insight magazine

Is Blockchain a Key Technology for the Future?

That’s the question Big Four firms Deloitte and PwC are answering in new research. By DERRICK LILLY | Winter 2018

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The truth is, blockchain is already getting much use today — far more, in fact, than just what you hear about around cryptocurrencies.

According to a PwC survey of 600 executives in 15 countries, 84 percent have active blockchain initiatives underway. Digging a little further into that number, 15 percent have a fully live blockchain project; 10 percent have a blockchain implementation pilot in progress; 32 percent have a blockchain project in development; and, while many other respondents are researching or evaluating projects, just 14 percent have no activity in place.

“Blockchain is getting closer to its breakout moment with every passing day,” says Deloitte’s report on the findings of its 2018 global blockchain survey. In its global survey of “more than 1,000 blockchain-savvy executives from seven countries and nine industries,” 74 percent of all respondents see a “compelling business case” for the use of blockchain — many of which are already being acted on.

Deloitte found 34 percent of its respondents already have blockchain systems in production, and another 41 percent say they expect their organizations to deploy a blockchain application within the next 12 months.

There’s also plenty of capital flowing into blockchain R&D — nearly 40 percent of Deloitte’s respondents said their organizations will spend $5 million or more on blockchain technology in the coming year.

“As more organizations put their resources behind this emerging technology, we expect blockchain to gain significant traction as its potential for greater efficiency, support for new business models and revenue sources, and enhanced security are demonstrated in real-world situations,” Deloitte reports.

“A well–designed blockchain doesn’t just cut out intermediaries, it reduces costs, increases speed, reach, transparency, and traceability for many business processes. The business case can be compelling, if organizations understand what their end game is,” says PwC Blockchain Leader Steve Davies.

Therein lies the challenge. In reporting on the matter, Ken Tysiac, FM magazine editorial director, explains: “Blockchain is a distributed ledger technology that enables an internet-based peer-to-peer network to facilitate exchanges in value. Computers on the network simultaneously verify and record transactions, which are able to be completed without a traditional intermediary such as a bank or credit card network.

“The technology, which provides the underpinning for cryptocurrencies such as bitcoin, has numerous potential uses in many industries. The technology has an obvious immediate impact on financial services, which was identified by 46 percent of the PwC survey respondents as the leading sector in blockchain development. Manufacturers also are finding blockchain to be helpful in supply chain management.”

The point is that developing blockchain platforms must be thought out in great detail to succeed in any given industry.

In “4 Tips for Developing Blockchain Platforms,” Tysiac calls out the following key areas of focus from PwC’s report:

1. Making the business case. The purpose of the initiative needs to be clear and well-conceived so it can move forward without confusion.

2. Building an ecosystem. Different companies in an industry (and perhaps even competitors) may need to work together to develop a common set of standards to govern blockchains. Nearly all (88 percent) of the survey respondents with live blockchain applications in the PwC survey were leaders or members of a blockchain consortium.

3. Designing deliberately around what users can see and do. Legal, compliance, and cybersecurity experts can help blockchain users develop rules and standards for access permissions that will engender trust in the technology.

4. Navigating regulatory uncertainty. Although regulatory requirements will evolve on blockchain, companies may fall behind their competitors if they avoid the technology while waiting for rules to be developed. Engaging regulators as they develop standards can help blockchain users anticipate their next moves.

Is your organization developing a blockchain platform? If so, tell us about it.