Business & Information Systems Engineering

, Volume 59, Issue 6, pp 425–440 | Cite as

Trading Real-World Assets on Blockchain

An Application of Trust-Free Transaction Systems in the Market for Lemons
  • Benedikt NotheisenEmail author
  • Jacob Benjamin Cholewa
  • Arun Prasad Shanmugam
Research Paper


Since its introduction in 2008, blockchain technology has outgrown its use in cryptocurrencies and is now preparing to revolutionize a multitude of commercial applications including value and supply chains, business models, and market structures. This work follows design science research to guide the implementation of a blockchain-based proof-of-concept prototype that enables the automated transaction of real-world assets, such as cars, and provides a valid, transparent, and immutable record of vehicle history to market participants, authorities, and other third parties. The contribution of this study to existing research is threefold: First, it introduces a built-in mechanism to reduce transaction risk resulting from the irreversibility of transactions in blockchain-based systems. Second, it replaces a trust-based, centralized, and bureaucratic register with a tamper-free and autonomous transactional database system that comprises a secure registration and transaction process. Third, it proposes a novel approach to mitigate adverse selection effects in lemon markets by providing a reliable, transparent, and complete record of each marketable asset’s history. In total, the findings in this article illustrate the potential of blockchain-based systems but also highlight technological shortcomings and challenges for commercial applications, such as scalability or privacy issues.


Blockchain Design science research Trust-free commercial system Asymmetric information Market for lemons 



We would like to thank the IT University of Copenhagen for giving us the opportunity to attend the Blockchain Summer School 2016, SKAT for the chance to work on this specific use case, and Felix Albert and Martin Dybdal for their contributions in the initial draft of our prototype during the summer school’s hackathon. We also want to thank the anonymous reviewers and the editors Roman Beck, Michel Avital, Matti Rossi, and Jason Thatcher for their valuable feedback and constructive criticism, which greatly improved the paper. In addition, this paper has greatly benefited from the comments by the participants of the Institute of Information System and Marketing’s 2016 winter retreat and the remarks of Christof Weinhardt and Florian Glaser. Finally, financial support of Boerse Stuttgart is gratefully acknowledged.


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Copyright information

© Springer Fachmedien Wiesbaden GmbH 2017

Authors and Affiliations

  • Benedikt Notheisen
    • 1
    Email author
  • Jacob Benjamin Cholewa
    • 2
  • Arun Prasad Shanmugam
    • 3
  1. 1.Institute of Information Systems and MarketingKarlsruhe Institute of TechnologyKarlsruheGermany
  2. 2.Department of Computer ScienceIT University of CopenhagenCopenhagen SDenmark
  3. 3.Digital Innovation and ManagementIT University of CopenhagenCopenhagen SDenmark

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