Is Mainstream Blockchain Going To Disrupt Soon?
The world’s largest brands could “flip the switch” one day, providing its massive user base of billions with Blockchain features who’ve probably never heard of the technology before. No one knows for sure when this might happen, but we’ve picked up plenty of hints so far in 2019 about large industries showing a keen interest in the Blockchain feature, although the timing and natures seem uncertain.
As announced last month, almost 35% of the world’s entire population would suddenly have access to Blockchain-based currencies if Facebook (with 2 billion users) succeeds with Libra. The impact of it is bound to amplify massively considering the 27 additional companies listed as members of the Libra Association (including Visa, Uber, and Spotify). Even if Libra somehow fails to launch, it wouldn’t be long until another integration of brands occupies the regulatory gauntlet with their fresh approach.
But Blockchain’s growing applications and influence cannot be limited to just currency. Over 60% of the world’s containership capacity is handled by Tradelens members, a new partnership in Blockchain-based alliance between IBM and Maersk. More than a hundred organizations including Walmart, Carrefour, and Albertsons are covered by IBM’s Food Trust ecosystem, and the customers can use QR codes to know where their food is being sourced from using Blockchain in some retail locations. But these are only the said hints through the headlines. As we enter the second half of the year, how is this initiative coming to life, and where is it lacking?
Momentum molds into shape behind the curtains
Changes are being brought about by many industries on capable, disruptive and complex projects behind closed doors. Nevertheless, these enterprise projects that are making maximum public progress are getting their work done in the deep back office. The enterprises that could be exploited could impact the way we work and play, which makes it very tough to foresee their magnitude development from outside the door. There is no market cap equivalent to these projects by the enterprises. This is coupled with a course overhype from 2018 that has led to widespread mistrust and withdrawal in funding for new upstarts.
Executives are thus facing the difficult decision of letting others operate the testing for the same –or making investments and going forward with it themselves, which will possibly lead to dominating a new wave of positive digital disruption.
While Strategies Differ, Top Brands Are Engaged
A wide range of brands is investing significant resources into Blockchain projects. Despite the uncertainty of known outcomes, proven business models or best practice, many leaders are diving in risk fully. The recently published Forbes Blockchain 50 includes companies with a revenue sum or valuation of more than $1 billion that are actively working to adapt decentralized ledgers to their operational needs. These organizations are rapidly getting educated as to where the technology proves successful—and where it fails—knowledge they can use to their advantage to purport power in the new, more collaborative ecosystems that the technology makes possible. Initial successes often prove to be of more impact based on the temporal yet crucial objective of increasing the auditability.
Patent Activity Continues To Build
Brands like Nike and Samsung have filed cryptocurrency and blockchain-related patents, thanks to the armchair innovation theorists, fueling all kinds of ventures. About half of these pending patents have been filed by only seven companies – IBM, nChain, Walmart, Intel, Alibaba, Mastercard and Bank of America. More than 100 of those applications came from IBM alone over six months, even so, China has historically led the way in Blockchain patency.
The Money Has Slowed—But There Is Still Activity
As Q2 2019 is nearing, venture investment has descended sharply. “We’re only on track to see $1.6 billion invested across 454 deals this year, which will be a serious decline from the $4.1 billion invested in blockchain last year,” reports market intelligence firm CB Insights. The firm pointed five trending areas in investments, including new smart contract platforms (which they called “Ethereum-killers”), payments layers (Bitcoin has weak scope for daily payments), improvised privacy on blockchains, securities and custody solutions.
Initial Coin Offering (ICO) activity has slowed down rapidly. However, every month a few projects are still funded through ICOs. New enterprises like IEOs (Initial Exchange Offerings, which is somewhat similar to ICO, but are offered through exchanges) and STOs (Security Token Offerings) have shown that thirst for lower friction financing is still in existence in spite of regulatory challenges.
A large volume of corporate deals has observed sharp descends on some days of 2018, with only 96 corporate deals so far this year, which was more than 300 last year, according to the CB Insights. Yet, as the industry continues to fuel the technology and prepare to move to production, their spending on Blockchain has increased. Spending on Blockchain solutions worldwide is forecasted to increase to nearly 42.9 billion in 2019, which is a 88% increase from last year, per the newly updated Worldwide Semiannual Blockchain Spending Guide from IDC. It expects these spending to continue growing at a robust rate to reach $12.4 billion by 2022.
A Fragmented Platform Market Confuses Decision Makers
Today’s Blockchain market is an array of overspread and fragmented offerings, confusing IT decision-makers. Recent Gartner research forecasts that 90% of current Blockchain platform implementations will need replacement within 18 months to stay secure in the competition and avoid obsolescence. Gartner Senior Research Director Adrian Lee explains, “Many CIOs overestimate the capabilities and short-term benefits of blockchain as a technology, creating unrealistic expectations when assessing offerings.” This could be contributing to uncertainty from CIOs to commit.
A previous Gartner report found that 77% of CIOs say their enterprise has no interest in working with the Blockchain technology and/or no plan to investigate or develop it. This trend is deemed “dangerous” by Gartner.
Governments Increase Blockchain Spending
Governments across the globe are continuously experimenting with Blockchain technology. While China-proposed cryptocurrency ban, it still considers blockchain a beneficial technology and is investing very heavily on it —keeping in mind that several of the world’s most well-funded blockchain companies are based in China.
The governments of Estonia and Dubai have set ambitious goals for converting government records into digital formats with the help of Blockchain technology. Purportedly, the U.S. government’s spending on Blockchain is likely to increase from $10.7 million in 2017 to $123.5 million in 2022, according to IDC. Blockchain spending among U.S. governments is also expected to leap, from $4.4 million in 2017 to $48.2 million in 2022.
The Savvy Are Getting Down to Business
“The blockchain story is beginning a new chapter,” reports Deloitte in their 2019 Global Blockchain Survey. “The question for executives is no longer, ‘Will blockchain work?’ but, ‘How can we make blockchain work for us?”. The report revealed a minimal but steady yearly progress in perceptions among executives with experience in the Blockchain technology.
83% percent responded that their executive team believes there is an acute business case for Blockchains, an increase of 9% since the previous year. Over half of them identified Blockchains as “critical, in our top five strategic priorities”, a 10% increase over 2018’s report. “The questions executives are asking are tougher, more granular, more grounded, and more pragmatic,” the report concluded.
But The Question Remains: “When?”
It’s tempting to want to know forecasts of Blockchain disruption. There is no clear prediction as to how successful this technology will prove to0 be, and there are certainly more and bigger business opportunities and threats. But as Blockchain savvy researchers around the globe build and form alliances, projects that appear to be small at the moment could quite quickly grow into something pervasive, consumer-facing, and difficult to outhaul.