Managing blockchain expectations: 3 expert takes
Realistic expectations are key. Not just for avoiding disappointment, but also for effective planning.
A recent PwC survey of 600 executives found that 84% of businesses have some kind of blockchain initiatives underway, but it's safe to say the number actively looking at cryptocurrencies is probably much lower. The survey also found that adoption is coming slowly with over 20% either sitting on paused projects or not having anything underway, and many more only being in the research stage which might be anything from heavy R&D investments to someone doing a little light reading on it.
Fewer than half of surveyed executives named blockchain as the leading financial services development, and fewer still expected it to be the case in the next three to five years while financial services was the most blockchain-keen industry by a large margin.
The general dichotomy is a very high degree of interest, but some quite tempered expectations. For planners going forward, the next question might be whether those expectations are too low, too high or just right.
Whether that can even be answered yet is unclear.
Shiv Malik, head of strategy and communications at Streamr
"People are both over and underestimating the change blockchain will have on their particular vertical," said Shiv Malik, of the Streamr blockchain data marketplace platform.
There's been a lot of investment and hype, and investment in hype, he says, and with that in mind any institution that's serious about being on the forefront of the technology should be heavily focused on realistic timelines. If someone believes in the potential of the technology, as many companies apparently do according to the PwC survey, it might be worth their while to dig into realistic timelines.
"There has been plenty of hype and investment in the last few years about the potential of blockchain but the tangible results of those investments are yet to procure world changing applications - certainly not outside of Fintech," he said. "It is unsurprising to see that financial services are seen to be leading the blockchain revolution at 46%, vastly outweighing other industries like retail and consumer at a mere 4%."
"Of course, that doesn't mean it won't come - it has to. People's expectations, not of what can be achieved but how fast it should be achieved, need to be tempered so that the imminent transition is as seamless as possible and we can all appreciate the benefits."
David Hanson, Co-CEO of Ultra
The ongoing cryptocurrency bear market of 2018 has surfaced a lot of doubts, says David Hanson of the Ultra blockchain gaming ecosystem, but these don't change the potential of blockchain technology.
As with any new technology, scepticism is healthy and to be expected. But if the lessons of the Internet and mobile revolution have taught anyone anything, it's that complacency isn't an option where all-encompassing new technology is concerned.
Based on the PwC survey, he says, most businesses seem to have learned that lesson well.
"It would be hard to deny that we are in a bear market right now for cryptocurrencies after the wild rise experienced in 2017 — but this does not change the reality. Blockchain is a new and innovative technology that allows us to optimize and create new systems for almost every industry. No one wants to be left behind, become less competitive, or fail to see the huge shift taking place in their industry, so it’s not surprising to see that 84% of survey respondents say their organisations are already utilizing blockchain technology either at a research, development, pilot, or live stage."
Adoption will pick up quickly once the technology proves itself, Hanson says. You only need to look at developments like the sharing economy which were quite outrageous on paper, but turned out to be exceptionally impactful once they arrived in the real world.
"Challenges such as lack of trust and regulatory uncertainty can be seen to hinder the progression of the blockchain industry, but this is to be expected. For any emerging technology, skepticism is natural and blockchain will need to prove itself before it is widely adopted. The idea of Airbnb and Uber was inconceivable 20 years ago, and now they are a part of our everyday life, the same way blockchain will be."
"While the survey recognizes the US as leaders in the blockchain space, I don’t necessarily believe any country is paving the way right now. Asia seems to be very open with South Korea leading the way, European hotspots such as Switzerland are building interesting technologies, and China is home to a lot of engineers working on blockchain. I don't think the blockchain revolution will come from any one country in particular. We are now living in a global world, and blockchain could be the first internet-powered global revolution."
Manuel Martin, CEO and co-founder of Orvium
Laying out realistic expectations for the development of blockchain technology is difficult, with adoption rates, viable use cases, regulatory hurdles and everything else varying widely around the world.
Manuel Martin, of the Orvium blockchain project, which aims to create a much-needed decentralised system for publication of academic journals and the associated data management, points at these differences as one of the reasons sensible regulatory clarity is so important.
The technology is by its nature beyond the reach of any central governing authority, he says. This is its defining feature, but it also necessitates all stakeholders including governments, businesses and academia pulling together to overcome the regulatory hurdles.
“Blockchain is based on a distributed ledger platform that is decentralised and immutable. It is intended to be a permanent, tamper-proof record outside the control of a central governing authority and this is what makes it a very attractive and useful technology," Martin says. "However, the space faces many challenges, including trust amongst users and interoperability between blockchain networks. Governments should collaborate and work with society, the private sector, and academia to overcome current regulatory challenges to co-develop policies at the pace of technology."
He points at the PwC results as a sign that blockchain technology may already be nipping at the heels of many incumbents and that they're scrambling to stay on top of new developments, while regulatory clarity may still be lagging behind and acting as something of a bottleneck.
"Today we are living in a digital revolution, comparable with the one created by the World Wide Web in the 1990s," Martin said. Recently, JP Morgan CIO Lori Beer said that "In a few years blockchain will replace the existing technology, today it only co-exists with the current one".
According to the report, 84% of respondents say their organisations have some involvement with blockchain technology. This indicates that blockchain technologies are disrupting many established industries around the world, changing the rules by making processes transparent and reducing costs significantly. This ranges from financial services with Bankor or Omisego to science dissemination with Orvium for instance. Alongside this, the technology is already helping people around the world (ie Venezuela or Iran) living very difficult lives because of the financial situation in their countries."
"We must ask ourselves why regulators are always playing catch up with the real-world technology."
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA