57% of executives polled said that implementing distributed ledger technology (DLT) at the enterprise level has been harder than expected, according to a report released today by consulting firm Greenwich Associates. DLT uses a database managed by multiple participants, rather than one central entity, to store information or settle transactions; it includes blockchain technology, though blockchain is not the only type of DLT.
The report is based on data collected from more than 200 executives working on blockchain initiatives at banks, technology vendors, dedicated blockchain companies, exchanges, and consultancy firms, among others. It identifies several common technical challenges of adopting DLT solutions, including scalability issues, the question of hardware security, the need for transaction confidentiality, and how to handle the payments leg of transactions.
42% of firms identified scalability, which refers to a network’s ability to process a high volume of transactions at high speeds, as a “major issue.” Interestingly, scalability was a major issue for just 7% of dedicated blockchain technology companies.
Richard Johnson, a vice president in Greenwich Associates’ Market Structure and Technology group and the author of the report, suggests that this discrepancy could be due to a combination of factors. “Perhaps it’s optimism on behalf of the blockchain companies and their technology,” he said, or “perhaps it represents the fact that a lot of the testing they have done has been in more of a demo environment. When you start connecting with the real world, that introduces latency and slows things down.”
The majority of firms surveyed had yet to implement their DLT transaction solutions, and most of those in production were still experiencing very slow transaction speeds. But 2% had been able to reach over 15,000 transactions per second, which is a relatively high level of throughput.
Even though this number is small, Johnson says it’s a good sign for future adoption. “We’re beginning to see firms figure out how to get the blockchain to run fast and do a lot of transactions per second, and I think that’s really encouraging.”