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While conversations about the blockchain in recent years have concerned speculation on cryptocurrency, major hack and early money offerings (ICO) – the controversial fund-raising exercise – there has been a clear change in opinion as more companies are trying to integrate technology into their operations.
According to Paul Brody, EY Global's blockchain innovation leader, the level of education and knowledge of blockchain technology is increasing. "Two years ago, nobody knew what blockchain was and was closely associated with bitcoin, which made it very difficult to keep the conversation going every time we talked about blockchain," he tells The Edge.
"But today I hear that conversations are very different." People are aware of cryptocurrencies and ICO, but the underlying technology has captured people's attention now in terms of how the blockchain can be used to solve real problems and cases. of real use. "
In Malaysia, several listed companies have announced blockchain pursuits with some even more established partners in the sector. For example, CIMB Group Holdings Bhd announced a strategic partnership with Ripple to allow immediate cross-border payments between the various markets.
Another example is Myeg Services Bhd, an e-government service provider, which has introduced blockchain-based payroll management software, PayMe, which will be piloted at selected sites.
The group said it focused on enhancing the benefits of blockchain and was working with Universiti Malaya to promote the development of blockchain technology.
Other companies are more interested in the cryptocurrency side of the currency. Among them, Cuscapi Bhd, who is planning the creation of a cryptocurrency exchange in the Philippines, and Country Heights Holdings Bhd, which is trying to issue its own digital token, currency of the horse, to raise funds.
Some companies in the public sector have also become proposers of blockchain technology, such as Shah Alam MP, Khalid Samad, who supported Harapan Coin, advertised as the world's first political ICO.
Regulators are also intensifying their game: the Securities Commission Malaysia will introduce a framework in the first quarter of 2019 to regulate trade in digital goods and ICOs.
EY added blockchain to its suite of customer solutions, Brody says, adding that more companies have contacted the consulting firm by asking for information on the blockchain and if they could use the technology to improve their operations.
"In fact, customers come to us and tend to want to use blockchain as a preferred solution because they've heard so much about it, but we turn the conversation over and ask the client what problems they are trying to solve and see if the blockchain is the right solution.
"In most cases, blockchain is not an autonomous solution, it must be combined with the right processes, governance and perhaps also with other technologies, not the answer to everything, like the way the hype shows it", he explains.
By using blockchain, companies can simplify and accelerate business processes by reducing the need for intermediaries, which would result in lower costs.
The blockchain hype
The advocates of the blockchain have advertised technology as the solution to most of the world's problems, especially during the ICO boom last year. This is quite far from the truth.
Every piece of new technology goes through the hype phase, says Brody. It begins with an innovation that reaches a peak when supporters call it the answer to every problem, followed by a trough, when the hype subsides, giving rise to more skeptics and critics.
Brody cites examples of previous innovations such as biometric identification, location-based services and mobile banking. These were overwhelmed when they emerged on the market about 15 years ago.
"Many of the things that people later said that it was hype or that it would not work are being used by the masses several times each day." We use our fingerprints to unlock our phones a hundred times a day. technologies and blockchain is the amount of time spent, "explains Brody.
He believes that blockchain has passed the hype phase and is currently in what observers call "the trough of despair".
Similarly to that of the late '90s and the early 2000s, many projects that have made ICO and launched blockchain services will crash, separating those that were in it for the & # 39; hype from those who actually have useful solutions.
When the dotcom bubble burst, many Internet companies, such as Pets.com, the online food retailer Webvan.com and the online toy retailer eToys.com, became insolvent. But the era also gave rise to giants like Amazon and eBay.
"Over the next two years, many of the companies that created ICO will go bankrupt, simply because they were not very good at what they were doing or did not find a way to deal with the problems they were facing.
"In two years there will be fewer blockchain software companies, but those that will survive will really work for industries and businesses," says Brody.
Many startups have developed their demonstrations of concepts and prototypes, which he says is the easy part as there is not much to lose. The work that comes after is much more challenging, with the industrialization and downsizing of projects so that they can be implemented and used by companies in their operations.
This requires huge investment, adds Brody, forcing the adopters to take a serious look at the net benefits they can derive from the use of blockchains.
"We are currently doing a very large project for one of our customers – the prototype only took six weeks, but industrialization will take more than a year from the beginning to the end. it will have to integrate the new system with the existing legacy systems and connect it to the systems of its customers.
"After that, there needs to be a security check by the security department and a review by the auditor.The work involved is huge."
However, this will not discourage the adoption of the blockchain, emphasizes Brody. Despite the critics and opponents, any new technology needs a cycle of about 10 years before it becomes mainstream.
It indicates the adoption of the cloud, the rise of the personal computer and the emergence of smartphones, stating that all these revolutionary changes have begun and ended in 10 years.
"A good example is the public cloud." In 2006, Amazon launched the public cloud with AWS and, if you asked an investment investment leader out there if they would put their company's business on the public cloud, the answer would be "on my body ".
"But last year, more than half of all the new enterprise resource planning (ERP) implementation was done in the public cloud, it takes about 10 years and I think it will be the same situation with the blockchain – a lot of criticism in the beginning, followed by adoption. "
