Technology continues to move business forward. Businesses tend to adopt new technologies when they provide tangible productivity or efficiency gains. Many times, businesses adopt new technology to stay ahead of their competitors. But that adoption can take years, or even decades for companies to implement. Blockchain is one of those early-stage technologies with massive potential to impact commerce.
I bet that’s what Crowd Companies CEO Jeremiah Owyang thought when he wrote this blog post in late 2016 seeking input for a report on blockchain technology. A few months later, he and co-author Jaimy Szymanski published a report. Their report discusses practical applications of the technology across 10 different industries. Additionally, the report also details six roadblocks to adoption that businesses must overcome.
At this point, even though the technology has been around since 2009, many don’t have a clear understanding of blockchain beyond a cursory familiarity with the cryptocurrency Bitcoin. Those of you looking for a deeper understanding of Bitcoin can check out Motherboard’s primer which includes many articles on the topic.
Blockchain technology is the public ledger that makes it all work. It can also facilitate all kinds of transactions. Jeremiah and Jaimy define blockchain this way: “At its simplest level, the term ‘blockchain’ is used to describe an immutable ledger that exists online, usually fully transparent that stores data in ‘blocks’ once it is approved by the network to meet the standards of the chain.”
The report also calls out smart contracts as a key component in moving adoption forward. Smart contracts define the rules and penalties of an agreement, just like traditional contracts, but with one key difference—smart contracts automatically enforce these obligations.
Smart contracts open up blockchain to the legal industry and the nine others highlighted in the report. Two industries that stood out to me: 1) Energy – As more households adopt solar energy to power their households, they sometime generate excess energy. Blockchain makes decentralized energy transfer possible via micro-transactions between the seller and purchaser and 2) Travel and Hospitality – Blockchain could enable a “single passenger ID” that could replace multiple documents needed for travel—ticket confirmations, IDs, passports, loyalty cards, etc.
In terms of the six barriers discussed in the report, slow verification speed is probably the biggest current barrier to adoption. How slow? Currently, blockchain verification can take up to 15 minutes to verify a single transaction, vs. the 39 transactions per second that a global financial services company processes, according to their EVP of Operations and CTO. Since the verification process is compute-intensive, it will get faster over time as technology improves. Jeremiah expects companies to deal with this shortcoming in the short term by “utilizing private, commissioned chains.” Longer-term progress will rely on collaboration between businesses and government. And speaking of government, regulations and policies around the technology will be slow to materialize.
In terms of business adoption, blockchain technology reminds me of where social media stood about 10 years ago. Lots of folks saw potential for corporate use, but it took a lot of trial and error before more companies adopted it. I think the technology adoption lifecycle applies here. As more businesses start to see pilot successes and efficiency gains, more companies will join in.
The report covers several good uses cases. One other that wasn’t part of the report: British artist Imogene Heap is experimenting with blockchain as an alternative to iTunes and streaming services. Money that comes from purchases of her new song through blockchain goes directly to producers, writers, musicians and engineers who produced it.
What are your thoughts? Are their industries or business use cases where you see blockchain technology being adopted more quickly over the next three to five years?