Blockchain - the Gateway to Trust-Free Cryptographic Transactions

Recently, the Bitcoin-underlying blockchain technology gained prominence as a solution that offers the realization of distributed trust-free systems, where economic transactions are guaranteed by the underlying blockchain. We are still at an early stage and thus require a deeper understanding of how the blockchain potentials can be realized, and what are the opportunities and challenges in so doing. Following a design science approach, we developed a proof of concept prototype that has the potential to replace a trust-based coffee shop payment solution that is based on an analogue, pre-paid punch card solution. The demonstrator provides a starting point to evaluate the strengths and weaknesses of the blockchain technology when replacing a trust-based by a trust-free transaction system. We conclude that the secure and trust-free blockchain-based transaction has the potential to change many existing trust-based transaction systems, but that scalability issues, costs, and volatility in the transaction currency are hindrances.