Blockchain technology may one day solve many of the world’s problems. But there are still obstacles to surmount before more companies will use it.
That’s according to consulting giant Deloitte, whose “Blockchain and the Five Vectors of Progress” report identifies those areas it thinks developers will have to improve.
Five to Get Ready
The five things that must be improved if blockchain supporters want it to become even more widespread, according to Deloitte: increase in transaction speeds, standards and interoperability, ease of implementation, regulatory “advancements” and expansion of consortia.
“Effectively incorporated, the technology has the potential to improve efficiency and effectiveness, cut costs and increase revenue by helping to create new products, services and business models,” the authors write. But they add that “unresolved issues are keeping many enterprises from adopting the technology,” citing a 2018 study by Gartner researchers that fewer than one in 10 CIOs have either launched blockchain projects or will within a year.
Over the past six years, Deloitte has become increasingly active in the blockchain world. Its global blockchain teams now employ over 1,200 people globally, and the company regularly produces treatises on the status of the emerging technology.
The report identifies “slow transaction speeds” as a major concern. While some legacy processing systems can handle tens of thousands of transactions per second, bitcoin’s (BTC) blockchain can process only three to seven transactions per second, and Ethereum’s blockchain, just 15 transactions per second.
“Blockchain can be slow,” the authors write, adding “that because of its relatively poor performance, many observers do not consider blockchain technology to be viable for large-scale applications.”
“A lack of standards and interoperability between various blockchain platforms and solutions,” is another challenge, along with high costs and complexity, and legal and regulatory concerns related to such areas as data privacy and intellectual property.
“Standardization could help enterprises collaborate on application development, validate proofs of concept and share blockchain solutions as well as make it easier to integrate with existing systems,” the authors write. They see the growth of blockchain consortia as a “bullish sign.”
They cite Deloitte’s blockchain survey, a State of the Blockchain Union released earlier this year, that found nearly two in five executives said regulatory issues interfered with investing more heavily in blockchain initiatives. “The reason for this is that the technology introduces concepts and methods, such as cryptographic signatures and smart contracts, that existing regulations don’t address,” the authors write.
The authors also mention the need for “blockchain consortia,” groups of companies that can share information and collaborate on projects. “Growing participation by enterprises, technology providers, regulators, and governments is a vector of progress,” the authors write.
Yet, companies are making headway in addressing these concerns, the authors add: “As the technology continues to mature, progress along five vectors can help mitigate or topple existing barriers to adoption and bring blockchain closer to the mainstream.”