Blockchain: A revolution picking up momentum
I recently read a BBC article, the headline of which shocked me: 'Blockchain: The revolution that hasn't quite happened'. Yet, just a few days later, I read that the Bank of England has teamed up with other major central banks to assess the case for launching their own digital currencies as the debate rages on over the future of money. As always, the truth lies somewhere in the middle.
By Nish Kotecha, Chairman and Co-founder of Finboot
Disruptive innovations take time to become mainstream but, when they do, we look back and wonder how we ever operated without the technology - obvious examples being email and smartphones. One of my favourite reads is Geoffrey Moore’s 'Crossing the Chasm', which describes the evolution of any given community’s acceptance of a disruptive innovation, organising it into four key stages that, according to a Forbes interview with the author, can be summarised as follows:
- The Early Market, where buyers are early adopters seeking to get ahead of the herd by taking a chance with a promising but unproven technology.
- Crossing the Chasm, where buyers are 'pragmatists in pain', stuck with a problem business process and willing to take a chance on something new, provided it is directly focused on solving their specific use case.
- Inside the Tornado, where buyers are pragmatists going with the herd, the technology now being proven, its value substantially superior to the status quo, and the forcing function being fear of getting left behind.
- On Main Street, where buyers are maintaining their investments in a now broadly adopted technology, looking for better value and lower total cost of ownership.
Using this framework, let’s now consider blockchain adoption:
- The Early Market: Satoshi Nakamoto’s Bitcoin starts the digital currency revolution in 2009, demonstrating how a cryptocurrency could operate without a central bank or single administrator. This new digital ecosystem captures the imagination of tech enthusiasts, at a time when trust in our global institutions was declining;
- Crossing the Chasm: As more is understood about how Bitcoin works, with the currency worth over $157bn in total, innovators are trying to apply blockchain technology to numerous sectors (with fintech being the most obvious, given it has the highest level of existing digitalisation);
- Inside the Tornado: While we are not here yet, we are not far off. Industry leaders such as Walmart, Coca-Cola and Repsol, as well as governments like China, are leading the way by moving their pilot blockchain experiments to production and gradually replacing legacy operations with blockchain infrastructure. Between Crossing the Chasm and Inside the Tornado, 90% of current blockchain platform implementations will have to be replaced or upgraded: Gartner believes this will need to happen by 2021 in order for them to remain competitive, secure and useful.
- On Main Street: I can’t wait for this phase because blockchain’s promise of changing the way we live and work will have been realised. At this juncture, we will see blockchain core technology become ubiquitous and connectivity will be driven through middleware platforms that simplify adoption across enterprise ecosystems.
Blockchain is following the same traditional technology adoption life cycle that other disruptive technologies have undergone before, and at Finboot we firmly believe that we will see full mainstream adoption in the next decade. External factors such as the increasing focus on ESG measurement, sustainability tracking, and increased transparency and cooperation in supply chains may speed up the time taken significantly.
Gartner has estimated that by 2025 the business value added by blockchain will grow to slightly more than $176bn, then surge to exceed $3.1tn by 2030. So, rather than a technology that hasn’t realised its potential, let’s step back and consider blockchain as a revolution that is picking up momentum!