporting processes easier for both Skatteverket and the traders.”

PS17 perceives the affordances to be rather limited within a strict definition of blockchain. The

trust benefits are limited for communicating internally and externally due to the generally high trust

in Swedish society. In addition, because the public would not gain more trust simply because a

specific technology is used, the trust lies in the institution and that they say that something is

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secure. The affordance of identification management is perceived to be highly useful, but there is

a long way to go until it can be realized because of legal and structural issues.

PS18 perception of blockchain’s affordances focuses on the identity and data control management.

There was strong perception that blockchain can be used to allow citizens to control their own

data and identity. However, false affordance was perceived as to the ability of blockchain to store

data, but the key aspect was the control of one’s own data, which blockchain could enable. As well

as the collecting of one’s identity in one place, to be used in all public sector interactions.

Verification was also seen as a key affordance.

PS19 perceives the affordances useful for the sector to mainly be related to the information flow

inside and out of the public sector. That is by providing the ability to verify that the information

from an agency is correct or that supply chain information being scrutinized is accurate. PS19

mentioned the specific potential use of sharing information between both agencies and suppliers

in the food supply chains to combat dilution and cheating by making the traceability much more

efficient. There was a false perception as to the sustainability impact of blockchain, with the overall

notion that all blockchains run on energy intensive PoW. In regard to the trust within the sector

PS19 describes it as:

“The trust between agencies may not be central to why it [blockchain] would be useful, but

it is still important because the data coming from the system has to be trustworthy. […]

The verification possibilities are what is primarily most interesting.”

There is general consensus in the perception of blockchain being a sustaining technology rather

than a disruptive one. However, there is also some notion that permissionless blockchains could

be disruptive in the future, but that this is not observable today. Another major barrier perceived

for permissionless blockchains is the high environmental impact caused by the energy intensive

PoW. Socio-technical transitions are increasingly affected by the real and perceived environmental

sustainability of the technology (Meadowcroft, 2005). There is clear disagreement as to the need

for trust between agencies in the sector, with some claiming blockchain is not needed as actors

trust each other. Whereas others claim that the ability to trust that information is correct is highly

relevant even if it is between two trusting parties in the sector. The false affordances found are

acknowledged as connected to the diffuse differences between blockchain and DLT, as well as

minor knowledge gaps. There is, for instance, a notion of blockchain being suitable for the

distributing and sharing of information in a network. It may be an enabler for this, but DLT and

a decentralized architecture are likely much more efficient for letting the information flow.

Regarding the perception as to who should be running nodes in a blockchain network used by the

public sector, there are different views. PS12 argues that the nodes could be held by both public

sector actors and private actors who are stakeholders in the system. However, the argument

included that this position should not be a commercial position that can be bought, but rather

decided by other criteria. PS18 argues that private companies never should be trusted with handling

personal data for the state, i.e., in the case of identity etc. Whereas others are of the notion that in

the cases of specific use cases in industries, there is no need for public sector actors to run nodes.

They simply need access to the blockchain and the nodes should be held by different actors in

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each industry. Naturally, who should run nodes depends on the purpose of the node, and as there

is currently no public sector implementations, it is hard to analyze what works best.

All interviewees think international blockchains could be beneficial, some even argue that it is

internationally that blockchain could have the most impact (PS15&16, PS19). The issues with this

is that nations have different regulation and incentives, making joint solutions problematic to

achieve, but if realized the gains could be extensive (PS17, BC6).

5.2.3 Perception Comparison

As perception of affordances is highly individual, there are clear differences within both groups.

There is a clear connection between how these individuals perceive blockchain and in what field

they are working. The perceived affordances are naturally inclined to be centered around the areas

and processes one is knowledgeable about. In both groups there is, however, fairly wide and

uniform conceptual understanding of what the affordances of blockchain are, which also aligns

with the literature in the field. The understanding is directly linked to the generic functions which

blockchain has been promoted to possess, or to more specific functions derived from these.

The affordances of blockchain will, for an average person in the public sector, be mostly hidden,

whereas for the group of individuals working within the blockchain community many of these

affordances will be perceptible. However, of note is that since the technology is in its infancy, the

likelihood of false affordances within the professional group is rather high, and the hidden

affordances are still abundant. The perceived affordances are generally assumed based on concept

and not on practice, meaning that they may show to be false in the long term and still hidden

affordances may be discovered.

The blockchain community’s perception as a group is rather uniform and highly positive that the

conceptual solutions will indeed be proven to bring value. The differences mainly lie within the

question as to whether permissionless blockchains will have a place in the public sector. As well

as to whether the benefits of many of the conceptual ‘blockchain’ solutions really are blockchain

or simply another type of DLT. How the term ‘blockchain’ is used differs in definition. In the

public sector, on the other hand, the perceived affordances are more directly determined based on

the context by which individual’s perspective is influenced. The perspectives of information

sharing, identity management, large scale transactions tracking, or document verification create

niched perceptions. The perspective of the generic functions may be homogenous in the group,

but the perceived affordances of what these enable differ.

One thing that the groups clearly have in common is the view of blockchain as one tool in the

digital technology toolbox. There is agreement that there are few use cases practically proven at

this early stage of innovation and the common view is that the value that blockchain brings to each

specific use case must be found. It is by the interviewees not seen as a technology that can be

applied everywhere and work wonders, even though the hype has, to some extent, promoted just

that. What can be observed is, however, that the perception as to how to use this tool differs. The

generic result that wants to be achieved is rather clear, but how to manage and use the tool is

inconsistent. This testifies to the lack of standards and need for cooperative education.

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6 Discussion

The aim of this chapter is to deliberate on the importance and meaning of the empirical findings,

as well as to provide answers to the research questions stated in the problematization. The first

two sections are of a practical nature, whereas the third is of a theoretical one. Section 6.1 regards

blockchain’s meaning and value to the public sector, as well as discusses identified conceptual

solutions that could be beneficial to explore for the sector. Section 6.2 presents and elaborates on

the recommended actions for the sector. Section 6.3 regards the theoretical aspects of how

perceived affordances affect a socio-technical transition and discusses potential pathways for

blockchain in the sector.

6.1 Blockchain’s Value for the Public Sector

This section presents the answer to the research question: ‘How can blockchain bring value to the Swedish

public sector?’ by discussing the technology’s value - and conceptual solutions - for the sector based

on the findings of the thesis.

The Swedish public sector has been under long term pressure to digitalize services and processes.

It has been gradually transitioning towards further digitalization by sporadically adopting

technology among the sector actors. The three areas that need to align for successful digitalization

are technology, methodology, and regulations. Blockchain as a technology shows promise to

indeed be useful in the sector, which is also how it is perceived by the actors within it. The

important realization here is that blockchain will be useless unless the two areas of methodology

and regulations become aligned with the technology. The technology as such could likely be

adopted hastily once a good use case is found. Hindering such an adoption would be the slow

progression of the methodology and regulations. Methodology would have an effect in that the

processes of establishing what procedures, governance models, and network structures to

implement are lengthy and require a lot of resources from many parties. The regulations are

naturally closely connected to this as it states what methodology can, and cannot, be used. If

regulation simply prohibits certain procedures regarding, e.g., data storage or sharing, the

technology may never provide any real value, since its usage would not be allowed. As law revision

is a lengthy process, the technology could have years to mature before it is even legally viable as

an option. This may not be an issue as the public sector should arguably not be the leader of society

when it comes to novelty technology adoption. Risk aversion is important, and the sector has little

cause for stressful adoption.

Blockchain is currently a technological tool which the public sector could use for verification,

authentication, transparency, automating simple logical functions, digitizing unique value, and

distributing citizens’ rights digitally. If compared to the established needs of the sector, it is clear

that the main value it provides is verifiability and traceability. Secondarily, it could be a secure

authentication part in the efficient distribution of information, as well as improve processes with

smart contracts. All these functions increase trust, but the low perceived need for increased trust

between, and to, actors in the sector makes these trust factors rather be perceived as extra layers

of security for the systems. From a regulations perspective, it could also be an enabler which allows

functionalities that do not violate regulations which other technologies would. It could do this by

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providing control and data integrity to the citizens. It is currently not a technology to be used as a

database for a large amount of data. It is also not a technology for sharing information in a network

to any extent that is data extensive, nor for creating shared digital infrastructures. However, DLT

and distributed architecture solutions may be highly suitable for these functions and in hybrid

solutions together with blockchain, efficient and secure systems could be set up. What blockchain

can be used for in such systems is to be the part which verifies the integrity of the data,

authenticates who can add or access the data, and tracks the history of entries and access. The

enabling of absolute transparency is, however, found to be unwanted by the incumbent actors.

Letting everyone have direct access to public information is deemed to do more harm than good.

What is important is instead traceability and immutability to ensure that tampering and malicious

behavior cannot be hidden.

Several potential blockchain solutions could lead to loss of employment opportunities. This is,

however, not at all unique to blockchain and is a natural occurrence as society becomes more

digitalized and autonomous. The loss of jobs is naturally not positive for the affected individuals,

but new, more qualitative tasks could be found, and new, more highly skilled jobs would be created.

Finding cost efficiency improvements in the public sector is a duty that ultimately benefits the

people. Providing jobs is not the purpose of the sector, the purpose is to govern society as

efficiently and qualitatively as possible. Ensuring employment for others is not the reason most

people pay taxes.

Conceptual Solutions

As a GPT, blockchain can potentially be used for many purposes and in many application sectors.

Based on the needs of the Swedish public sector, the perceived affordances, and the findings about

blockchain presented in chapter 2, four areas of conceptual solutions that may be applicable have

been identified. The first one extends over the entire public sector and regards identity and

authentication management. The second is also public sector-wide and regards a blockchain for

verification of information and documents. The third is specific purpose chains, which in turn can

be divided into two subareas, internal and external. There are also hybrids of the two, but the

internal specific purpose chains would generally be maintained by sector actors. Whereas the

external ones are maintained by private actors but would be accessible by sector actors. The

conceptual solutions are presented in Table 6.1 and explained in the following paragraphs

Table 6.1 Conceptual Solutions

Identified Conceptual Solutions

Suitable for the Public Sector

1. Identity Blockchain

2. Hash Verification Blockchain

3. Specific Purpose Blockchains

- Internal, e.g., physical property (real estate or vehicles)

- External, e.g., for supply chain or sales tracking

The first conceptual solution is the creation of an identity blockchain which would allow all citizens

to control their own confirmable digital identity. This would allow citizens to have one universal

ID to authenticate themselves to - and interact with - any connected function in society. Compared

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to today’s Swedish BankID, there would be no need to rely on and trust a private bank to be the

authenticator and mediator for one’s own self. There should also be the possibility to attach

information to the identity which the citizen could share with others should they wish. This could

be fundamental things like personal number, driver’s license, age, height, or family relations. It

could also be other significant pieces of information such as degrees, jobs, physical or intellectual

ownership, or certificates of certain abilities, e.g., welding, CPR, or athleticism. It could also be

linked to temporary rights, e.g., transportation tickets or memberships. It could also be linked to

the very essence of the democratic system: voting. Voting rights can be issued to the identities,

both for the three levels of governance and for direct democratic decisions. Naturally, personal

data, other than perhaps personal number, should not be put on the blockchain, but rather linked

to the identity. Its authenticity would be confirmed by the issuer, who perhaps does this with

another blockchain. The control of the identity would be given to each citizen by holding their

own private key to which their identity is connected. This should be made user friendly and with

redundant security measures. Authenticating oneself to societal functions should need two, or

more, factor authentication using, e.g., biometrics, tags, authenticator apps, SMS-functions,

devices, and PINs. For critical functions such as banking, it should, naturally, be made considerably

secure.

The network maintaining the blockchain could consist of nodes run by governmental agencies to

which the right to issue identities has been granted, e.g., Skatteverket. This is a blockchain solution

that would benefit greatly from international cooperation. The Nordic countries could set up the

network and each have their own master node with the right to issue identities to their own citizens.

The network would then be safer as it is more decentralized, and the authentication and societal

functions would work in all countries. This could potentially also be done throughout the EU,

with the scale granting even more benefits, but also with more governance issues.

The second conceptual solution is the creation of a blockchain with the purpose of containing

verification hashes and perhaps simple public information for the public sector. This sector-wide

blockchain could enable all the actors to hash any data, documents, or entire databases and upload

the hash for later verification. Naturally, the purpose would be to be able to verify that something

existed at a certain time and that the information used in the hash has not been changed since

then. This could be used for, e.g., health journals, contracts, patents, criminal records, transaction

records, or any arbitrary registers. Citizens and companies could, perhaps, also be allowed to

request that a hash be uploaded but at a cost as to avoid spamming. This could, e.g., be a private

contract or documentation of an invention not yet ready to be patented. Simple but important

public information that does not change often could also be added without being hashed, e.g.,

official phone numbers or crisis information. Since this blockchain would mainly contain simple

hashes and text information, the size would likely be easily manageable, especially with the use of,

e.g., Merkle trees. Restrictions as to what would be allowed to be uploaded would, however, likely

be needed to some extent. The network and distribution of nodes would be similar to the previous

concept. International cooperation would make the network more secure, but if made too

extensive, scalability issues may arise.

The third concept regards specific purpose blockchains. This is not a solution, but rather a

collection of solutions. These solutions would be useful for one or a collection of sectors actors.

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Physical property chains could be maintained internally in the sector and would allow for efficient

and transparent handling of registered property. This could be, e.g., a vehicle blockchain for

Transportstyrelsen or a land and title deed blockchain for Lantmäteriet. The property could be

directly linked to the owner’s digital identity giving them access to safely sell and manage it, with

safeguards in place to hinder errors or abuse. The selling of a house could, as an example, require

signatures from loan givers and witnesses. The chains could allow for important information about

the property to be added such as loans, repairs, damages, previous sales and owners, etc. Private

companies with authorization could be given the right to propose entries about the property, after,

e.g., an inspection, with the full transparency of who entered what information. The private

information could be encrypted and only given access to, e.g., a potential buyer. A master node

could be controlled by the governmental agency and other nodes by other agencies or entrusted

stakeholders. International collaborations could also be beneficial here for the same reasons as

stated above.

External specific purpose blockchains could be used for cases where the public sector and external

entities have interest in the information on the blockchain. In these cases, the governmental agency

could either have the right to read the ledger or also host a node and have a more active role in

maintaining the blockchain. This could be useful in the handling of unique financial instruments

such as, e.g., promissory notes. Instead of promissory notes being physical papers needing to be

physically transferred, they could be unique in digital form instead. Kronofogden, the banks, and

other financial institutes could maintain such a network to enable the much more efficient

transaction and tracking of such items. Other industry specific chains could, as an example, be

food supply chains, import supply chains, or sales made in, e.g., the taxi industry. The

governmental agencies could then have access to the blockchain and audit to make sure everything

is done correctly. Smart contracts for taxes could be used on sales to autonomously pay tax, making

the process much more efficient for all parties. Jordbruksverket could, e.g., have the ability to

certify the origin and medical records of cattle in the blockchain, making the citizen’s choice of

food easier and based on the verifiable truth. These networks should not be built by the public

sector, they should rather encourage the creation of them. For the agencies, to be part of the

development process in an advisory role would provide benefits for all parties once the solution is

implemented. This is probably where blockchain’s trust enabling has the most value for the public

sector, when receiving information from external entities.

These are the use areas found where blockchain would provide value in today’s public sector. They

are all based on permissioned ledgers. In the future there may also be permissionless blockchains

applicable in the sector, but currently these are not practically feasible. These established values

and concepts are not final and many more may exist.

6.2 Recommendations to the Swedish Public Sector

This section presents the answers to the research question: ‘What actions are needed from the public

sector to enable leveraging on blockchain?’ by including the recommended actions and considerations to

the Swedish public sector, which are argued to be beneficial or necessary for the future adoption

of blockchain.

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The recommendations are based on the established needs of the sector and characteristics of

blockchain. Several of them are not specific to blockchain, but also are applicable for digitalization

in general. Actions and considerations furthering digitalization generally further blockchain as well.

At the same time no technology should be pushed into solutions, no one would benefit from the

use of blockchain solutions unless they actually provide value. The recommendations are presented

in Table 6.2 and explained in the following paragraphs.

Table 6.2 Recommendations to the Public Sector

Recommendations to the Public Sector Regarding the Adoption of Blockchain

1. Educate

2. Keep an Open Mindset

3. Revise Regulations

4. Top Down Instructions

5. Explore Sector Wide Use Cases

6. Encourage & Explore Specific Use Cases

7. Work with the Blockchain Community

8. Encourage Blockchain for Private Industries

9. Collaborate Internationally

10. Explore the Identified Conceptual Solutions in 6.1

The first recommendation is to actively educate developers and decision makers about the

technology. It is important to make sure that there is a perception of blockchain’s affordances and

that these perceptions are as close to reality as possible so that well-informed decisions can be

made. The value contributed by the technology to each use case should be understood, otherwise

more suitable technologies may be overlooked. The different types of blockchains, permissioned

and permissionless, need to be differentiated, in addition to possibilities of controlling how public

or private the ledgers ought to be. The possibilities and limitations of smart contracts are important

to highlight as these can be highly useful, but also highly problematic if not developed with

precision. The sector should enable the sharing of knowledge about the technology internally, as

there are experienced individuals that could effectively educate others. This should be done both

within and between actors and could be done in structured discussion groups or seminars. They

should also take in educators from the blockchain community as they have a broader perspective

and because there are continuous and rapid novelty improvements in the field.

The second recommendation is for developers and decision makers to keep an open mindset

towards blockchain. It is still a technology in its infancy and it is easy to form a narrow perception

of its affordances. Novelty affordances are found as it evolves and as a GPT it is a tool applicable

in many use cases. A broad perception can lead to new insights of usage; individuals should try to

look beyond the uses for their specific area of operations. It should not be pushed into solutions,

but rather pulled in when there is a need.

The third recommendation is the revision of regulations. For the public sector to be able to fully

leverage on blockchain, regulations need to be updated to suit the modern digital era. It is

important that regulations are kept technology-neutral to not restrict development. The regulations

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currently deemed to be restrictive for the leveraging on blockchain are those connected to the

restricted sharing of information between sector actors, as well as the lack of legal rights of digital

signatures in some cases. The regulators need to listen to the developers of modern systems to be

able to effectively improve regulations.

The fourth recommendation is to give clear top down instructions as to what issues need solving.

This would make the allocation of resources much more efficient and collaborations would be

easier to form. The parliament and government should, e.g., encourage the counties to work

together to solve the issue of health data being spread out in siloed databases.

The fifth recommendation is to actively explore sector-wide use cases and solutions. This includes

the setting of sector standards when it comes to digitalization and information. Common

standards, a shared digital infrastructure, and sharing systems with generic functions would be

beneficial in reducing costs and providing more qualitative service to the people. Examples could

be the identity blockchain and the verification hash blockchain suggested in the previous section.

Such large scale projects must be initiated from the top with clear instructions; the new

digitalization agency should be given authority and resources to lead such projects.

The sixth recommendation is to encourage and carry out exploration of specific use cases and

solutions. Sector actors should conduct short small scale projects in order to test out new

innovations to stay updated. As well as to be able to quickly determine if more resources should

be spent on researching or developing the innovation or if it should be discarded. There should

be acceptance towards trial and error as that is how to find the most viable options.

The seventh recommendation is to actively work with the blockchain community in both small

scale projects as well as in those that are sector-wide. External resources should be utilized to

efficiently find the most viable solutions. The sector should make sure that the collaborations are

conducted with companies engaged in setting the standards in the evolving industry. To not be

stuck with systems incompatible with future development in the industry, partnerships should be

secured only with companies following set standards.

The eighth recommendation is to encourage private companies and industries to start using

blockchains in their registers and supply chains. Actors should actively be taking part in community

collaborations to act as a sounding board and make sure the interests of the sector are considered.

The benefits for both the sector and the industry actors should be highlighted as costs can be

reduced for both sides.

The ninth recommendation regards international collaborations. The Swedish public sector should

actively seek international collaboration partners. Many benefits can be achieved when digital

solutions are implemented on a broader scale and the possibilities are especially great for

blockchain. First and foremost, partners should be sought among the neighboring Nordic

countries as there are many interactions with them and many similarities in legacy systems, culture

and needs. However, the EU should always be considered, as well. It is important to be in line

with agendas in Brussels as national development may be wasted if there are decisions in the future

to have common solutions throughout the union. Sweden should pursue a leading role in the EU

when it comes to digitalization to be able to steer decisions in a favorable direction.

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The tenth recommendation is to actively engage in the further exploration of the identified

conceptual solutions that were presented in the previous section.

6.3 Potential Transition Pathways

This section provides the answer to the research question: ‘How can the perceived affordances of a

technology affect a socio-technical transition in its early stages?’ by discussing possible transition pathways

for blockchain into the public sector based on the findings of the thesis.

There are several potential pathways and sequences of pathways which blockchain could take to

enter the public sector. However, as the technology is in an early stage of innovation, there is a

risk that the adoption of the technology will not even start. This could happen if the perceived

conceptual affordances turn out to be practically false, or if other technologies emerge and

outcompete blockchain. Which could lead to them taking over the market and obtaining

technological lock-in. The research findings do, however, suggest that blockchain likely will enter

the sector eventually and they also indicate which types of pathways are most probable.

The potential transition of the public sector adopting blockchain is in turn part of the larger

transition towards digitalization. The digitalization transition has been ongoing for a long period

of time and has contained a sequence of aggregating small scale technological transitions with

different ‘dealignment & re-alignment’ and ‘technological substitution’ pathways. As the public

sector has successively become more digitalized, the large scale transition has become more stable

and reliant on enhancing incremental improvements. The sector is currently facing increasing

pressure for further digitalization, but the pressure is primarily coming not from a specific

technology, but rather from the increasing societal demand for usability improvements. This has

led to a situation where actors in the regime are exploring what technologies are befitting for their

desired solutions. In extension, this means that the regime is responding to the pressures by

coordinating their efforts and using both internal and external resources to purposely transition.

Hence, the potential transition of adopting blockchain is argued to be both an internal renewal

and a purposive transition, just as the other technologies being explored.

As the public sector actors are engaged in a purposive transitional process, they are actively seeking

enhancing niche innovations using internal and external resources. The perception of blockchain’s

affordances is that they will enhance systems and new solutions by enabling new functionalities,

i.e., related to trust, verification, authentication, efficiency, etc. Hence, several of the sought after

enhancement properties and functionalities are aligned with the perceived affordances. Thus, this

alignment means that the technological barriers of entry for blockchain are kept low and adoption

is probable as soon as practicality and regulations allow. However, as regulations are perceived as

a major barrier which take a long time to amend, the full scale acceptance is likely to be delayed by

years. This indicates a transformation pathway to be likely initially, but when considering the GPT

qualities of blockchain, along with the divergence of perceived practical affordances in both the

blockchain community and the public sector, it appears likely that a reconfiguration pathway will

commence.

As a GPT, blockchain is potentially applicable in many application sectors, meaning that its

adoption can occur simultaneously, and for different functions, in several areas of the public

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sector. The differences in perceived affordances in both the public sector and the blockchain

community indicates that the exploration and development of practical solutions will also be wide,

increasing the chances of adoption in several application sectors. Because of these aspects the

adoption of the technology is argued to likely lead to further modifications and linkages in and

between actors, forming a sequential transformation which, over time, will grow to be extensive,

i.e., a reconfiguration pathway. As the blockchain community’s perception is more extensive in

terms of seeing a broader range of affordances, they are able to accelerate the creation of new

connections, usage patterns, and insights in the early stages of adoption. As the community

matures and the knowledge of blockchain increases in the public sector, the GPT cluster synergies

will increase.

These potential transitions are based foremost on permissioned blockchains, as these are the

blockchains currently perceived as beneficial for the sector. There is also a minor perception of

permissionless blockchains being potentially disruptive for the public sector. However, these are

perceptions on a much higher conceptual level, with few connections to recognized practical

solutions. There is a possibility of permissionless blockchains having hidden affordances that, once

discovered and practically enabled, will indeed be of a disruptive nature and put immense pressure

on the sector for a technological substitution transition, simply due to it being superior to the

incumbent systems. Should this happen, it is not a transition that will be fast or happen without

control as the public sector is a rigorous apparatus with full control over legal authority and

monopoly over the public governance of the citizens. Since disruptive innovations and transitions

are indisputably hard to predict, and since such a transition would take decades, there is little reason

to speculate excessively about them. The actors of the public sector should, however, be aware of

the possibility to be able to realize the importance of such trends as they appear.

The perceived affordances arguably affect the potential transition pathways to a large extent. It can

be observed in the findings that the perception of blockchain’s affordances directly influences the

entrance barriers and allocation of resources spent on its development. Even though most of the

proposed affordances of the innovations have not been practically proven and could be false, the

regime actors are willing to spend internal resources on the technology. The reason for this is the

perceived affordances which they individually and collectively have built up based on concepts and

visions established in the niche innovations community. If the perceived affordances did not align

with the desired solutions, the actors would simply choose to spend resources on another

technology perceived to be more suitable at that time. Alternatively, they would not find any

external innovations suitable to spend resources on and instead focus solely on internal regime

realignment. In either situation it would leave the niche innovations to develop further without

any resources from the regime, and as the regime would not be involved in the development, the

barriers of entry would be much higher. The then potential pathways would be much different,

and the niches would likely have to wait for a new opening caused by changes in the landscape, or

to evolve to become more radical and disruptive to be able to enter the regime through, e.g.,

technological substitution.

The perceived affordances of a technology within the niche communities considerably affect the

potential pathways for an incumbent regime as well, but arguably not as much as the regime’s

perception. As the blockchain community contains different perceptions as to what types of

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blockchain are useful for the public sector, many different focus areas are being explored and

proposed to the regime. Thus, there are many divergent niches being developed with potential to

enter different parts of the regime. This increases the chances of a synergetic reconfiguration

pathway. Whereas if there is uniform alignment in the perceptions, the evolving innovations will

be much more alike but also develop faster, as the spending of resources is also aligned. The

likelihood of a transformation or technological substitution pathway are, therefore, argued to be

increased in such situations.

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7 Conclusion

The aim of this chapter is to present the final conclusions of the thesis and connect back to the

introductory chapter. First, the conclusions of a more practical nature regarding blockchain and

the public sector are presented. Second, the theoretical conclusions about analyzing socio-technical

transitions by combining the multi-level perspective framework with affordance theory. Last,

potential future research is proposed.

Blockchain and the Swedish Public Sector

For the Swedish public sector, the research shows that there are several areas where blockchain

can provide value. This value is found to relate to the functionalities of verification, authentication,

traceability, automation, and digitizing unique value, all of which can be related back to trust.

However, blockchain is part of a larger information technology revolution which has the potential

to revolutionize humanity, including, e.g., DLT, IoT, AI, and big data. It is important to realize

that blockchain is but one of many promising technologies and that these technologies will have

more revolutionary impact when utilized together.

Blockchain was created to move the need for trust between counterparties and to mediators and

place it in a shared network. Even though these networks were intended to be P2P with disruptive

qualities, the interest from the Swedish public sector and blockchain community lies almost solely

in enhancing the incumbent structures of the sector. Permissioned networks providing sustaining

innovations are the ones being explored and that show promise of being valuable in the years to

come. There are no eminent signs of permissionless blockchains challenging the public sector by

disrupting the market of societal governance. In theory, there is disruptive potential which should

not be underestimated. Highly advanced P2P blockchain networks will likely be influential in the

future as the technology matures. However, in practice, no indications were found supporting such

disruption within the following decade and, in Sweden, a majority of both the blockchain

community and the public sector are of that same belief.

As the Swedish public sector has high trust both towards and within it, the reason for interest in

internal implementations is not a lack of trust. The reason is, rather, to further improve the integrity

and security of data, i.e., improve the trust towards the systems used, as well as to increase

efficiency to some extent. A need for increased trust towards information coming from external

entities is, however, the reason for interest in the technology regarding external implementations.

All the conceptual solutions identified could contribute to Sweden’s goal of becoming a leader in

the digitalization of public governance. The concepts are in the forefront of digital solutions and

would provide high value to both the quality of service provided to citizens and to the increased

security and integrity of data. An identity blockchain could provide the same service quality,

efficiency, and cost benefits as those realized by e-identity in Estonia, but with the increased

security benefits of a real blockchain. A data verification blockchain could provide severely

improved abilities to prove the authenticity and integrity of data. Specific purpose chains for, e.g.,

vehicles or real estate could make official registries more efficient and improve security in

secondhand markets for the people. External industry chains could make the auditing of

information coming in from companies regarding, e.g., supply chains and transaction records more

efficient. Simple smart contracts could make parts of the processes these blockchains are involved

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in both time and cost efficient. However, smart contracts are currently deemed to be highly

difficult to program securely, making only logically simple smart contracts viable today.

The ambiguity concerning the exact definition of a blockchain is found to be of minor

consequence in the public sector, as all solutions providing value are useful regardless of their

definition. Aside from blockchain, other DLT solutions are found to be promising in the public

sector as well. Thus, the highlighting of DLT through the excitement surrounding blockchain is

positive; potentially valuable solutions regarding distribution of information can be developed

using DLT. Hybrid solutions are, by many, seen as being those that will prove to be most valuable.

What needs to be understood about blockchain is the differences in definition between

permissionless, permissioned, public, and private blockchains. These distinctions are important as

they enable different functionalities and have different restrictions. For instance, the considerable

difference in environmental impact between permissionless and permissioned blockchains is of

importance.

Theoretical Findings

The combination of the MLP framework and affordance theory has been found to be useful when

analyzing the socio-technical transition of technological niche innovations. It provides a method

for anticipating the commencing transition pathways based on the perception of a technology from

both a meso-level and a micro-level. The perceived affordances are argued to affect the potential

transition pathways in several ways. The perception within the incumbent regime directly

influences how much resources are spent on the niche innovations as well as the barriers of entry.

When regime actors have positive perception and take part in the niche innovation communities

they effectively provide a direct opening into the regime and incumbent systems. The regime also

prepares for its entry by starting to adjust, e.g., regulations and spreading the knowledge about the

technology internally. The aligned or de-aligned perceptions also affects how many openings for

the niches appear and among which actors. Among the niche innovations the aligned or de-aligned

perceptions directly affects the speed and diversity of development, which in extension affects the

transition pathways. The findings in this thesis indicate that a reconfiguration pathway will likely

commence for blockchain in the public sector due to its GPT characteristics and the diverse

perception of its affordances. It is likely to be adopted in several application sectors and the initial

adoption of the technology will probably lead to new linkages and modifications, effectively

furthering the diffusion of blockchain in the public sector.

Future Research

This master thesis connects several different theories and frameworks, with a focus on the specific

case of blockchain in the Swedish public sector. It contributes by providing a holistic perspective

on a novelty technology in relation to a large-scale incumbent system. What this scope neglects is

the specific, in-depth details of the areas covered. From the practical perspective of blockchain

and the public sector, future research could contribute by having a narrower scope. The scope

could focus on one specific conceptual solution enabled by blockchain, either sector-wide or actor

specific. Fields of interest that could prove useful are, e.g., cryptocurrencies’ or centralized

decentralized currencies’ impact on the sector, blockchain identity management, smart contracts

for Skatteverket, or traceability of the entire food supply chain for Livsmedelsverket and

72

Jordbruksverket. This would provide a more in-depth perspective on distinct affordances where

the practical value of blockchain is explored.

From the theoretical perspective in regard to perceived affordances’ effect on transition pathways,

future research could focus on another socio-technical regime rather than the public sector, as well

as on another collection of niche innovations in place of blockchain. Another interesting scope

could be to follow up this specific research by once again focusing on the same regime once

blockchain matures and has been practically implemented. What transition pathways came to pass,

how the perceived affordances have changed, and its effect on the pathways could be analyzed

and compared with these findings. This could strengthen or denounce the findings of this research;

either outcome would be positive as it would further the knowledge about this niche perspective

on transitions. Further research that combines affordance theory and the MLP framework is

needed to enhance the understanding of the field.

73

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9 Appendices

In the following pages the appendices of the thesis are presented.

Appendix A – Interview Templates

Technology Experts, Interview Blockchain in the Public Sector

Round 1

Interviewee: Date & Time:

Company: Title/Position:

Experience with Blockchain?

Is Blockchain suitable for the public sector? Why/ Why not? How?

How can smart contracts be used? Police, taxes, health care… Automate processes? Improve

efficiency of information transfer?

How would this affect public governance employees?

What are the risks and problems you see? Technical, legal, organizational…

Thoughts on permissioned and public ledgers for the public sector? Candidates for being

anchors/stewards (holders of permissioned ledgers)?

What do you think about a state managed identity block as a base? How to handle a lost private

key? Keyless system?

Should citizens own their digital identities?

Problems with GDPR? Immutability, data undeletable… Hard forks & consensus in permissioned

blockchain?

How can safe collaborations be set up with private companies?

How can Sweden collaborate with other nations? EU? Nordics?

How much resistance will a transition to blockchain entail? From whom?

What does the Swedish government and governmental agencies have to do to launch a

transformation successfully? Technically and organizationally.

In how many years do you think Sweden could have successful implementations in the public

sector? Main reason?

What applications or project in the public sector do you know of?

81

Technology Experts, Interview Blockchain in the Public Sector

Round 2

Interviewee: Date & Time:

Company: Title/Position:

Introduction. Experience with Blockchain?

Use cases you see for the public sector?

Uses to improve verification efficiency and trust?

Uses as a database?

A technology to enhance systems or replace systems?

What are the technical problems you see?

Thoughts on legal problems? GDPR, immutability, undeletable data…

Thoughts on permissioned and public ledgers for the public sector?

How to achieve consensus in public sector permissioned blockchain?

How to choose node candidates?

Thoughts on identity management? Individually owned on public blockchain? State controlled?

What external pressures on the current system are causing this transition?

What internal public sector pressures are driving the transition?

How much resistance will a transition to blockchain entail? From whom?

What should public sector institutions do to enable the transition? Technically/organizationally.

In how many years do you think Sweden could have successful implementations in the public

sector?

How can Sweden collaborate with other nations? Nordics/EU.

What applications or project in the public sector do you know of?

Do you know of any individuals I should interview?

82

Public Sector, Interview Blockchain in the Public Sector

Interviewee: Date & Time:

Agency: Title/Position:

Introduction. What is it you do? Position?

What types of registers does your agency work with?

How does information enter the system?

How is it stored?

What kind of standardized work is done with the information in the system?

Is the information sent to other governmental agencies? To citizens? To companies? How?

What needs are there to verify the authenticity of data or documents? Improvements?

How is it secure from hacking and manipulation?

What are the risks and problems you see today?

What features would improve the system?

Where does pressure for system changes come from?

What is needed for you to make changes in the system?

Thoughts on having public information directly accessible by the public? Secured by immutability

and the ability to verify correctness.

Would this increase trust to the public sector?

Thoughts on using distributed databases in your systems?

Thoughts on direct system collaborations with other public sector institutions? Other nations?

Nordics?

How much resistance does a system transition entail? From whom?

How long does it take for you to implement system transitions?

What’s your knowledge about blockchain?

Do you know of any public sector blockchain projects?

83

Jurisdiction, Interview Blockchain in the Public Sector

Interviewee: Date & Time:

Agency: Title/Position:

Experience with Blockchain, how well do you know of it?

What are your initial thoughts on Blockchain being used in the public sector?

What are the problems and risks you see?

How would it work with the new GDPR regulations? Inability to remove data etc.

Do you think other nations will benefit from not having strict laws like the GDPR when it comes

to blockchain solutions?

Can you see any legal issues with smart contracts? Autonomous actions executed etc. Who would

be responsible? Programmers, agencies, server providers, solution providers?

What does the Swedish government and governmental agencies have to do to launch a

transformation successfully?

How many years do you think it would take for Sweden (EU) to have digital laws that are up to

date when it comes to using blockchain in the public sector?

Do you know of any current projects that are dealing with this issue?

www.kth.se