Blockchain - state of play

Edited extract below of a very useful blog post by Irving Wladawsky-Berger, summarizing the state of play of blockchain today:

A few weeks ago I wrote about the current state of blockchain.  In particular, I asked whether blockchain is ready to cross the chasm from its early adopters, - who are already involved with blockchain in one way or another, - to the considerably larger set of mainstream users who may be considering blockchain but are waiting for results and assurances before jumping in.

I explored this question by comparing blockchain today to the Internet in the early-mid 1990s, which is roughly when the Internet made its own transition from early adopters to mainstream users.  My conclusion was that blockchain isn’t quite ready for this important transition.  It’s still in its early adopters stage, - perhaps akin to the Internet in the late1980s.  A lot is going on with blockchain, so much so that last year the World Economic Forum (WEF) named The Blockchain one of its Top Ten Emerging Technologies for 2016.  But much remains to be done in key areas, including standards, applications and governance.  Blockchain has the potential to make our digital infrastructures much more secure, efficient and trustworthy, but it will take time.

Let me briefly summarize the current state of blockchain.

• Blockchain is nowhere near as mature as the Internet in the early-mid 1990s, perhaps more akin to the Internet in the late 1980s.  But, marketplace interest has considerably picked up in the past few years.  Universities and research labs have launched blockchain-based projects, and there is serious interest on the part of governments.
• A number of large companies and startups have blockchain prototypes under way.  But, the amount of such activity is still relatively small, with a few prominent exceptions such as financial servicesand supply chain management. A recent IBM survey of almost 3,000 C-suite executives found out that less that 10% of companies are actively involved in blockchain activities, while 25% are considering but not yet ready to deploy blockchains.
• IT companies are starting to offer blockchain-based services to their clients, including IBM, Microsoft, and Amazon.  So have a number of new blockchain startups.
• Blockchains are generally multi-institutional and mission critical, and thus fairly complex.  On the other hand, the Internet’s global infrastructure greatly facilitates the development and deployment of blockchain-based platforms and applications.
• Despite the increasing number of articles, reports and books being written on blockchain, most people have little idea what blockchain is about and why we’re so excited about such a seemingly exotic topic.  It’s all still very new. Many still associate blockchain primarily with Bitcoin and other cryptocurrencies.

Will blockchain have a profound long-term impact, - like the Internet, - on companies, industries  and economies?  I think it will, but, it’s too early to tell how big the impact will be and how long it will take.

In The Truth about Blockchain, an article published earlier this year in the Harvard Business Review, Marco Iansiti and Karim Lakhani wrote: “TCP/IP unlocked new economic value by dramatically lowering the cost of connections. Similarly, blockchain could dramatically reduce the cost of transactions. It has the potential to become the system of record for all transactions. If that happens, the economy will once again undergo a radical shift, as new, blockchain-based sources of influence and control emerge… Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction.”

And, in a recent WEF report, Don and Alex Tapscott wrote: “We are now witnessing the rise of the internet of value. Like the first generation of the internet, this second generation promises to disrupt business models and transform industries… pulling us into a new era of openness, decentralization and global inclusion… However, this extraordinary technology may be stalled, sidetracked, captured or otherwise suboptimized depending on how all the stakeholders behave in stewarding this set of resources - i.e. how it is governed.”

Getting back to our original question, should your company get on the blockchain learning curve now or wait and run the risk of being left behind by more aggressive competitors? There is no easy answer. In the end, it all comes down to your leadership aspirations.