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Issues Blockchain Has to Address for Acceptance and Adoption
- Blockchain technology is the next driver in major industries such as finance, supply chain & logistics, aviation.
- While lauded for safety and privacy, various factors are major barriers to mass adoption — speed, complexity notion, lack of rules and regulations
- Blockchain is in a unique paradox — unlike other advancements in the past century
Blockchain technology is poised to be the upcoming technology driver in many various industries. Many major organizations such as Amazon, Huawei, IKEA, IBM, PwC, have invested considerable amounts of time and resources into the technology. Firms that adopted it have lauded it.
But why is blockchain technology advancement, unlike other technological advancements? It has been around a decade since it was really launched in open source, about 5 years of growing coverage but it is still an alien term to the simple majority. Blockchain has been stigmatised and perceived with negative connotations (thanks to ICO coin scams, rumors* that Bitcoin is a bubble, etc) — like how the insurance industry was dogged by it for decades.
Feasibility of Mass Adoption
We look into some of the main reasons why Blockchain has yet to reach the adoption rate many predicted and what major issues the technology face. The technology needs to address these issues with the collective effort of all stakeholders involved in order to experience major progression.
Current technology and infrastructure is not suffice
Blockchain technology (as of 2015–2019 research) is slow — period. As it is on a decentralised network, the fact that it is so secured is also the catalyst for slower transaction speed due to checks. This is one of the main factors why people are hesitant to adopt it for larger-scale operations.
The good news is that many companies, interest groups, blockchain community programmers, etc are aware of this and working to develop newer technology that would enable higher transaction speed.
Substantial initial resources
While adoption of blockchain technology generally helps to reduce overall long-term costs, the initial setup can be expensive and time-consuming. Blockchain technology requires a higher amount of electricity, space, technical knowledge, convincing skills, etc.
For example — A company that wishes to optimally integrate blockchain technology within its own internal system, the company would need to:
- Find the right developer to kick-start the process (which doesn’t come cheap)
- Training and guiding employees/stakeholders on how to utilize the technology
(training = downtime = opportunity cost). Not to mention it is also not an easy process
- External stakeholders may or may not be affected depending on the nature of the industry. If it is not affected, all is fine. However, if the process flow is affected, it would add to further confusion
The cost associated with the setup & maintenance will put many off and it plays an important factor in driving down adoption rates.
Regulation is uncertain globally and no one knows what or how will it be regulated in the near future. Even the regulators won’t have the full picture and will not be in a prime position to make well-informed regulations. The decentralised network and safety mechanism features that Blockchain technology prides itself in is ironically the hurdle to the difficulty in coming out with a set of regulated standardization.
Not many companies or people will wish to invest in something so heavily if they do not know what the future holds. At most, they would invest into the blockchain ecosystem within their own permissioned network like IBM, Oracle, Amazon, etc. This is the reason why outside their ecosystem, the adoption rate is slow as people are afraid to invest in something that is “unknown”.
Blockchain Mindset paradox
Another major factor that influences the adoption rate — the blockchain community as a whole must tackle is the human mindset. Earlier we mentioned that Blockchain has been stigmatised and perceived with negative connotations. Thanks to fraudulent ICOs and projects that have been mentioned in the headlines occasionally. This negative thought that the general public associates are deeply rooted and it requires a collective effort from all stakeholders involved to educate and change the mindset. It is not an easy feat as time and resources would be required.
Collaboration & coopertition
Competitors do not want to share sensitive data or information that gives them the advantage. This is also the reason why many do not want to adopt this blockchain technology and even those who adopt blockchain would make it a permissioned-base network — shunning companies they view as “competitors” and de-incentivizing these groups from adopting blockchain along the way.
For blockchain adoption to truly reach its optimal rate, companies need to see beyond competition and work together with others — this would allow all stakeholders involved yet to adopt it — to truly see the harnessing power of adopting blockchain. However, in this realistic world, the human mind is the biggest hurdle against a higher blockchain adoption rate.
Mass adoption — So is it possible?
These are just some of the factors that influence the adoption rate of blockchain technology. There are many other factors that affect it but not covered here. Blockchain technology will most certainly be one of the major drivers in many industries in the near future. Companies have already begun laying the foundation for a smoother transition — albeit slower than desired. As technology improves, cost reductions to adoption and time, blockchain technology adoption rate will surely rise.
However, we will never know if time will allow blockchain technology to age gracefully or consigned it to the pit of obsoletion.