The 2017 challenge for blockchain: Getting executives to understand it
Will 2017 be the year blockchain becomes part of the mainstream business culture? This past year has seen the technology used in various ways, and companies are throwing money behind it, but headaches and obstacles to its growth remain.
Deloitte conducted an online survey of 308 senior executives at U.S. companies with $500 million or more in annual revenue to find out about corporate sentiment towards blockchain technology.
Key findings from the survey showed that 28 percent of respondents had invested $5 million or more in blockchain technology, while 10 percent had invested $10 million or more.
On the flip side, 39 percent of respondents had little or no knowledge in the technology.
Blockchain was developed alongside the digital cryptocurrency bitcoin. It works like a huge, decentralized ledger which records every transaction and stores this information on a global network to prevent tampering.
"It is fair to say that industry is still confused to a degree about the potential for blockchain," said David Schatsky, managing director with Deloitte LLP, in a press release.
"More than a quarter of surveyed knowledgeable execs say their companies view blockchain as a critical, top-five priority. But about a third consider the technology overhyped."
Based on the survey, sectors including technology, media and telecoms, consumer products and manufacturing are leading the deployment of blockchain, with about 30 percent of survey respondents in these industries saying their company has brought blockchain into production.
In contrast, just 12 percent of surveyed financial services company executives said their company has deployed blockchain.
Other sectors keen to find uses for blockchain is the electrical power industry, where it can be used to manage wholesale transactions, peer-to-peer networks and allow energy users to register and trade renewable credits.
"Power is a logical use case for a few reasons: units of power and energy are a strong fit for so-called smart contracts based on blockchain, and meters can feed data directly into blockchain logic," said Katrina Westerhof, analyst for market researchers Lux Research, said in a press release.
"Power also relies on cumbersome trading and clearing systems to support complex markets, and blockchain can help create a leaner distributed system that can cut out intermediaries and associated fees."
However, in a report on the topic, called "Beyond Finance: Blockchain's Impact on the Power Sector", Westerhof and her colleagues pinpointed some challenges ahead. These included; the limited number of blockchain experts; the challenge of finding the talent to build proprietary blockchain networks; and how blockchain will be treated in a tightly regulated sector such as energy.
Blockchain will need to overcome several obstacles such as these in order to succeed in 2017.
For instance, some companies are considering integrating blockchain into the real estate sector, where the technology can help keep transaction records secure, and enable cheaper, faster transactions.
Seven out of ten property investors believe regulators are unprepared for the introduction of blockchain, according to a survey by real estate investment platform, BrickVest. Many also felt banks, insurance companies and private equity firms would be reluctant to invest in the technology.
"While the majority of property investors view blockchain as a core part of the future industry landscape, investors have correctly highlighted many of the challenges ahead, most notably at a legal and regulatory level," said Emmanuel Lumineau, CEO at BrickVest, in a press release.
"It will be a far from straightforward journey to overcome the status quo."
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