Hitting hype cycle peak, the world prepares itself for blockchain or bust

Published on the 01/08/2017 | Written by Jonathan Cotton


Blockchain_Data61

New research highlights distributed ledger tech’s rise to ‘next big thing’ status, even though it’s generally poorly understood...

According to new research from Juniper – ‘Blockchain Enterprise Survey: Deployments, Benefits & Attitudes’ – interest in blockchain and its associated benefits has increased dramatically over the past 12-18 months with 57 percent of large corporations now either actively considering or in the process of deploying their own blockchain-powered technologies.

The report looked at ‘best-fit’ opportunities for deployment (highlighting settlement, land registry and digital fiat currency as points of interest) but cautioned that for each of these opportunities the scale and variety of barriers were “significant”.

While it may be getting harder to figure out what’s real and what’s hype, but one thing’s for sure: there’s serious money involved. According to blockchain-centric news site Coindesk, US$796m has been invested in electronic ledger system technologies since the beginning of 2016, part of an estimated US$1.74bn overall.

A recent study from SAP found that senior executives in the banking and insurance industries plan to more than double their investments in blockchain technology by 2019.

On Monday, ‘Blockchain Revolution’ author Alex Tapscott launched a new digital asset investment firm, NextBlock Global, backed by a cool US$20 million.

But as anticipation builds, actual insight into the realities of the tech may be getting lost.

Author of the Juniper paper Dr Windsor Holden cautioned overly enthusiastic blockchain adopters that, in many cases, “systemic change, rather than technological, might be a better and cheaper solution than blockchain, which could potentially cause significant internal and external disruption.”

That research also found that many early-adopting companies have underestimated the scale of the blockchain challenge. In regards to such issues as interoperability, “the proportion of survey respondents expressing concerns progressively increased as companies proceed towards full deployment”, while concerns also “rose sharply” regarding client refusal to embrace blockchain.

A US study by Deloitte concluded that 40 percent of private sector senior executives actually had “little or no knowledge about the technology”, even as one quarter of other executives placed it among their company’s highest priorities for 2017.

The Australian government is getting on the forward foot here – or at least is making some of the right noises – releasing two reports last month that looked at the regulatory, technical and societal implications of using blockchain based-systems across various industries.

The research, conducted by Data61, the innovation arm of the Commonwealth Scientific and Industrial Research Organisation (CSIRO), determined that Australia has “a rare opportunity to lead the way in the adoption of blockchain technology” – with some caveats.

The study highlighted the fact that, while exciting, the path towards widespread adoption of blockchain-based systems is still not clear. Though the opportunities are profound, the report said further research is required to determine just how new blockchain solutions will work with legacy systems.

Furthermore, the report recommended that forthcoming trials of blockchain systems should demonstrate responses to ‘rainy day’ scenarios when problems arise like disputed transactions, incorrect addresses, exposure or loss of private keys, data-entry errors or unexpected changes to assets on blockchains.

Other recommendations from Data61 included:

  • Scrutinising technology-specific risks for new systems
  • Increasing research and development (R&D) on trustworthy blockchains
  • Providing sufficient evidence for regulatory acceptance of blockchain-based system
  • Informing regulators and businesses about the typical technical risks and limitations of blockchain technologies
  • Implementing technologically-neutral regulation and policy.

 

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