PwC study shows four out of five executives (84%) surveyed report blockchain initiatives underway.
- China to overtake US as leading blockchain developer within three to five years.
- Trust, regulatory uncertainty identified as biggest barriers to business adoption.
84% of executives surveyed by PwC report that their organisations are involved with blockchain technology – 15% state they are fully live.
The new research released by PwC today – Blockchain is here. What’s your next move? – surveyed 600 executives across in 15 countries and territories, on their development of blockchain and views on its potential.
As blockchain rewires business and commerce, the research provides a clear signal that organisations’ fear being left behind as blockchain developments accelerate globally. The technology is opening up opportunities including reduced costs, greater speed and more transparency and traceability.
The US (29%), China (18%), and Australia (7%) are perceived as the most advanced currently in developing blockchain projects. However, within three to five years, respondents believe China will have overtaken the US (30%), shifting the early centre of influence and activity from the US and Europe.
The survey also reflects the early dominance of financial services developments in blockchain with 46% identifying it as the leading sector currently and 41% in the near term (3-5 years). Sectors identified by respondents with emerging potential within 3-5 years include energy and utilities (14%), healthcare (14%) and industrial manufacturing (12%).
The survey findings indicate that organisations recognise the importance of working with blockchain – they don’t want to be left behind as blockchain developments gain momentum globally. We are seeing rapidly growing interest in this space in South Africa as startups look to create new businesses around blockchain, and incumbents across industries are learning what blockchain will mean in their context.
The speed at which blockchain technology is being adopted is unprecedented. There is a growing recognition that this technology has profound implications in many areas, and we are watching it move from a startup idea to an established technology in a fraction of the time it took for the Internet to be accepted as a standard tool.
As a distributed, tamperproof ledger, a well-designed blockchain doesn’t just cut out intermediaries, reduce costs, and increase speed and reach. It also offers greater transparency and traceability for many business processes.
Blockchain’s biggest benefits will be developed and delivered through shared industry wide platforms. But the study notes this won’t happen without industry specific companies – including competitors – agreeing on common standards and operating together. Project Khokha, initiated by the South African Reserve Bank, was an illustration of how this kind of collaboration can work successfully.
Despite the technology’s potential, respondents – paradoxically – identified trust as one of the biggest obstacles to blockchain’s adoption. Almost half saw it as a potential barrier to blockchain adoption. A similar portion of respondents (48%) cited regulatory uncertainty as a concern. Concern about trust amongst users is highest in Singapore (34%) and Hong Kong (35%), reflecting in part the dominance of financial services in blockchain development. Concern about regulatory uncertainty was highest in Germany.
By design blockchain can foster trust. But in reality, companies confront trust issues at nearly every turn. As with any emerging technology, challenges and doubts exist around blockchain’s reliability, speed, security and scalability.
Creating and implementing a blockchain is not your traditional IT build. Organisations need to commit to a strategy that is suitably transformed from where they are today. Usually this starts with a business case. Organisations need to know where blockchain will fit into their business environment, and fine-tune issues along the way. Ultimately they will need to stay focused on the long-term value.
One in three of those respondents who reported little or no involvement with blockchain cited the reason for a lack of progress as cost, uncertainty over where to start and governance issues.
The study identifies four key areas for focus in the development of internal or industry wide blockchain platforms:
- Make the business case: organisations can start small, but need to set out clearly the purpose of the initiative so other participants can identify and align around it.
- Build an ecosystem: Participants should come together from different companies in an industry to work on a common set of rules to govern blockchains. Of the 15% of survey respondents who already have live applications, 88% were either leaders or active members of a blockchain consortium.
- Design deliberately around what users can see and do: Partners need rules and standards for access permissions. Involving risk professionals including legal, compliance, cybersecurity – from the start will ensure blockchain frameworks that regulators and users can trust.
- Navigate regulatory uncertainty: The study warns that blockchain developers should watch but not wait as regulatory requirements will evolve over the coming years. It’s vital to engage with regulators to help shape how the environment evolves.