This is the Dawn of Mainstream Blockchain Adoption
Blockchain technology became the talk of the town since the meteoric rise in Bitcoin prices and the initial coin offering craze in 2017 took place. The technology which lies beneath the speculative buzz around cryptocurrencies has the potential to revolutionize business processes and supply chains. Data, for example, can be more responsibly and transparently accounted for when stored on a blockchain, a distributed system where corruption or manipulation is almost impossible.
According to an analysis by McKinsey & Company, blockchain technology is estimated to be three to five years away from full-scale feasibility and viability. However, the inherent risks of an immature technology do not deter many established corporations from experimenting with pilot trials and proofs-of-concept (PoCs) to integrate blockchain solutions in their current systems or develop new blockchain-based applications.
Walmart, for instance, is exploring the possibilities of blockchain in overhauling its current supply chain to inspire greater consumer confidence. The company believes that consumers today want more transparency in the supply chain, such as in gaining knowledge of how their food travels from farm to table.
By adopting a blockchain solution, Walmart can implement a more transparent food supply chain, which will potentially solve a serious real-world problem like food fraud. Unethical behaviour such as counterfeiting and dilution can be pinpointed and addressed more efficiently with a more transparent supply chain. By tracking food origins, processing, and supplier data on a public ledger, consumers can be better assured that the food on their table is compliant with safety standards.
Deloitte conducted a survey with companies in the United States, China, France and Germany with at least $500 million in annual sales. Out of over a thousand respondents, 75 percent indicated that their companies either have a blockchain system in production, or plan to launch a blockchain application within the next year.
Several public blockchain protocols are in the race to achieve enterprise adoption. However, for corporations to consider strategic involvement and adoption, these protocols have to provide sophisticated smart contract capabilities and achieve scalability to handle high-volume transactions and activities, while maintaining security, privacy, and cost-efficiency. The effort to build a robust platform that fulfills all these technical requirements is a major undertaking.
Security, for one, is a serious concern. Ethereum has been under the spotlight for several security risks over the past few years. The DAO hack in 2016 and the Parity wallet hack in 2017 are proof of growing pains. The technology requires more time to work out its kinks before corporations may be willing to move valuable assets and data onto public blockchains.
Nevertheless, it does not stop blockchain players from testing their solutions by building proofs of concept and prototypes with established companies on private networks.
For example, Mindshare is a 7,000-strong global media agency currently experimenting with how blockchain technology can counter ad fraud in the programmatic advertising industry. Ad fraud is a $16.4 billion-dollar problem. It happens when advertising dollars is wasted on fraudulent ad placements through malicious bots generating false web traffic to fraudulent sites in attempts to pass off as quality publishers, causing ad spend to be wasted on such sites.
Together with digital media buying platform Mediamath and one of the world’s largest advertising exchanges Rubicon Project, Mindshare is partnering with Zilliqa, a scalable blockchain implementing sharding technology to support high throughput use cases, to examine how a blockchain solution can help build a more transparent and reliable ad exchange model where advertisers will only pay for the ad impressions that have been verified as viewable, brand-safe and free from ad fraud.
The heavy investment required for early blockchain adoption can be astronomical, involving talent acquisition and research and development
MNCs would typically be more enticing, but with the option of raising money via ICOs, blockchain startups are able to compensate their developers handsomely as well. This leads to a greater demand and therefore severe shortage in quality blockchain developers in the global market. In the United States, specifically in Boston, New York and Silicon Valley, blockchain developers command an annual average income of US$158,000 — about 12% more than what a software engineer typically makes. Similarly, blockchain developers in Switzerland draw a salary upwards of US$180,000.
For both MNCs and startups, another problem arises. With different blockchain solutions offering different levels of scalability, cost efficiency, governance policy, and privacy, how shall a company choose the solution most suitable for its business use case?
In 2017, Amazon Web Services made $17.46 billion in revenue. How AWS became the cloud computing titan it is today is simple in retrospect — they solved a crucial pain point developers around the world struggled with.
It all started as a problem faced by Amazon’s internal teams. The management team realized how manpower-intensive and costly it was for each team to build and maintain their computing and storage machines for each of their projects. The solution was to design and implement a set of common technology infrastructure services that every team could access, without having to build from ground zero whenever they embarked on a project.
During an executive meeting in 2003, the team decided to take a gamble to build a business model around this particular service — what would later be known as the first Infrastructure-as-a-Service (IaaS) in the market, and the rest was history.
What Amazon built provided immense value: it allowed startup founders and developers to focus their time and attention solely on building technology applications. With tech companies no longer having to build and manage their own infrastructure, the cost of launching and scaling an application decreased significantly, lowering the barrier to entry of building a software product. From this perspective, Amazon played an instrumental part in the proliferation of the tech industry in the last decade.
The market has begun to resemble the startup scene of 2006. Where software startups in 2006 struggled with infrastructure setup and manpower costs, companies today have trouble choosing the right blockchain solution and hiring good smart contract developers to build blockchain-based products.
The next frontier to reach will be to create a viable solution: a scalable end-to-end Platform-as-a-Service for building, deploying and managing blockchain networks. This solution could potentially bring millions of large and small enterprises the tools and services they need today, allowing them to capitalise upon the blockchain ecosystem in the long run.
I shall not comment on when consumer-facing blockchain applications will take off, but I believe blockchain integration with existing enterprise functions will be a more probable reality; businesses could soon understand how adopting blockchain-based solutions could have a great impact on the bottom line, by means of either cutting on transactions and middlemen costs, or increasing transparency and efficiency.
I sincerely believe startups will work towards lowering the barriers to entry by building a blockchain-based IaaS solution, helping blockchain developers all over the world spend more time designing and creating truly useful products, creating a chain effect that will make mainstream blockchain adoption a reality.