The Strategist

PwC: Not everyone needs blockchain

08/29/2018 - 15:39

Just five years ago, most entrepreneurs were just starting to get acquainted with the blockchain technology. Now, almost two thirds of business representatives say that they already have their own blockchain projects. However, its widespread introduction is still far away. PricewaterhouseCoopers (PwC) decided to find out who needs blockchain and what prevents it from becoming a truly mass technology.
It seems that blockchain, which appeared along with Bitcoin about ten years ago, has now turned into some idea fix. PwC conducted a survey among 600 executives from 15 countries and found out that 84% of them somehow use blockchain in their activities. 62% of respondents said that they have their own blockchain projects. In 2017, according to Gartner, eight out of ten such projects fell on the financial services sector. Now, PwC says representatives of virtually all sectors of the economy are trying to adapt the new technology to their needs. However, only 25% of the companies have reached the pilot launch stage.

The majority of experts believes that the blockchain technology can become a new norm for business in a few years, and will increase its efficiency and transparency.
But before this moment comes, it is necessary to overcome several barriers. In the opinion of business representatives, the most significant barrier is costs associated with imminent reorganization of the entire business, if its management decides to introduce blockchain into their work. "Creation and use of blockchain does not seem to be the traditional alignment of IT systems. There is no point in re-creating the old world simply because of blockchain," the PwC report says.

Such a reorganization will inevitably entail serious expenses. Slightly more than half of the respondents say that the high costs are one of the three main reasons why they failed to introduce blockchain into their business. About a quarter of PwC respondents said they simply do not know where to start, and 14% complained about possible problems with managing the new structure, which eventually scared them away from transition to the new technology.

At the same time, blockchain will only work in case of its mass application. And for this, business representatives will have to negotiate among themselves and create alliances. "To lead a group of project participants to a single agreement on a set of rules that will determine the business model is probably the most difficult thing in the world of blockchain," the authors note. - Participants must determine rules for participating in the project in order to ensure an honest allocation of costs and profits, which control and risk management system should be used to match the distributed business architecture, and which management mechanisms, including audit and validation, should be used to ensure that the blockchain system functions as intended."

All this is impossible without a trusting relationship between the participants, the report stresses. It was expected that blockchain could solve this problem by replacing the trust relationship with well-defined algorithms of interaction between the parties. But it is the lack of trust between participants in the project that is called one of the main reasons of why blockchain has not yet become a mass technology. This is the opinion of 25% of respondents. Only lack of clear regulation seems more frightening for the blockchain community, say 27% of PwC respondents. Another 32% say that it is impossible to create a single system of several blockchain projects for various reasons.

However, the study’s authors, not everyone needs blockchain. Many of the ideas that representatives of the business community are trying to implement with the help of modern technology could be realized without it. And 54% of respondents, disappointed in the results obtained with the efforts made, are just the best confirmation that fashion trends cannot be a determining factor in choosing a business development strategy, and blockchain cannot be a cure for all diseases.