The real reasons why blockchain isn’t everywhere
EVERYONE understand the benefits blockchain can bring to businesses. However, adoption remains slow.
An EY report shows that most businesses are finding it difficult to grasp how blockchain will affect regulatory compliance. Many of them are also finding it difficult to understand the capabilities of blockchain and how it integrates with legacy technology.
Ironically, changes in regulations are the main driver for businesses to adopt blockchain into their ecosystem. Respondents generally recognize that blockchain will improve operational efficiencies, as well as provide a high level of transparency and data integrity.
This shows that companies are making an active effort to implement blockchain. However, many would need clear guidance on how to best manage it in their business.
Paul Brody, EY Global Innovation Leader, Blockchain Technology, explained, “As blockchain platforms become more mainstream, putting a robust governance model in place will be key.”
He said that establishing best practices for reviewing the integrity of blockchain applications can help “build trust in the company’s underlying assets”. This ultimately would mean greater investor confidence.
According to the data, the majority of respondents are expecting financial services to spearhead blockchain innovations. More than half of respondents within finance are expecting some form of blockchain adoption within the next year.
As companies begin to actively seek out blockchain uses for their businesses, EY expects to see four transitions:
- The networks will move from private to public, creating an open system for all users.
- Data will be tokenized instead of synchronized. This means that data will be transferred as a token, instead of updates from a private network synced to a public network. Tokenization improves accuracy and reduces risks such as forks in the distributed ledger.
- Instead of independent cryptocurrencies, financial companies could tokenize existing, or approved currencies. This will allow users to transfer value on a public network.
- There won’t be separate networks that run parallel to each other. Instead, there will be an integrated network that complies with laws and regulation from central banks and governments.
EY anticipates that these changes will drive blockchain to become a standard enterprise tool.
“With these developments blockchain could become fully operationalized into enterprises, leading to a surge in applications across industries,” Brody concluded.