This article compares these technologies in key areas: immutability, decentralisation, integration and complexity, environmental impact, scalability, and cost. It provides an introduction for non-technical readers about what to consider with each technology.

In this article:

• Conventional refers to modern cloud-based databases and related services like APIs. It includes today's best practices in security and scalability, such as audit logs, and uses reliable cloud infrastructure and data centres.

• Blockchain includes different models like proof-of-work and proof-of-stake, which use "transaction ledgers"—distributed records of transactions—to verify data. This data may be stored "on-chain" (within the ledger) or "off-chain" in traditional databases.

Immutability / Tamper Resistance

Blockchain: Blockchain's key feature is its theoretical immutability: once data is recorded, changing it is extremely difficult without the agreement of the network. This is valuable for applications needing high data integrity, like financial transactions. However, methods for correcting errors, such as "hard forks", can create weaknesses, especially if too much control is held by a few participants.

Conventional: Conventional systems ensure tamper resistance using strong security standards, access controls, transaction logs, and data encryption. A major advantage is that these methods are mature and widely used, providing assured integrity. While they don't have the built-in immutability of blockchain, they can achieve similar security levels with advanced protocols.

Decentralisation

Blockchain: In decentralised systems, no single participant has full control. Each participant shares authority, and changes can only happen through agreement among network members. Blockchain works like this, using a decentralised network of nodes to validate and record transactions.

It's important to consider who manages these nodes and what they approve or deny. While nodes can confirm that data is valid or that someone has permission to modify or access data, they can't prevent incorrect data from entering the system in the first place, whether by mistake or on purpose.

Conventional: Traditional methods rely on a central trusted authority to control, manage, and maintain the data and its changes. For DPPs, this authority must be independent and without conflicts of interest to ensure trust and data integrity.

This approach simplifies management and accountability. However, users must trust this central authority to manage the system fairly, protect their data, and handle transactions correctly. Transparency is limited to what the central authority permits. This is how most public and private organisations operate today.

Integration & Complexity

Blockchain: Blockchain is more difficult to implement. It demands specialised skills and major changes to what we use now. Because blockchain methods are often confusing, this increases the complexity. Wider availability of experts is required before it can match the ease and price of current systems.

Conventional: Traditional solutions benefit from economies of scale, lower computing power needs, compatibility with existing systems, and readily available skills. These factors reduce complexity and cost, making these solutions easier to implement and maintain in current IT environments.

Environmental Impact

Blockchain: The environmental impact of blockchain is a common concern, especially for proof-of-work (PoW) models like Bitcoin, which uses about 200 TWh (Terawatt hours) annually—similar to the power consumption of Sweden. While less impactful methods like proof-of-stake (PoS) are used today, they often involve trade-offs in other areas, such as reduced decentralisation, affecting security and trust.

Conventional: Cloud-based conventional databases and services are generally more energy-efficient. Providers can achieve economies of scale, and major cloud companies invest in renewable energy sources, reducing or offsetting their overall environmental impact.

Scalability

Blockchain: Scalability is a known issue for blockchain technology. Many blockchains have reachable limits on transactions per second (TPS), causing congestion and delays. As the network grows, centralisation can reappear because fewer nodes can handle the larger amounts of data, reducing the benefits attributed to decentralisation.

Conventional: Cloud-based services offer great scalability, instantly adjusting resources based on demand. They can handle high transaction volumes, with TPS rates usually 100 to 1,000 times higher than blockchain solutions. This makes cloud databases more suitable for applications needing high throughput and quick scalability.

Cost

Blockchain: Implementing and maintaining blockchain is currently expensive due to the need for specialised hardware, high energy use, and scarce skilled personnel. While costs might decrease over time with more adoption, it's unlikely they will drop enough to match conventional technologies for widespread uses like DPPs, even in the next 10 years.

Conventional: Cloud-based solutions are generally more cost-effective because of economies of scale, lower computing power needs, and available skilled professionals. Cloud providers spread their hardware demands and costs over many users, reducing individual expenses and making these solutions more affordable for most organisations.

Author’s Perspective

Blockchain and conventional technologies each have strengths and challenges for EU Digital Product Passports. Blockchain's decentralisation and immutability could make it ideal for high-trust applications, but its complexity, environmental impact, scalability issues, and high costs are significant barriers. It is still relatively untested, with most projects in pilot stages.

Meanwhile, conventional solutions are proven, scalable, and cost-effective, making them a more practical choice for current applications.

It's important to recognise that the hype around blockchain, especially during the 2016–2021 boom in blockchain start-ups, is closely tied to cryptocurrencies like Ethereum and Bitcoin, which are built on blockchain technology. Investors with cryptocurrency holdings have a vested interest in increasing public interest and confidence in these cryptocurrencies, as it directly affects their portfolio's value. The overlap between wealthy crypto-investors and investors in blockchain and Web3 start-ups deepens this vested interest. Therefore, decision-makers must carefully navigate the media for objective and unbiased views when considering blockchain versus conventional technologies.

It's unclear whether the EU will require blockchain, exclude it, or allow both methods. A balanced approach where both technologies coexist would enable real-world testing—and healthy competition—to find the best solution for the future.

About the Author

Ashley Smith is the Chief Technology Officer at TAZAAR. He leads the development of innovative solutions to improve the circularity and traceability of electronic products. With experience in data analytics, consultancy, and technology leadership across start-ups, scale-ups, and FTSE 100 firms, Ashley offers a unique mix of technical expertise and strategic insight.