Blockchain Not Ready For Prime Time, But Getting Close

Perceptions about blockchain, the distributed global ledger (or distributed ledger technology, if you will), have been seesawing back and forth, from outright skepticism (either “too good to be true” or simply another data management mechanism) to breathless predictions of shaking up the world as we know it. Maybe the reality is somewhere in between. The problem at this time is that real-world use cases and applications have not yet caught up to all the hope and hype.

Blockchain continues its upward surge.Photo by Joe McKendrick

We do know this: many organizations are at least testing the waters, to see what blockchain’s all about, and if it will make sense for their business models. The folks at Deloitte have been looking at adoption patterns, and suggest some serious efforts are surfacing. “While blockchain is not quite ready for prime time, it is getting closer to its breakout moment every day.” In a recent survey of 1,000 executives, there is evidence of “momentum shifting from ‘blockchain tourism’ and exploration to the building of practical business applications.” About one-third of executives surveyed, 34 percent, say their company already has some blockchain system in production, while another 41 percent of respondents say they expect their organizations to deploy a blockchain application within the next 12 months.

Here’s the real kicker: nearly 40 percent of respondents say their organization will invest $5 million or more in blockchain technology over the coming year. So serious money is being committed to this new way of sharing, validating and storing data. However, there’s a rub. The application world has not caught up to blockchain yet. “Adding to the uncertain state of blockchain adoption is the fact that while more than 41 percent of respondents say they expect their organizations to bring blockchain into production within the next year, 21 percent of global respondents—and 30 percent of US respondents— say they still lack a compelling application to justify its implementation,” according to Linda Pawczuk, Rob Massey and David Schatsky, authors of the Deloitte report.

The problem, as reported, “is that for all the talk about blockchain’s promise, there are very few active use cases they can currently employ to advance their beliefs. As a result, a certain ‘blockchain fatigue’ is beginning to set in among those who feel its potential has been over-communicated, while its real-world benefits remain elusive.”

Yes, there are some interesting use cases now being demonstrated — including a blockchain-based shipping supply chain initiative from IBM and Maersk, and a blockchain-based food chain demonstration from Walmart. But it’s going to take time before blockchain becomes commonplace within enterprises. 

Additional issues include scalability, security, and the need for consortia to support industry-specific networks.

Deloitte’s research suggests that blockchain’s time may not be here yet, but its effects will be pronounced within the next few years. A significant percentage of early adopters in the business community (59 percent) believe in blockchain’s potential to disrupt and revolutionize their industries—and the overall economy.

A good place to start would be to stop looking at blockchain as a technology, Pawczuk, Massey and Schatsky state. “Organizations should stop looking at blockchain as a ‘new’ technology, because it’s really not. Just as Uber achieved success by building a unique business case by combining three existing technologies and protocols (automobiles, online reservations, and online payments) into a new, disruptive model that changed public transportation, blockchain holds the same promise for business across the various industries.” That disruption is already beginning from companies offering blockchain-based services, including distrubuted cloud storage, file storage, and cybernetics services. 

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