What is blockchain? Does it have any benefits? Isn’t’ blockchain bitcoin or cryptocurrencies? Questions that are asked from the public. It has been around 10 years, mainstream medias have increased their coverage – thanks to bitcoin boom. But why is the adoption rate of blockchain technology at snail’s pace?
Luxury of time?
In this fast-pace unforgiving world, time waits for no one and is especially harsh to technologies that do not keep abreast with time. Think Nokia. Think HTML5. Think Friendster. This the CD-ROM. Think PHP forms. Not many technology can afford time like blockchain does. Close to a decade-old and adoption rate is no where near sunrise. Even majority of the public outside of the blockchain ecosystem have never even heard of this term. Not many technology can boast the same and this shows the uniqueness of blockchain.
If you ask the majority of industry veterans in the blockchain scene – about the future of it, many would say it’s the future. Ask them why its adoption rate is snail pace, chances are you’ll get either no answers or many various theories. Welcome to the sui generis world of Blockchain.
The paradox of Blockchain
The blockchain industry is facing many constraints that are contributors to the slow adoption rate. The constraints that the industry (blockchain) face can be broken down into two (2) main categories – Technical and Psychological constraints. Technical constraints
Psychological / Technical constraints
- General lack of trust in the technology
- Perceived notion of complexity (it could be)
- Fear of technology isolation – being the only one to adopt technology and unable to connect with others (ahead of its time)
- Inconclusive data analytics to make well-informed decisions
- Regulations are not uniform throughout mature economies
- Lack of standardization and guidelines
- Spirit of cooperation is not high
- Initial investment and resources are required (turn-off for many)
Fear of unknown – Lack of full commitment
Even companies that spearheaded the blockchain movement – the leaders approach – are approaching blockchain with caution but substantial investment resources. Another sign of irony. An example would be Oracle and a consortium of companies which in 2017 came together with the aim of adopting and integrating blockchain technology. Mission and goals were chartered. Sounds good? Within a short period of time, major partners pulled out mainly due to uncertainties.
The very companies that spearhead the blockchain movement are providing both good and bad report cards of the technology simultaneously.
Organizations are scaling back on large-scale blockchain implementation outside of their direct ecosystem. Results are inconclusive as their blockchain implementation “success” may only work in their ecosystem they are the dominant player in their field. Others have “no choice” but to follow suit.
Theory vs Practicality
In general, organizations that had embraced blockchain have experienced varying degree of success. On theory, it should be no-brainier given the known benefits one can reap from adopting blockchain. However when it comes to implementation – the constraints while looks “simple” (it is actually – on theory), is a nightmare situation in reality. Assuming we can fix it, these are some constraints we can overcome –
- Mass adoption of permission-less blockchain will reap economies of scale benefits. This will drive investment amount significantly down. It requires the collective effort of majority of stakeholders to “invest” into this idea.
- At same time would see standardization and allay peoples concern of uncertainty. When uncertainties are cleared, the psychological barriers are lowered.
- Mass implementation of blockchain technology will create channels that help bridge the complexity of blockchain with the commoner. Either through driving up interest or the innate fear in humans that causes them to learn the technology or risk being left out.
Realistically speaking, it would virtually impossible to expect all stakeholders across all industry to adopt blockchain simultaneously.
Everyone wishes to be reap benefits of cost-lowering drivers. But no one wants to be the first, even those that are among the first are taking a very caution approach. Those who make the first move successfully are usually in a private permission-ed based network that while useful to its own purpose and smaller ecosystem is not scalable on the larger scene – due to constraints.
Sinking investment resources to save cost is one of the main reasons that are preventing organizations from adopting it. Many want the benefits without risking much – that’s why after almost a decade old, blockchain is still considered at its infancy stage.
The blockchain paradox in a nutshell – It’s potentials are limited by similar constraints that it is designed to solve.