A new pair of studies by Deloitte and PwC casts doubt on the recent pessimism surrounding blockchain’s progress in terms of enterprise adoption and experimentation.
Quashing the notion that blockchain is over before it even started, PwC’s Global Blockchain Survey 2018, which polled 600 executives in 15 territories, found that 84 percent of respondents said their companies are involved to some extent with blockchain activities.
Blockchain is a digital decentralized database in which nodes, or blocks, of data are stored securely using cryptography and live on many computers in lieu of a single, centralized one (as is routine with traditional databases).
Blockchains can be public, like the ones that power cryptocurrencies such as Bitcoin, or private, as in “permissioned,” such as ones developed for enterprise use in which sensitive, competitive information is available only to invited stakeholders. Blockchain is said to be immutable, or unchangeable, because its data lives on so many individual computers; any attempt to alter a node would require the consensus of the majority of blockchain users, making amendments notoriously difficult if not impossible. Blockchain is seen as disrupting industries like finance, shipping and logistics, supply chains, social media, and fashion and retail. Given its ability to transparently store data, it’s also useful as an anti-counterfeiting mechanism.
The findings from Deloitte’s “2018 Global Blockchain Survey: Breaking Blockchain Open” report are similarly encouraging. In a survey of 1,053 professionals from six countries, including the U.S. and China, nearly three quarters (74 percent) indicated that their organizations see a “compelling use case” for the distributed ledger technology. Though considerably fewer—34 percent—described their companies having active blockchains in development, it’s still far higher than the 1 percent of CIOs who said their organizations had any sort of blockchain initiative underway, according to reports from Gartner earlier this year.
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Because blockchain is still so new, companies have reached varying levels of progress with the distributed ledger technology adoption. The largest percentage (32 percent) are in the development phase, according to PwC, while 20 percent are further behind and merely researching the technology, and an even smaller group (10 percent) are one step ahead and in pilot mode. Just 14 percent reported no blockchain activities whatsoever.
“Blockchain is at an inflection point, with momentum shifting from ‘blockchain tourism’ and exploration of the technology’s potential to the building of practical business applications,” Deloitte said. Despite the steps enterprises are taking to evaluate the technology, some are finding that blockchain isn’t what they expected it to be. Nearly two-fifths (39 percent of Deloitte’s respondents said they believe blockchain is overhyped, a figure that rises to 44 percent when looking exclusively at those from the U.S.
With Gartner predicting that blockchain will generate $3 trillion in annual business value by 2030, blockchain could very well fundamentally alter how companies operate, PwC said.
Tokenization, the act of representing physical goods with a digital asset equivalent on a blockchain, could accelerate internal business processes, saving time and money. What’s more, some companies are using initial coin offerings (aka ICOs) to bring funding into their blockchain startups instead of relying on traditional funding mechanisms like venture capital, PwC observed. In just the first five months of 2018, for example, ICOs have brought in $13.7 billion.
Blockchain could have a significant impact on enterprise software platforms that are central to any large organization, such as ERP, financial software and platforms to manage human resources—and this could be why major players like Oracle, Microsoft and SAP have all formed some sort of blockchain software service. Salesforce reportedly has a blockchain project in the works, too.
“Using blockchain in concert with enterprise resource planning platforms will enable companies to streamline processes, facilitate data sharing and improve data integrity,” PwC said.