By Nick Roquefort-Villeneuve, Global Marketing Director – Amalto Technologies
Do you remember claiming that never, e-ver, you’d compromise yourself intellectually by buying a book on Amazon, because nothing could replace the unique experience of spending quality time in a bookstore, talking to a passionate employee about his or her feelings regarding the latest New York Time Best Seller? That was in the nineties, at a time when the Internet was still in its early stages, when transacting online triggered much distrust, and when having an @excite.com email address meant the world.
In 2019, is Blockchain technology in the same space as the Internet was in the nineties, suffering from a lack of mass adoption for similar reasons? If so, what is preventing Blockchain from becoming widely adopted today? In other words, is Blockchain totally underrated, just like Amazon and similar e-commerce sites were in the old days?
Here is a list of issues that are still erecting obstacles on the Blockchain’s path towards mass adoption:
Skillset Deficit: To develop decentralized applications that run on a Blockchain network, there is the need for skilled developers, since Blockchain requires specific skillsets. For example, there are Blockchain platforms that impose their own coding language, which obviously must be learned. Moreover, the development of Blockchain-based applications oftentimes requires the development of off-chain solutions to ensure the integrity of the platform itself and the proper functioning of the solution. Therefore, developers must innovate and build brand new applications… for which there is no documentation or reference point yet. Moreover, there is currently a shortage of Blockchain-focused developers, which contributes to creating a barrier to Blockchain technology adoption. And, at the same time, the lack of adoption is one reason behind this human resource deficit.
Absence of Regulation: Without proper regulation, the use of Blockchain technology remains limited. First, the absence of regulation pertaining to Blockchain in the Banking industry, for example, prevents many key-players from embracing the technology, since the GAAP, banks and financial institutions do not recognize crypto-based transactions. Second, no clear regulation creates distrust in the technology itself. Furthermore, the succession of ICOs we’ve witnessed in 2017 and 2018 have in certain cases revealed flagrant fraud, creating much defiance vis-à-vis Blockchain startups. It is obvious that regulation would benefit mass adoption and contribute to building trust.
Bad Press: There’s been a lot of bad press about Blockchain technology. And the responsibility lied in the multiple mishaps some public Blockchain platforms have experienced, sometimes with dire consequences such as hacking, theft and money laundering, among other criminal activities. A few crypto trading platforms were indeed overly optimistic regarding their security features, when in reality they lacked extra security layers to ensure they could not be compromised. Such dysfunctions were given widespread coverage in the media and reinforced the defiance towards the technology. Then there were the fraudulent ICOs and the insane speculative behaviors around Bitcoin and other cryptos that made people rich overnight and broke the next day.
Lack of Dedicated Budget: As I mentioned earlier, to build a robust decentralized application that runs on the Blockchain takes more effort than just coding the app itself as well as all associated smart contracts. There is the necessity to develop off-chain solutions, so ultimately data cannot be compromised. And most Blockchain projects were started omitting the development of those crucial off-chain applications. As hurdles started appearing and, consequently, budgets skyrocketing, decision-makers oftentimes elected to leave it at that.
Read “4 Tips for A Successful Blockchain Implementation.”
Dragging Performances: Reports indicate that the current Blockchain transactional speeds are slow: Ethereum can only handle 15 transactions per second and Bitcoin 7 transactions per second. This is a significant barrier to entry for enterprises who engage in tens of thousands of transactions per minute (credit card companies, for example).
Lack of Education: Absence of exposure creates separation or divide. For business folks (as opposed to IT professionals), grasping the theory behind a new technology is extremely difficult. The best way of understanding the non-technical benefits of a new technology is meaningful or purposeful interaction on a daily basis. Very much like with your G-Suite or Outlook email application, for example. But, to this day, there is no Blockchain application with which Finance processionals, for example, can interact every day, several times a day. Therefore, understanding what Blockchain can bring to the table remains extremely difficult.
To Conclude: Beyond the Issues…
There is a clearly identified pattern: businesses have no other choice but to adopt new technologies to support the achievement of their business objectives, remain competitive and avoid market share erosion. Those who missed the Internet train or caught it late went bankrupt. It will be the same phenomenon with Blockchain technology.Blockchain technology does represent a true competitive advantage when:
- The use case is pertinent
- Historically there is a lack of trust among the trading partners
- Smart contracts automate seamlessly the approval of key-business documents like invoices
- The Blockchain platform is private and permissioned, which limits the volume of participants and transactions, consequently improving performance
- Last but not least, it’s always better to be among the first ones to master a new technology