Despite positive expectations and enthusiasm on the benefits of the blockchain technology to companies, its integration has proven difficult. According to the research released by Greenwich Associates, the collated data and responses from executives from companies undergoing adoption of the distributed ledger technologies (DLT), has revealed that the process has been harder than expected. The study from Greenwich includes responses from various industries like banks, consultancy firms, technology vendors, dedicated blockchain companies, exchanges, and more.
Scalability is an Issue
The report identified various consistent and collective technical challenges that make the adoption of blockchain solutions so difficult. These include issues such as scalability, hardware security concerns, transaction confidentiality, and the handling of the payment component of the transactions.
When the issue of scalability was raised, 42% responded identified it as a major problem, 30% called it a minor issue, while 19% didn’t encounter any challenge at all. Seven percent of the chief executives of the companies, however, view the issue of scalability as a significant problem.
Author of the report and vice president at Greenwich Associates’, Richard Johnson, said the apparent discrepancy between scalability as an issue in blockchain companies and non-blockchain companies, could be as a result of a number of factors. Such problems could be “due to optimism on behalf of the blockchain companies and their technology,” or because “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 report also revealed that a large number of the firms surveyed were yet to implement DLT transactions solutions, as those in production were still having issues with the slow transaction speed. 2% of the respondents have, however, gone over 15,000 transactions per seconds, a relatively high level of throughput.
Blockchain, also referred to as distributed ledger technology came into the financial market scene a few years ago, due to its potential to correct some real-world issues faced in the financial markets. Such issues include a reduction in settlement time, operational costs and streamlining business processes. Companies have millions of dollars in the technology and the necessary workforce in a bid to apply the DLT to their business operation.
Optimistic for the Future
However, Johnson remains optimistic about the potential and the future of the DLT, even though the ratio of those who have successfully implemented it is still quite small.
“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 encouraging,” he remarked.
Despite being regarded as a “silver bullet” and regardless of the issues it comes with, blockchain keeps increasing and is widely being adopted by companies to boost efficiency, reduce fraud and waste.
The most recent employment of the blockchain technology would be IBM’s Food Trust product, which allows the company to use the technology to track the basis and logistics of perishable food items.
IBM also partnered with PWC, Adel and global legal firm Squire Patton Boggs recently in a bid to fast-track the development and adoption of the distributed ledger technology in the economic and public spheres of the Czech Republic. The main aim of the group is to enhance the Czech economy within the next five years with employment of blockchain, which is believed to be relevant in developing cryptocurrency solutions across sectors.
In an interview with CNBC, Joe Duran, the CEO of United Capital, talked about how excited he was regarding the future of blockchain technology stating that blockchain “is going to be part of every transaction that occurs in the world,” but adding that “It’s going to take a decade before it’s there.”