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Blockchain, Featured, Technology

How Blockchain Finds Use in License Management for Software and Online Assets?

Within a short time span, blockchain has cemented its position as a prominent disruptive technology in current markets across the globe. Once mainly associated with cryptocurrencies, the technology has evolved into the chief architecture powering next-gen innovations such as Web 3.0 and the metaverse. Though a foundational technology, blockchain can easily integrate with any existing infrastructure and optimize work processes reducing costs and eliminating intermediaries. This article will put the spotlight on blockchain’s application in enhancing security across software license management systems.

Blockchain Smart Contracts for License Validation

The greatest success of blockchain’s mainstream breakout will probably be its widespread application in any domain that prioritizes trust, transparency, and security. Hence, it makes sense to use Ethereum smart contracts and derive new innovative possibilities in license validation protocols for software and proprietary digital products. Before we proceed further, it is essential to understand a little bit more about software licensing. 

Also Read: Blockchain Technology to Revolutionize the Education System

What Is Meant by Software Licensing?

In the world of technology, licenses are the primary documents that outline a user’s rights and obligations to a specific software product. The product can also be an application or a service. The license serves as an agreement between the 2 parties i.e. user and the software provider, and is available in either paper or electronic formats. 

Types of Software Licensing

There are 4 popular types of software license practices:

a) Subscription

The subscription licensing scheme offers users full or partial software access for a specific term period. Common subscription terms feature a validity of a month or a year.

b) OEM License

The OEM License is a comprehensive license that is commonly found across pre-installed software in new devices.

c) Volume License

Volume licensing services are used by large-scale enterprises. Software developing companies keep this feature for corporate use, easing the process of installation across multiple devices in an organization, which may also include state institutions.

d) FPP or Full Package Product

The FPP license allows users to legitimately install the software across any computer or compatible devices, usually for a specific number of installations. 

The data pertaining to these licenses are stored by software providers or license managers within a centralized server. There are certain demerits of a centralized structure, including issues of security, data misplacement/loss, or theft. Blockchain technology built upon a decentralized platform addresses these changes, turning the process of license issuance and authorization more secure, transparent, and hassle-free.  

Also Read: Impact of Blockchain Technology on Corporate Treasuries

The Advantages of Blockchain Integration

Rising out of the shadows of cryptocurrencies, blockchain is being widely adopted for building a stable, trustworthy, and decentralized work architecture with proper information databases that can be accessed by everyone. In addition, distributed ledger technology ensures that the information does not belong to any single entity in particular. 

Blockchain is currently powering the entire DeFi revolution, helping out in:

  1. Accelerating Financial Transactions
  2. Storing and Validating License Copyrights
  3. Personal Information Storage
  4. Storing and Managing Voter Information in EVS systems. 

The operations of a blockchain network are not determined by a singular centralized authority, but by its network members, or nodes. Yes, the process is democratic, and blockchain information is accessible to all members. On the other hand, network access is granted with cryptographic keys unique to each member. These keys have multiple functions. First, they enhance network security and stability, eliminating the possibility of data substitution. Second, they help in the identification of transaction occurrence, i.e. the node where the transaction has taken place. However, the keys manage to do so without revealing the person behind the node, ensuring data privacy. Software licensing systems utilize blockchain-powered smart contracts

The Power of Smart Contracts

Ethereum brought Smart Contracts to the world, exponentially increasing the scope and possibilities of blockchain integration across multiple domains. Blockchain networks such as NEM or EOS, some based on Ethereum itself, deployed smart contracts based on their platform too. Smart contracts helped in the rapid expansion of blockchain’s capabilities. 

In simple terms, smart contracts can be described as pre-programmed contracts that self-execute upon satisfying all the written requirements. The requisites are written in code which is executed upon reaching all the agreement conditions between the two parties. The legitimacy of a smart contract is validated only upon signing and execution. The process is similar to the actual signing and execution of transactions across a network. The contract remains visible to everyone within the network, however, the identities of the participants are kept confidential. 

How does Blockchain Benefits Software Licensing?

Blockchain offers multiple advantages that are extremely beneficial in license management. The distributed ledger mechanism of blockchains consists of storing updated copies of all ledger information by all the network members. The mechanism also features asymmetric encryption. 

The main benefits of blockchain for software licensing include:


  • Decentralization


  • Transparency
  • Sustainability
  • Security



In short, the possibility of implementing any logic through code across a decentralized mechanism for data storage, P2P computing, and networking allows blockchain to be an excellent option for building, managing, and accumulating licenses and their relative information. 

Notable Use Cases

  1. Spotify utilizes blockchain for connecting artists and license agreements with the available tracks on their music streaming service. 
  2. Ernst and Young and Microsoft developed a blockchain solution for the management of content rights and royalties across the media and entertainment domain.
  3. Accenture deployed blockchain technology for the management of its software assets as early as 2018. Their solution tracks all software license events throughout the lifecycle. 


Blockchain continues to prove its invaluable utility across multiple domains where decentralization, flexibility, trust, transparency, and regulation are of paramount importance. The technology has soared well above its initial crypto association and has to be crucial for businesses dealing with licensed software and products.

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