If you have been following the mainstream financial press, and even some cryptocurrency news sources, you could not have missed the hype around the so called “Blockchain”. It feels like every day another established company claims to be testing using the technology to disrupt its own industry. In reality, however, it seems that the overwhelming majority of these pilots will never materialize.
Also Read: Banks Don’t Really Want to Use ‘Blockchain’ for FX Settlement After All
A Significant Disconnect Between Hype and Reality
Forrester Research Inc. (NASDAQ:FORR), the global advisory company, has determined that 90% of corporate blockchain pilots, usually announced with much fanfare, will never actually materialize into a service or product to hit the market. Companies are reportedly experiencing difficulties handling performance, oversight and operations, as well as failing to agree on a common system among competitors, thus resulting in extended timelines and greatly reduced expectations.
“Blockchain is supposed to be an important future revenue stream for IBM, Microsoft and others in equipment sales, cloud services and consulting,” Roger Kay, president of Endpoint Technologies Associates is cited by Bloomberg. “If it materializes more slowly, analysts will have to make downward revisions.”
And according to a Gartner Inc. (NYSE: IT) study, only 1% of chief information officers report their companies have any kind of blockchain adoption, and almost 80% said they had no interest in the idea to begin with. “The disconnect between the hype and the reality is significant – I’ve never seen anything like it,” said Gartner analyst Rajesh Kandaswamy. “In terms of actual production use, it’s very rare.”
Example Test Cases
The report cites a number of long promised blockchain solutions that have so far not come to pass. ASX Ltd., the Australian stock exchange, pushed back its blockchain-based clearing and settlement system to 2020/2021, that was originally planned to be released about six months ago already. BHP Billiton Ltd., which planned to monitor rock and fluid samples on a blockchain by early 2017, now doesn’t even “have a blockchain project/experiment in progress.”
Progress is hard to notice even at the company that thinks of itself as in charge of legitimizing the field in the eyes of US regulators and big banks, Nasdaq Inc. The stock exchange group, that wanted to have shareholder voting on a blockchain back in 2016, has not deployed the service in any meaningful way. “The expectation was we’d quickly find use cases,” Magnus Haglind, Nasdaq’s senior vice president and head of product management for market technology, said. “But introducing new technologies requires broad collaboration with industry participants, and it all takes time.”
Does the idea of a private corporate blockchain even make sense to begin with? Share your thoughts in the comments section below.
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