Like many other emerging technologies that have risen to the pantheon of global “game-changer” status (remember Google glass?), it’s not surprising that nine years following blockchain’s introduction we see some increased skepticism regarding the tech’s potential impact on business and society at large.
McKinsey and Company’s recent article “Blockchain’s Occam problem,” and Terence Corcoran’s report on it (“Blockchain’s groundbreaking, world-shaking, life-changing technology revolution has been cancelled,” FP Comment, January 9th) raise the “so what?” question for the technology and ponders what the future holds for blockchain as hype and reality diverge. While McKinsey’s article does recognize the high degree of potential, the authors primarily observe that “despite billions of dollars of investment, and nearly as many headlines, evidence for practical, scalable use for blockchain is thin on the ground.”
Yes, the “blockchain for everything” hype of recent years has driven some inflated expectations that are now beginning to subside (to put it mildly). Using the Gartner hype-cycle as a reference — see accompanying illustration — blockchain has officially moved past the “Peak of Inflated Expectations” and has entered what is referred to as the “Trough of Disillusionment,” signalling waning interest as experiments and implementations fail to deliver, and negative press begins. As the global adviser Gartner observes, it’s at this stage that “…producers of the technology shake out or fail.”
This is what we see now. The many failed, or stalled blockchain proofs-of-concept of recent years clearly illustrate that the technology cannot be applied non-discriminately to every business or social problem with the expectation of game-changing success, no matter how hyped. What is emerging instead, is the understanding that blockchain is a specialized technology with a problem set it is well suited to handle; however, it is not a panacea for everything.
Beyond the many failed blockchain proofs-of-concept there are also many large brands, multi-national organizations and governments successfully realizing the benefits of blockchain and continuing to develop further and expand their solutions. Some exciting examples include:
— IBM/Walmart Food Trust (digital supply chain): In 2018, Walmart announced it requires all suppliers of lettuce, spinach, and other leafy greens to join the Food Trust blockchain by the end of January 2019. Also, farmers, logistics companies, and other business partners of these suppliers must also participate by late September 2019.
— IBM/Maersk TradeLens (digital supply chain): After a successful pilot in 2018, the TradeLens blockchain ecosystem became commercially available this past December. Today, the solution is actively engaged with more than 100 organizations, this includes 60 network members, including four ocean carriers, three inland carriers, 40 worldwide ports and terminals, and eight customs authorities spanning the globe.
— The government of Estonia (digital governance): According to Wired magazine, Estonia is the most “advanced digital society in the world.” The government has been testing blockchain since 2008 and has used blockchain technology in production since 2012. Today Estonia is probably the only country in the world where 99 per cent of public services are online 24/7.
With lessons continually being learned and applied, blockchain implementations are becoming more standardized. The recipe for guaranteed success, however, is still being determined. We are now seeing the emergence of fourth-generation blockchain platforms which present solutions to some previously identified challenges, such as scalability and high transaction costs. The full benefits of these innovations have yet to be seen; however, they represent a promising development in the maturation of the technology and suggest that blockchain will continue its path along the Gartner hype-cycle into the “Slope of Enlightenment” and finally the “Plateau of Productivity.”
As blockchain technology continues to develop rapidly, 2019 will continue to be an exciting year, albeit, with much less hype.