Blockchain has been touted by venture capitalists, technophiles and pundits as the Next Big Thing in computer science. The reality, however, is that the digital ledger software at the heart of Bitcoin and other cryptocurrencies has a long way to go before it gains mainstream adoption.
That was a key takeaway from a blockchain panel at last month’s MIT Sloan CIO Symposium. Noting that blockchain enables parties to ferry financial transactions, contracts and other digital records over the Internet, MIT professor Christian Catalini asked the panel about potential enterprise applications for the technology.
"Frankly, there's not many right now," said Anders Brownworth, principal engineer of Circle, which relies on blockchain for secure person-to-person payments. "The blockchain has been pitched as this thing that solves all of the problems in the world and frankly it just doesn't do that.”
Such candor about blockchain may come as a surprise if what you know about the technology is culled from the media, which has accorded the technology with cult status. You can thank some of the world’s largest banks, such as Barclays, Bank of New York Mellon and UBS, which have anointed the software as the future of custody settlements. "Blockchain, as the digital ledger, will heavily impact the way we do business in the financial services industry," then UBS CIO Oliver Bussmann told CIO.com last September. You can hardly blame them, with the World Economic Forum estimating that 10 percent of the GDP will be stored on blockchains by 2025.
From last month's MIT Sloan CIO Symposium are, from left to right, Anders Brownworth, principal engineer at Circle; consultant Peter Nichol; Intel architect Simon Peffers; Matthew Utterback, co-founder of Rex Mercury. (Click for larger image.)
But the banks are outliers. Brownworth is right; there aren't enough viable applications yet, according to experts.
Blockchain’s big hype, big challenges
PA Consulting Group principal Peter Nichol, who also participated in the MIT panel, told CIO.com that people are also interested in using blockchain to establish chain of custody in supply chains -- proving the provenance of goods. A blockchain-enabled mobile application might enable shoppers to scan barcodes of products at Whole Foods to determine the origin of products, down to the region, specific farm and perhaps even cows that contributed to a gallon of organic milk.
But Nichol said that outside of high-worth goods, such as diamonds, most consumers don't care enough about the provenance of most goods to warrant building such an app. With too few merchants or consumers using blockchain, adoption raises more questions than answers – especially in a corporate scenario where CIOs are called upon to show return on investment for emerging technology implementations.
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