A report authored by three Deloitte analysts explains the barriers to blockchain adoption and how the “five vectors of progress” may help companies lower the cost and risk of deploying and exploring the technology.
Deloitte Report Analyzes Falling Barriers to Widespread Adoption of Blockchain
As a means of processing transactions, blockchain-based systems have been comparatively slow.
Consequently, only nine percent of CIOs said their organization has either implemented blockchain-related projects or plan to within a year, according to a recent survey.
But that is about to change thanks to the development of new consensus mechanisms, which promise significantly higher performance by reducing time and energy-intensive mining and the number of nodes needed to validate a transaction.
IBM researchers have recently tested an application running on Hyperledger Fabric that achieved a throughput of 3,500 transactions per second with sub-second latency. Higher blockchain speeds will render viable applications in domains such as trade finance, supply chain traceability, auto leasing, marine insurance, health care, and insurance.
Adding to increasing throughput and performance, the blockchain community is also enhancing standards and interoperability, which could help enterprises collaborate on application development, validate proofs of concept, and share blockchain solutions.
The Enterprise Ethereum Alliance, the Hyperledger Foundation, and the Decentralized Identity Foundation are leading examples of standardization efforts.
To reduce complexity and cost, Amazon, IBM, Microsoft, and others, are providing cloud-based blockchain technology as a service. These include blockchain templates intended to automate the setup of basic blockchain infrastructure and reduce application development from months to days. Additionally, new software platforms are easing the work of blockchain developers with new tools such as modular designs that hide complexity.
Furthermore, regulatory issues have been a major barrier to blockchain adoption in the past years, but the report states that the U.S. government is now in action. This has seen dozen of bills passed by 17 U.S. state legislatures, covering areas such as the recognition of cryptographic signatures, the definition and use of smart contracts, and the use of blockchains for maintaining business records. The U.S. Congress Joint Economic Report of 2018 called for a common and coordinated regulatory framework.
“There is a lot of work still to do before the major regulatory hurdles to blockchain adoption are cleared. But momentum is building. Continued progress here is a vector of progress that will help to increase adoption of blockchain technology.”
Finally, the number of active blockchain consortia has increased from 28 in 2017 to more than 605.
“Growing participation by enterprises, technology providers, regulators, and governments is a vector of progress in the development of blockchain that will help increase adoption of the technology”, the report argued. “Progress along these vectors is bringing the technology closer to its breakout moment every day.”
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