There are more blockchain-based projects and pilots than ever before, and investments in the technology are surging – but when will blockchain really break through? We sat down with Melissa Loh and Stephen DeMeulenaere to discuss all things blockchain.
This article is an expansion on some of the ideas discussed in the video.
In this article, we discuss:
- Corporate and enterprise investment in blockchain projects and blockchain-as-a-service
- Current blockchain-based projects in progress at some of the world’s largest companies
- The importance of focusing on the end user, interoperability, and having a bit of humility when it comes to potential use cases for new technologies.
Blockchain’s Enterprise Future
It’s impossible to talk about the future of blockchain without talking about the present. Long-discarded as merely a technology for cryptocurrency mining, blockchain, the distributed ledger technology that allows users to verify data on a trusted network, is now seen by some as the future of digital identity, supply management, and large swathes of the FinTech industry.
Just a couple of years ago, blockchain as a standalone technology was not unthinkable, but there were very few business cases for it and essentially no investment from the corporate world.
Fast forward to 2019, and things have changed. Amazon, Microsoft, Walmart, and IBM are just a few of the enterprise companies making significant investments in the blockchain space – and it doesn’t seem to be slowing down.
Although FinTech typically gets the most attention as the sector most-associated with blockchain technology, business leaders surveyed by Deloitte in 2018 see things a bit differently.
As we’ve discussed before, there are use cases for blockchain’s verified, immutable ledger that go far beyond cryptocurrencies and other financial instruments.
As you can see in the chart above, the respondents to the Deloitte survey (n=1053; C-level and VP) see supply chain management, the Internet of Things ecosystem, and digital identity as the best use cases for blockchain technology – and that’s where they’re spending their money right now.
Walmart is the perfect example. The retailer does close to $22 billion in annual revenue and is the largest private employer in the United States with 2.3 million employees. In late 2018, it partnered with IBM on different blockchain pilot programs to track mangoes and pork products.
The tests went well, and now Walmart has given its suppliers of leafy green vegetables – all of them – a directive to track the products on a blockchain-based system by September 2019. It’s a huge step forward for the entire blockchain space, especially the burgeoning industry around provenance of goods – including everything from oranges to diamonds.
Walmart’s lead on the project is Frank Yiannis, and he has some great advice for other business leaders trying to make the move to blockchain-based systems. Here’s what he told Computer World about blockchain for supply chain management:
The first recommendation is define the business case or what’s the problem you’re trying to solve. While we believe blockchain is a great use case for supply chain traceability and transparency, you really need to understand what you’re trying to solve. We really weren’t chasing blockchain, we were trying to solve a business problem.
Once you do that, then I’d recommend they become informed and understand the technology. My recommendation is that it always be business-led but technology-enabled. Often times, people want to relegate blockchain to the technology department in an organization, but it has to be in my view – and why it’s been successful here – business led.
This is great advice and we couldn’t agree more. It’s important to remember that blockchain – like so much other technology – may not be a cure-all for our digital woes, but it can be remarkably useful. That may mean applications and services running on blockchain-only systems, or applications that are maybe 10 or 20% blockchain-based.
It’s All About the User
It’s easy to forget that, for most end users of almost any product, the technology underpinning that product is largely unimportant. People want to use things that make their lives easier, better, and otherwise more liveable. They want to see benefits.
This explains, at least in part (more on this later), why blockchain-based digital identity security is starting to take off – it’s simply a more directly-beneficial use case than technology tied to digital wallets. Whereas the emergence of multiple payment apps has put the requirements for adoption on users and retailers alike, often meaning several apps, hours spent onboarding, and then having to toggle among several apps just to find the one a certain seller accepts – digital identity is relatively straightforward.
There are now countless organizations dedicated to making blockchain-based digital identity the norm, rather than an outlier. BanQu, Everest.org, Selfkey, and even large consultancies like PwC, are deploying systems right now to help people identify themselves more conveniently via biometrics and simple mobile app, bring the unbanked into the economy, and ease the transfer of medical information.
Here’s how Dr. Ng Kee Chong, Associate Professor and Chairman of KKH Medical Board in Singapore, describes the hospital’s blockchain projects done in cooperation with Everest.org:
The programs started with emergency procedures for midwives, and then moved to pediatric training programs, integrated with train-the-trainer programs for sustainability. We are aware of the need to track mothers from birth to the 30th day of the baby’s life, to make sure the mother is well nourished, understands her pregnancy, and understands the need to go to the health center early to prevent complications later on.
Everest has the ability to identify and track mothers, to ensure that they have a healthy and trouble-free pregnancy, including a sound understanding of post-birth care in the critical first 30 days of the baby’s life. The pilot being run could set a new precedent for maternal and child care, and become scalable not only in developing countries but also in developed markets.
Barriers to Blockchain Implementation
So…if blockchain is so effective at tracing provenance, providing a trustworthy identity, and more, why aren’t we using it more? The regulatory environment has a lot to do with it, especially with regards to cryptocurrencies. In the United States, for example, Bitcoin is a security, not a currency. So, if you go to Starbucks and want to pay in Bitcoin (which Starbucks is experimenting with), for example, you’ll pay a capital gains tax on the amount of Bitcoin you spend. That turns into a pretty expensive cappuccino pretty quickly.
Respondents to the Deloitte survey mentioned earlier largely echo this view.
But it’s more than just regulators and banking rules. Blockchain-based systems may indeed have the power to make transactions easier, contracts smarter, and supply chains more transparent, but to do that, the legacy systems they are replacing need to be undone.
Look a bit closer at the chart above and you can see this sentiment in several of the responses, not just the one directly addressing the topic of systemic transformation – which 37% of respondents said was an organizational roadblock. “Uncertain ROI”, “Lack of In-house Skill/Understanding”, and “Potential Security Threats” can all be placed in this basket. They also make up the next three most-common responses. Baked-in systems – some, decades old – and lack of knowledge are fundamental issues. Luckily there are more and more organizations dedicated to addressing just those things.
Reasons to be Optimistic
It’s impossible to say when, or even if, blockchain will become something resembling a universal application, but it has momentum. More investment in the space by large corporations and outside organizations has borne fruit in many ways, and we’re now at a point where systems can be analyzed, adjusted, and built upon – and that’s a great thing.
One more reason for optimism comes from the Deloitte survey. Organizations are very willing to collaborate, even with direct competitors, on create viable business models for blockchain. 29% of respondents work for an organization that already does just that, and another 45% say their organizations are willing to work with the competition on building blockchain solutions.
In short, the future of blockchain looks very bright.
If your business or organization is using blockchain, or planning to, drop us a line and tell us how it’s going!