In spite of all the hype surrounding blockchain, proving the tangible benefits of the technology may be longer than some might expect, experts say, adding that the earliest viable applications will likely be in supply chain management, rather than financial services.
Anoop Nannra, head of the Cisco’s blockchain initiative, told CNBC that the American tech conglomerate stopped researching potential blockchain applications in the financial sector after 18 months, “because it will take a while for the many players in the complex markets to get up to speed.” They opted for research about applying the technology in supply chain management instead.
Their research up to now indicates another 10 years need to pass for blockchain to be prevalent in supply chain management, whereas financial services have to wait 25 years. “It’s anyone’s guess,” Nannra said. “When you’re trying to drive a mindset shift it’s almost a generational thing.”
However, Cowen, a financial services company, said a survey of 23 executives and experts in the field expect on average the technology will take 5.9 years to gain widespread adoption.
Meanwhile, Cisco's research also indicates that in a number of applications, blockchain may not be the best solution, instead adding another layer of complexity. Although it cuts costs and increases transaction efficiency because the technology eliminates the need for a third-party intermediary, such as a bank, the technology is not a magical solution to all problems.
Mark Smith, CEO of blockchain development company Symbiont, said the technology works best when there’s need for automating a process: “I think supply chain is going to be the first, if not near the first, to really show the value of blockchain. There aren't any regulatory questions in supply chain management that you have to deal with,” he told CNBC.
USD 945 million was spent on blockchain solutions in 2017 and the spending is expected to grow on a robust rate, reaching USD 9.2 billion in total by 2021, according to the International Data Corporation (IDC), a market intelligence firm.
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