Investigating the link between transaction and computational costs in a blockchain environment

Abstract

The research and thinking pertaining to blockchain have thus far focused on cryptocurrency and Bitcoin. However, there is increased interest in using the technology to solve operational challenges in manufacturing and service supply chains. In this study, we introduce a new implication of using blockchain technology and propose two unique contributions. First, we introduce the notion of computational costs (measured in units of gas) as an essential mechanism for completing operational transactions in the blockchain environment. Second, we discuss the use of smart contracts and their influence on operational transactions. To investigate the link between blockchain transaction and computational costs, this study uses an experimental methodology. We develop and implement a fully functional virtual public blockchain to store, validate, and maintain transactions. The methodology provides a process to measure the computational costs, frequency, and intensity of transactions. This research contributes to conceptual research on the blockchain implementation paradigm. Its novelty stems from the identification of computational costs for operational transactions and use of an experimental methodology. This research provides managers an insight into the design of smart contract transactions in a supply chain from a cost perspective.