Is Blockchain Even Ready For Mass Adoption?
Blockchain education is a stumbling block to its implementation.
Blockchain is a foundational technology that has the potential to transform business as we know it on a scale like what we’ve seen it with the Internet. Those are not my words but words from respected Harvard professors. However, to date there are few use cases and critics would say that the technology has serious limitations. That’s why in my on-going series about “Blockchain Opportunities And Risks For Finance” I have now teamed up with Kunal Patel to discuss the prospects of mass adoption of Blockchain based applications and business models and not least, of course, the potential impact on the finance function.
Kunal is a thought leader in the space of FinTech, advisor to the large Indian Bank YES BANK where he advises on the potential of FinTech, a mentor for Blockchain start-ups in India and Singapore, and board member of the Blockchain Foundation of India.
The benefits of Blockchain has been highly touted and Kunal definitely also sees potential there.
“The biggest use cases for me are digital identity and KYC [Know Your Customer]. KYC is still a huge problem globally and there isn’t one solution, which can systematically deal with the problems countries, regions and organizations have put in place over the decades.”
Ask anyone with knowledge about Blockchain and they will tell you about all the potential problems it can help us solve.
OK, I buy the benefits so why aren’t we seeing faster adoption?
So, with all the hype around Blockchain, all the potential benefits, and everyone showing so much interest in the technology why aren’t we seeing faster adoption? Kunal has a few perspectives to share on this.
“Trust to a certain degree and education, which the general population lack when it comes to these new types of digital-based services.”
However, even if the wider population understood what Blockchain was all about then there are still many barriers which Kunal helps me list.
- How to handle the massive data storage requirements when storing billions of transactions on Blockchain based networks?
- Regulation. When is it going to come and how will it affect what is feasible with Blockchain?
- Many senior managers in the corporate world are still clueless about Blockchain and many still associate it with Bitcoin only so how are these leaders going to leverage Blockchain for efficiencies and creation of new business models?
- Interoperability between organizations i.e. you might be able to use Blockchain for back-office efficiency gains but how will companies work together on Blockchain based platforms?
And then we haven’t even mentioned the technology barrier of limited transaction speed and high energy consumption for performing the necessary cryptography to the make the Blockchain network work.
So, I should just give up on Blockchain?
The short answer is “no, of course not”. Anyone distrusting the pace of how technology can improve would be foolish as we seen countless times throughout history. There’s a high likelihood that the same thing will happen to Blockchain or a similar Distributed Ledger Technology (DLT). Here’s Kunal’s take on it:
“There is definitely awareness but as I had previously mentioned, a lack of understanding and education is a still a problem. Therefore, it’s implementation will take longer to push through even though it’s an obvious consideration.”
Besides the fact that technology is likely to catch up and obliterate the current concerns and challenges then we continue to see more and more serious moves by large corporates in the Blockchain space. The announcement of a joint venture between Maersk and IBM is one of the latest ones. Kunal also sees quite a bit of adoption around him.
“KYC – the benefits that bring to bring on new customers for digital banking and insurance products. Given that’s an area of focus for me, I can happily say that those specific point solutions which have tackled this problem have proven to be successful.”
Kunal goes on to add further about adoption and use cases.
“The use of specific applications, protocols are already being worked on, specifically on private-based Blockchain that I know some banks in India especially have put together.”
We probably just have to acknowledge that Blockchain is still very much in an innovation phase where we’re only now starting to see early adopters pop up. That puts us still some time out from the critical mass needed to push the use of Blockchain into mass adoption. That and the fact that the technology is still not ready. However, this only means that we should all continue to realize the potential of Blockchain from our own perspectives. If you work in the finance function you should prepare yourself for what’s coming and how it will change the way transactions occur and are verified.
What’s your take on all of this? Will we ever see mass adoption of Blockchain? Will a similar technology outcompete Blockchain even before we really get started? These are indeed interesting times and if Blockchain indeed will be as transformative as the Internet then I can’t wait to see what will happen in the coming years and then I have no doubt that we will see mass adoption of Blockchain.
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