Blockchain technology has the potential to streamline business processes, enable new business models and even remodel industries. However, companies have to overcome various obstacles when it comes to traditional adoption, according to a Monday report by Deloitte.
If implemented effectively, blockchain can improve efficiency and effectiveness, help reduce costs and increase revenue by creating new products and services, the report notes. However, the adoption of businesses remains low: only 1% of CIOs said they had already adopted some sort of blockchain within their organization, and only 8% said to be in short-term planning or active experimentation with blockchain, according to a report by Gartner.
Blockchain adoption barriers include slow transaction speed, lack of standards and interoperability between different platforms and solutions, legal concerns and data privacy and intellectual property regulations, and technical complexity related to the implementation of solutions , noted Deloitte. There are also many persistent blockchain myths surrounding the technology that has put some companies on hold.
SEE: guide of the IT leader to the blockchain (Tech Pro Research)
Despite the challenges, it is not impossible for companies to exploit the potential of the blockchain. Here are five signs that mean the maturation of the blockchain and help companies bring technology closer to the mainstream, according to the report.
1. Increased productivity and performance
Blockchain can be slow, notes the report: while some legacy transaction processing systems can process tens of thousands of transactions per second, Bitcoin's blockchain can only handle three to seven transactions per second. This has led many business leaders to believe that blockchain is not viable for large-scale applications.
However, developers are working on consensus mechanisms to bridge the performance gap, the report noted. These help the participants in the transaction to trust the validity of the transactions faster, improving the speed of the blockchain, which can be particularly useful for applications in commercial finance, supply chain, car leasing and health care.
2. Improvement of standards and interoperability
There are still only a few blockchain standards in place, which can give developers more freedom in space, but cause IT problems, as these platforms often can not communicate with each other, according to the report.
However, more people in the industry, including the Enterprise Ethereum Alliance, the Hyperledger Foundation and the Decentralized Identity Foundation, are working to create cross-blockchain, interconnectivity and standardization transactions, the report noted. These efforts will likely lead to an easier adoption of the corporate blockchain.
3. Reduce complexity and costs
The costs of blockchain and its complexity are the main obstacles to the adoption of the blockchain, the report noted, bringing many large technology providers including Amazon, IBM and Microsoft to offer cloud-based Blockchain as a service. These offers and a range of others quickly available on the market have the potential to simplify implementation challenges and improve adoption rates over time, the report noted.
4. Regulatory support
Two out of five managers cite regulatory issues as a barrier to more investment in blockchain technology, according to another recent Deloitte report. The technology includes concepts and methods such as cryptographic signatures and smart contracts that are not covered by existing regulations. Political changes will be needed to address these issues and are ongoing in many areas: for example, 17 US state legislatures have passed laws on the adoption of blockchain this year, the report said. Other federal regulators have also formed working groups to examine the technology.
5. Multiplication of consortia
The Blockchain consortium groups are growing: now there are more than 60 globally, in a dozen sectors, which will facilitate more blockchain transactions, according to the report. Although not all of these groups are developing applications, the increasing participation of members, including companies, technology providers, regulators and governments, will help to increase the adoption of technology, Deloitte noted.
"It is understandable why, despite promising pilots and experiments, managers might wonder when – and even if – the blockchain will be ready for mass adoption," the report said. "But progress along these carriers is bringing technology closer to its time of escape every day."
The big takeaways for technology leaders:
- The main barriers to blockchain adoption include slow transaction speed, lack of standards and interoperability between different platforms and solutions, legal concerns and regulations regarding data privacy and intellectual property and technical complexity involved. – Deloitte, 2018
- Signs of blockchain progress include increased throughput and performance, improved standards and interoperability, reduced complexity and costs, regulatory support and growth of multiple consortia. – Deloitte, 2018