Many different use-cases for blockchain have been tried and tested over the last years by startups, corporations and governments alike. Some of them have found real world applications but most have not made it out of a proof-of-concept phase. Building on interactions with major blockchain actors at national level, the B-hub consortium has identified a number of particularly relevant use cases throughout the different ecosystems.
After our last article offering a per-country overview of blockchain adoption, we will delve into specific use cases in a new series of articles. While varying greatly in terms of sectors and usage; all have in common that they are currently applicable, somewhat mature – underlying technology exists and is available on the market – and implemented.
This second article deals with traceable ownership records for secondary market trading of digital assets. In summary, blockchain applications exist to allow clear and (semi) public ownership records, and through that enable trading in digital assets.
Description and problem statement
While discouraged by licensors, perpetual software licenses should be tradable in the European Union as per EC judgement of 2012 (Usesoft vs. Oracle C-128/11). While this provides the legal possibility to trade in used software, it also comes with the requirement to track usage and to ensure software is not used anymore by the seller. This license management is a complex task that requires transparency towards the licensors and software licenses need to be tracked throughout their lifetime to secure upgrades and ensure the license chain is complete.
Making available a system providing tracking of license use and rightful license owner can provide transparency towards the manufacturers and ensures that only unique licenses that are not duplicated exist.
In particular in insolvency situations, M&A case, cloud migrations or downsizings with the enterprise space, licenses that were previously included at no value in the balance sheet, can now be monetized and proceeds used to repay debtors or finance the selling corporate.
Why is blockchain particularly relevant to address this problem?
Blockchain provides immutable records of ownership and public records of transfers that can not be randomly modified. The transparency provided enables licensors to understand the new rightful licensees. In addition, tokenization of the licenses provides a marketplace and appraisal.
As a consequence, implementing a blockchain system for software license management can improve the traceability of software licenses throughout their lifecycle. A software license can be monitored from purchase, to allocation, to decommission – when the software is shelved for reuse. This eliminates the need for expensive software license servers and license software, as this is achieved in a more cost-efficient and transparent way using a decentralized approach.
How does it work?
Records of ownership are added to a digital assets blockchain as a token. Transfers and their requirements (right documents, claims of the seller, license history) are then attached to the token. The token thus becomes a digital twin of the license, and combines all needed license information with the license itself.
A workflow verifies the authenticity of the license. After that verification and the issue of the licenses as a token, it can be traded and tracked.
What are some examples of implementation?
Implementation is illustrated by Accenture’s blockchain platform for software license management.
What are some examples of technology providers?
Want to see more blockchain use cases articles? Check out our first article on Notarization, timestamping and tamper-proof records.