In the wake of 2016’s ever-escalating blockchain hype, 2017 has given way to sometimes dire predictions about the industry’s prospects ahead.
Deloitte principal Eric Piscini, for example, has gone so far as to label 2017 the blockchain industry’s “make-or-break year“, arguing that unless the financial services industry can demonstrate “real-world implementations”, the technology risks succumbing to “boardroom fatigue”. And he’s not alone in positioning this as the narrative for the year.
But, is this prognosis too dire? And just how patient can organizations, governments and consultants afford to be?
The consensus opinion among those interviewed by CoinDesk is that the technology is simply too new to pronounce this year – or even the next few years – as ‘do-or-die’ times for blockchain adoption in major industries.
Nicola Morris, senior vice president of corporate development at payment solutions provider WEX Inc, for instance, is in the early stages of work with the technology, but said she doesn’t feel any particular rush.
“I wouldn’t say we are behind or that the industry is necessarily behind. I think we are all at various stages of the proof-of-concept stage,” Morris said. “We feel very good about what we’re doing this year.”
Yet, others say the pace of the industry’s development is accelerating.
Scott Manuel, head of product management at Thomson Reuters, said he expects “some” of the investments in blockchain the past two years may well turn into “real revenue-generating products” in 2017, but he said more work is likely ahead.
Manuel told CoinDesk:
“We still have three-to-five years of real, hard education and investigative work before you can say this is or isn’t going to go anywhere. I think there’s a lot of time here.”
DLT, not blockchain
Indeed, ‘in flux’ may be the right way to describe it.
Several interviewees noted the difference between ‘pure’ blockchain and the emerging variations of the technology, often termed ‘distributed ledgers’, that do not batch transactions as a means to mediate between untrusted entities.
“One of the conclusions that companies that have already invested in blockchain strategies are beginning to come to is that pure blockchain has limitations,” said Mercedes Tunstall, a partner in the public policy practice at the Washington, DC, law firm Pillsbury Winthrop Shaw Pittman LLP.
As a result, she said, “There is a bit of a sense that maybe [blockchain] isn’t going to bear all of the promise that has been talked about.”
“When people who have invested in this are coming to that conclusion, then other companies start to think that maybe this isn’t a direction to go.”
However, distributed ledger technology, which uses a modified version of blockchain, or a blockchain as part of a larger architecture, may have more promise for some applications, particularly in payments.
“I think that’s something that even companies that have invested in pure blockchain are looking at as something that can be more flexible and more secure, so they may be moving forward along those lines,” Tunstall said.
No magic bullet
Still others say blockchain’s biggest business impact in 2017 may be creating a market for other, ancillary solutions.
Tom Gonser, a partner at Seven Peaks Ventures and the founder of DocuSign, where he earned the nickname, ‘the father of electronic signatures’, is someone who falls into this category of thinking.
“Companies should be evaluating the business value versus the technical possibilities of blockchain implementations. In many cases, the business value can still be achieved by other non-blockchain means,” he said.
“I expect the conversation between the ‘purist’ view of ‘trustless’ distributed ledgers and cryptocurrencies and the more business-focused discussion about the need for distributed transaction processing will continue for some time.”
For now, Gonser says bluntly, “blockchain technology is still in the hype phase”. And for companies outside the financial services sphere, he believes “there is plenty of time before they must weigh in”.
All in all, most interviewees expressed the sentiment that time is on the side of incumbents, but that developments are ongoing.
“I think the real question is whether progress is being made, and that answer is unequivocally yes,” said Angus Champion de Crespigny, blockchain and distributed infrastructure strategy leader at EY.
Even Deloitte’s Piscini agrees about that, though he said financial services remains an industry that should strongly consider action.
“Outside of financial services, the level of awareness and understanding of the blockchain potential is generally lower,” he said.
Andy Singleton, the CEO and founder of Maxos, a Boston-based team of IT professionals that helps larger companies unlock new advantages, perhaps summed up the collective mindset when he stated that blockchain is not yet considered “a stable foundation for applications”.
“Users can afford to wait until 2018.”
Hard or easy image via Shutterstock