Blockchain not yet living up to hype, according to McKinsey study
A new report provides a relatively bleak outlook on the future of blockchain, a technology touted by many as truly disruptive.
The study by McKinsey & Company, titled "Blockchain’s Occam problem," looks at the practicality of the technology. The study's title refers to Occam’s razor, the principle stating that the simplest solution is most likely to be the best. “On that basis blockchain’s payments use cases may be the wrong answer,” the report states. In its early days, starry-eyed industries had placed blockchain on a pedestal, perhaps a bit infatuated with the possibilities of the technology. Automakers, insurance companies, the public sector, banks – all had big, mostly complex ideas as to how blockchain could revolutionize the ways they operated.
“There is a clear sense that blockchain is a potential game-changer” the report states. “However, there are also emerging doubts. A particular concern, given the amount of money and spent is that little of substance has been achieved.”
The study states that blockchain’s best value for 2019 are in niche applications. Companies which are already oriented around modernization, as well as those seeking to prove their ability to innovate might also find use for the technology.
The cryptocurrency bitcoin is an especially well-defended aspect of blockchain technology. While far from the only use of blockchain, Lebanese writer Nassim Nicholas Taleb called bitcoin “an insurance policy against an Orwellian future.” And in a December 2018 article in Time magazine, Alex Gladstein wrote, “For people living under authoritarian governments, bitcoin can be a valuable tool as a censorship-resistant medium of exchange.”
Despite rather vocal support for bitcoin (and cryptocurrency as a whole), McKinsey & Company has charted blockchain’s life-cycle stage by market size. The outlook isn’t extraordinary. The chart shows that blockchain teeters on the precipice of the “pioneering” stage, in which prototype technology is introduced to early adopters. Upon entering the next stage (“growth”) blockchain should start to see success and the beginnings of widespread adoption. While some argue that blockchain has indeed entered the “growth” stage, its obvious success his has not yet occurred.
“At today’s tipping point, many prototypes have been built, but blockchain technology has not yet seen widespread application at scale, and the future remains uncertain,” the report states.
A lack of faith in blockchain, however, isn’t altogether stopping the technology in its tracks, with large-scale international moves and partnerships consistently making headlines. Management and technology consultancy firm CGI, for example, recently announced a collaboration with the National Bank of Canada and Skuchain regarding a blockchain-based method of managing the often complex, agreements used by banks to secure financial transactions, which are currently conducted by email.
The Inter-American Development Bank will also be focusing efforts on promoting blockchain in Latin America and the Caribbean. Further, KoreConX, a blockchain-based business management platform, announced in December a partnership with Middle East SME advisors Metis Management Company.
