The hype surrounding blockchain technology will recede sharply in 2018 as the cost and complexity of implementing blockchain solutions becomes apparent, according to GlobalData, a data and analytics company. The report says that many of the early blockchain projects will either be quietly shelved in favor of more traditional approaches or they will evolve in a way which reduces their dependence on blockchain technology.
GlobalData's Thematic Research report, ‘Blockchain – Thematic Research’, reportedly shows that while the market is awash with absurd claims about the benefits of blockchain technology, there are some key domains where the ability to execute distributed transactions without relying on a single central authority will bring significant value. While blockchain technology will have lost much of its gloss by 2025, it will have found its way into the heart of many key business processes; especially those involving multiple, disparate, participants.
Blockchain is an electronic ledger of transactions that are continuously maintained in blocks of records. The ledgers are jointly held and run by all participants. Coupled with cryptographic security, this makes them tamper-proof (at least in theory).
In a world where computer code is trusted more than human-run operations, the blockchain protocol, often referred to by the umbrella term 'distributed ledger technology' (or DLT), will come to be seen as a powerful antidote to the high fees charged by intermediaries such as banks, law firms and other 'middlemen' because it enables individuals, corporations and devices to transact with each other independently.
“We are entering a new phase in the evolution of blockchain technology; over the next 24 months the more outlandish claims made by proponents of blockchain will be debunked and technology providers and users alike will begin looking with clearer eyes at the narrow but significant set of use-cases where blockchain and distributed ledger technology can add real value,” said Gary Barnett, Chief Analyst, Technology Thematic Research, GlobalData.
Blockchain Use Cases
The blockchain industry is being shaped by a host of start-ups, platform providers and consortia on the supply side working with such forward thinking customers as Goldman Sachs, Santander and Credit China FinTech in the financial services sector and IBM, Microsoft, Intel and Telstra in the technology sector. The British, Swedish and Singapore governments have embraced it too.
The chart summarises the three main 'use case' categories for blockchain technology:
- Asset registries
- Financial services platforms
- Industrial platforms
The lion’s share of the benefits that organizations will derive from blockchain projects will have relatively little to do with the choice of blockchain as an underlying transaction platform; instead the vast majority of the benefits will come from the transformation, integration, and modernization work that will be required in order to realize blockchain projects.
“For every dollar spent on blockchain technology, between 5 and 20 dollars will be spent on transformation and modernization,” said Barnett.
Big consulting firms that can combine technology capability with consulting will be the medium-term winners, the report indicates. The key players in the next phase of blockchain will be the technology-savvy systems integrators and the big software providers who participate in established eco-systems. Firms like IBM, Accenture, SAP, and Cognizant all combine technology expertise with the ability to bring multiple parties together into consortia.
Ken Briodagh is a writer and editor with more than a decade of experience under his belt. He is in love with technology and if he had his druthers would beta test everything from shoe phones to flying cars.Edited by
Ken Briodagh
