To understand the ongoing development of blockchain, which hurdles we face and how we might overcome them, we can start by looking at the rise of another revolutionary technology: the internet.
Thirty years ago, this ‘internet’ had yet to ruffle its first corporate feather. High-speed networks were limited to universities, government agencies and financial institutions. The World Wide Web did not exist, search engines were unheard of, and even the concept of online advertising was utter nonsense.
Imagine traveling back to those days, armed only with your wits and your knowledge of things to come. Now, picture yourself trying to convince a major retailer to give e-commerce a shot. No matter how passionate the pitch, you would be laughed out of the boardroom. Seen in the light of the times, the mere thought of selling goods online was fanciful and unrealistic. Becoming a pure play online retailer? Ridiculous.
Back in the present, however, we know what’s what. The global market for retail e-commerce is now estimated at $2 trillion and rising, with growth rates in the double digits. Not bad for a platform that didn’t even exist three decades ago.
Building a Blockchain-Based Foundation for new Business
The history of the internet is one of long-term disruption. As the TCP/IP protocol suite made inroads into modern life, it gradually changed everything it touched – not by letting us do the same things differently, but by enabling us to do new things. Rather than expanding the existing bedrock, the internet laid a new foundation, allowing global enterprises to develop business models the world had never seen before.
Blockchain, too, is such a foundational technology. It is not so much a tool as it is the basis for a new ecosystem. You shouldn’t expect it to radically change how you do what you’re already doing today – but it will allow you to do exciting new things tomorrow.
Similarly to the internet, it won’t disrupt your business overnight. Instead, it will teach you how to envision new opportunities and applications in the blockchain. As the technology evolves, your understanding of its potential and its real-world value will evolve along with it, leading to novel insights and ideas.
And as was the case with the internet in its early days, it will take curiosity, vision and determination to expand the infrastructure behind the blockchain and construct practical, marketable solutions over time.
Recognizing Hurdles in the Implementation of Blockchain
Blockchain is perhaps the hottest trend in today’s tech marketplace, for reasons that are plain to see. Here is a technology that has every chance of becoming the most democratizing force in history. By eliminating intermediaries, revolutionizing contracts and transactions, improving our systems of trust and making fraud practically obsolete, it has the power to usher in a new, ‘programmable’ economy.
The massive blockchain hype is therefore quite understandable. By providing an economic infrastructure that allows users to combine physical and digital assets and send them to specific recipients without the need for centralized management, blockchain will reduce marginal operating costs to almost zero. With sophisticated blockchain implementations, selling a house will be as simple as making a micropayment for your personal cloud storage. In this sense, blockchain will facilitate new uses cases and scalable business models for every service imaginable on the internet.
Unfortunately, those rewards lie in the future. As enticing as the image of the programmable economy may be, the current technology is nowhere near that level of sophistication. To put it in terms of the Gartner Hype Cycle, blockchain is fast approaching the so-called “peak of inflated expectations”. Companies are aching to get their hands on successful use cases, but the reality is that blockchain infrastructure development is still relatively basic and the market is not yet ready to receive new products. This gap between future expectations and current realities is a formidable challenge to the implementation of blockchain technology.
Another potent hurdle is risk. Tapping into the boundless promise of blockchain requires a massive investment in infrastructure up front. Even if you ignore the risks inherent in a developing technology like this, the risks to your business are still quite substantial. And because the most enticing blockchain implementations are also the riskiest, many companies are hesitant to pursue them.
Finally, there is the simple matter of cost. Keeping a distributed network alive costs money. This makes blockchain development an ongoing, long-term investment, rather than a short-term cost-saving measure. From a traditional perspective, this makes the technology seem unattractive. After all, why pour money into new tools that won’t help you reduce your operating costs?
Taking Steps Toward Blockchain Implementation
The key, of course, is understanding that blockchain isn’t just a new tool. Investing in blockchain development isn’t the same as buying a new vehicle that will help you get from point A to point B faster. It’s about changing the landscape itself, altering the very fabric of business reality, adding new points and destinations to the map that previously didn’t – or couldn’t – exist.
Accenture is currently involved in numerous pilot projects around the world, designed to test the potential of blockchain implementations in a variety of industries. Each use case is different and requires a unique approach, but there are several universal steps each company must take:
1. Understand the Basics of Blockchain Technology
Let’s face it: blockchain is already out there in the wild. Private, single-use applications are available today, and tomorrow will invariably bring new applications. To participate in this revolution and to prevent being disrupted, you must understand the technology that drives it forward.
2. Critically Examine Your Industry for Opportunities
Developing blockchain use cases is as much a matter of identifying opportunities as it is a matter of testing technology. Take a closer look at your industry and pinpoint unnecessary intermediaries that could disappear if they were forced to compete with a decentralized model. These are your targets.
3. Radically Internalize Consumer Perspective
At its heart, the ongoing digital revolution is all about the consumer. Creating high-value consumer experiences is what matters most. Therefore, you should put yourself in their shoes. Find ways to decrease service costs by connecting suppliers and consumers directly. Cut out the middleman.
4. Identify and Remedy Trust Issues in Your Business
Trust is one of the universal constants in business. From accounting to real estate and from legal services to e-commerce, the common currency is trust. Look for areas where this trust is lacking or inadequately realized, then develop blockchain implementations to remedy these issues.
5. Adapt to the Lessons You Learn Along the Way
On a fundamental level, blockchain technology is still undiscovered territory. It’s new and exciting. There are no tried-and-true approaches, no proven roadmaps. You will have to discover what works for you, so take your time. Take small steps, experiment, iterate and learn as the technology evolves.
Experiment Today, Disrupt Tomorrow
Blockchain is still very much an emerging technology. Like TCP/IP before it, blockchain is still finding its footing in the world at large. It may take a decade or two for the technology to come into its own and makes its mark on our economy and our society. In the meantime, you are of course free to ignore it. Perhaps your industry will remain untouched. Perhaps it will simply pass you by.
Regardless, there is no doubt that it can provide interesting opportunities to those who seek them. And if you want to prepare yourself for the blockchain future, starting small makes all the difference. Blockchain technology is not mature enough yet to warrant big development projects, and at any rate, the market is not quite ready for it either.
This means you have time. Time to experiment with blockchain. Time to learn about the technology and how it applies to your business. Time to adjust your perspective on what your added value truly is, and how you could use new blockchain capabilities to transform your industry for the better.
The final word on blockchain has not yet been written. The technology is evolving and you have the opportunity to evolve along with it. As your understanding grows, you will start to discover business cases – new niches you can claim by implementing blockchain solutions over time. After all, a decade can fly by in a flash, and only those who work to unlock the secrets of the blockchain will be able to wield its potential.