Since the first blockchain advocates began promoting the technology’s capabilities over a decade ago, leaders across industries have often seemed unsure what to do with it. But this is changing according to Deloitte's recently published 2019 Global Blockchain Survey: Blockchain gets down to business (registration required).
According to the research there is a shared recognition across enterprises and industries that blockchain can be a pragmatic solution to business problems across industries and use cases. Even leaders wary of tech-based solutions have come to see the larger, transformational importance of the technology.
The report is based on a survey Deloitte conducted between Feb. 8 and March 4. It polled a sample of 1,386 senior executives in a dozen countries — at companies with $500 million or more in annual revenue for US respondents and at companies with $100 million or more in annual revenue for respondents outside of the United States. It also surveyed executives at a group of 31 blockchain emerging disruptors to gauge their attitudes and investments in blockchain as a technology. Findings indicated that, despite problems, blockchain is going mainstream. Among the figures that stood out:
- More than half of executives (53%) say that blockchain is a critical priority for their organization, up 10% from last year. Furthermore, 40% of enterprises will be investing more than $5 million in blockchain chain over the next five years.
- Financial services and financial technology (fintech) sectors are leading in blockchain development.
- Enterprises are looking for and finding valuable use cases for blockchain completely independent of bitcoin and cryptocurrency, including management of loyalty points, digitizing physical assets, creating virtual contracts and wallets for finance management and reconciliation.
- Enterprise leaders (83%) say there are now compelling use cases for the technology, 86% believe it will achieve mainstream adoption even though 43% see it as overhyped.
Related Article: Will Quantum Computing Break Blockchain?
Significant Enterprise Adoption
Dr. Michael Yuan, chief scientist of the CyberMiles Foundation, a public open-source blockchain for online marketplaces like 5miles, pointed out that incorporating blockchain technology into existing businesses is not an insignificant investment as it requires substantial time, money and energy.
In addition, there are certain operational and technical challenges, such as the experience with the Ethereum network, which — as it has gained popularity — has become both too slow (transactions per second) and prohibitively expensive (gas fees). Volatility in the crypto market also has affected its mainstream adoption as a practical method of payment for goods and services. “Supply chain and financial services have seen significant adoption of (or at least investment in) blockchain technology, in part due to an ever-growing need for enhanced security as well as the availability of mobile and online banking in global economies,” he said.
Even still, blockchain technology, despite certain political and institutional resistance to decentralization, is poised to transform entire industries and economies, particularly in less developed or emerging economies with nothing to lose.
Blockchain-based smart contracts, in fact, can immutably and transparently perform routine tasks, and may even render third-party intermediaries (credit card processors) obsolete. They can upend slow, laborious processing and improve the efficiency and error rate of future commercial transactions.
Moreover, stable coins may help cryptocurrency go mainstream, enabling cross-border transactions — village to village, region to region and country to country — to occur with little to no interference in more transparent, efficient and cost-effective ways.
Blockchain’s Developed Use Cases
Since its introduction as a cryptocurrency platform, blockchain has gained recognition as a technology that can be useful to enterprises to help resolve business challenges, said Agnelo Marques, vice president of technology and head of the blockchain center of excellence (CoE) for Mphasis. “If we go back a few years, 2017 witnessed the exuberance of price appreciation of cryptocurrency with Bitcoin hitting the $20,000 mark. But at the same time several industries evaluated blockchain as a promising technology for enterprises too,” he said.
The result is that 2018 witnessed a steady growth in blockchain, with technology teams trying it out to build several proof of concepts (PoCs) to test drive it for business applications, resulting in successful pilots. Additionally, several industry consortiums reached maturity level and defined clear goals, guidelines and principles for Blockchain’s successful future. He cites two specific use cases.
Blockchain will be included as an important technology in the enterprise’s digital transformation journey. So far, the technology has been tried out to prove concepts in an isolated environment. This year will witness a more cohesive assembly of blockchain alongside technologies such as artificial intelligence/machine learning (AI/ML), data and new age security mechanisms. Enterprise digital architecture, which is constantly changing, will have to factor in the network nature of the blockchain technology and have a more collaborative but secure integration with its partners in the industry ecosystem.
Security And Privacy
One of the concerns of enterprises has been information security and privacy in a blockchain environment. Zero Knowledge Proof (ZKP) probably has an answer to this challenge. ZKP is an old concept in which one can prove that a particular fact is true without actually sharing that fact. It’s an age-old complex cryptographical concept that has the potential to solve privacy issues when applied to blockchain-based applications. “In the year 2019, we could expect to hear more on this topic and its application to the enterprise. Blockchain is the all-encompassing term for the underlying distributed ledger technology, we can expect to see a clear distinction between the two and specific uses of each in the enterprise,” he added.
The three giant cloud providers currently have some offering for blockchain-as-a-service, but there is also a rise of niche players specializing in blockchain-as-a-service and we should expect to see specialized services from them in the future.
Blockchain will see progress in the coming year and sustained growth going forward from there,” Marques added. As for governments and enterprises planning to use the technology, they need to be clear on their goal for using blockchain. Without a clear understanding of the expectation there are chances that the benefits of the technology may not be derived, which in turn can produce hurdles for the technology.