Is there already a problem for blockchain to solve, or is the search continuing?
Billions of dollars in experimentation later, consultants and financial services firms continue to scratch their heads over whether blockchain is promising or perilous.
“In the nine years since its launch, companies, regulators, and financial technologists have spent countless hours exploring its potential,” say McKinsey partners Marie-Claude Nadeau and Kausik Rajgopal in a new report. “[However] evidence for a practical scalable use for blockchain is thin on the ground.”
Blockchain’s stuttering economic development isn’t unsurprising, they say” “It is an infant technology that is relatively unstable, expensive, and complex. It is also unregulated and selectively distrusted.”
The vast majority of proof of concepts that blockchain developments have yielded remain in ideation, or are being wound up because “they have failed to get to Series C funding rounds.”
However, KPMG Lower Gulf’s head of advisory Vikas Papriwal expects a blockchain breakthrough could be right around the corner.
“The way that the internet is used today, blockchain fundamentally revolutionises that,” he told Arabian Business in an interview, arguing that any technology with such a fundamental proposition cannot be ignored.
“From the way that authentication is done to aggregation, Blockchain is a fantastic technology. As we find more use cases its value will be fully realised,” he said.
Papriwal acknowledged “not many industries are fully applying it yet,” however he pointed to the financial services, banking and aviation industries saying that “their businesses are already applying blockchain.”
If there is one area that the consultants agree is that blockchain’s hype could remain unfulfilled in the currency arena.
Mickinsey’s consultants say the technology has rivals in its sphere and, more importantly, “is a clunky solution in search of a problem.”
“The payments industry faces a classic innovator’s dilemma,” they say. “Incumbents understand that investing in disruption, and the likely resulting rise in customer expectations for faster, easier, and cheaper services, may lead to cannibalization of their own revenues.
Papriwal’s thoughts on the matter are even more straightforward. “You have to consider what the real objective is,” he said.
“The real application is parallel processing in real time. With more and more use cases and as more industries start applying block chain the more value the customers and industry will find in it. Currency is a small part of the tech frankly,” he added.