Blockchain technology has the potential to streamline business processes, enable new business models, and even reshape industries. However, businesses must overcome several barriers when it comes to mainstream adoption, according to a Monday report from Deloitte.
When implemented effectively, blockchain can improve efficiency and effectiveness,help cut costs, and increase revenue by creating new products and services, the report noted. However, enterprise adoption remains low: Only 1% of CIOs said they had already adopted some kind of blockchain within their organization, and just 8% said they were in short-term planning or active experimentation with blockchain, according to a Gartner report.
Barriers to blockchain adoption include slow transaction speeds, a lack of standards and interoperability between different platforms and solutions, legal and regulatory concerns around data privacy and intellectual property, and the technical complexity involved with implementing solutions, Deloitte found. There are also several persistent blockchain myths surrounding the technology that have given some companies pause.
SEE: IT leader’s guide to the blockchain (Tech Pro Research)
Despite the challenges, it is not impossible for enterprises to harness the potential of blockchain. Here are five signs that will signify the maturing of blockchain and help businesses bring the technology closer to the mainstream, according to the report.
1. Increasing throughput and performance
Blockchain can be slow, the report noted: While some legacy transaction processing systems can process tens of thousands of transactions per second, the Bitcoin blockchain can only handle three to seven transactions per second. This has led many enterprise leaders to believe that blockchain will not be viable for large-scale applications.
However, developers are working on consensus mechanisms to close the performance gap, the report found. These help transaction participants trust the validity of transactions faster, improving blockchain speed, which can be particularly useful for applications in trade finance, supply chain, auto leasing, and healthcare.
2. Enhancing standards and interoperability
There are still only a few blockchain standards in place, which can give developers in the space more freedom, but cause problems for IT departments, as these platforms often cannot communicate with one another, the report found.
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 transactions, interconnectivity, and standardization, the report noted. These efforts will likely eventually lead to easier enterprise blockchain adoption.
3. Reducing complexity and cost
Blockchain costs and its complexity are major barriers to blockchain adoption, the report noted, leading several large technology vendors including Amazon, IBM, and Microsoft to offer cloud-based Blockchain as a Service. These offerings and a number of others rapidly coming to market have the potential to simplify deployment challenges and improve adoption rates over time, the report noted.
4. Regulatory support
Two in five executives cite regulatory issues as a barrier to greater investment in blockchain technology, according to another recent Deloitte report. The technology includes concepts and methods like cryptographic signatures and smart contracts that are not addressed in existing regulations. Policy changes will be required to address these issues, and are underway in many areas: For example, 17 US state legislatures have passed bills pertaining to blockchain adoption this year alone, the report found. Other federal regulators have also formed working groups to examine the technology as well.
5. Multiplying consortia
Blockchain consortia groups are growing–there are more than 60 globally now, across a dozen industries–which will facilitate more blockchain transactions, the report found. Though not all of these groups are building applications, growing participation by members including enterprises, tech providers, regulators, and governments will help increase adoption of the technology, Deloitte noted.
“It’s understandable why, despite promising pilots and experiments, executives might wonder when–and even whether–blockchain will be ready for mass adoption,” the report stated. “But progress along these vectors is bringing the technology closer to its breakout moment every day.”
The big takeaways for tech leaders:
- Top barriers to blockchain adoption include slow transaction speeds, a lack of standards and interoperability between different platforms and solutions, legal and regulatory concerns around data privacy and intellectual property, and the technical complexity involved. — Deloitte, 2018
- Signs of blockchain progress include increasing throughput and performance, enhancing standards and interoperability, reducing complexity and cost, regulatory support, and the rise of multiple consortia. — Deloitte, 2018