Blockchain euphoria is giving way to blockchain fatigue: Despite the hype, only 1% of executives in a survey reported deploying the technology at their firms. And while corporate management remains bullish about distributed ledgers, mentions of “blockchain” are on the decline during earnings conference calls.
But IBM, which has roots going back more than 100 years, still thinks the technology that underpins bitcoin has untapped potential.
Blockchain is a kind of tamper-proof database for keeping track of just about anything. IBM has around 1,600 employees working on such projects, and is leading other technology companies in terms of headcount and investment, according to Marie Wieck, general manager for IBM Blockchain. The Armonk, New York-based company thinks promising uses include supply chains and finance. And while the public’s love affair with blockchain is showing signs of dissipating, Wieck still thinks the technology could be as transformative for businesses processes as the internet has been for personal ones.
Companies are experimenting with blockchain technology, though 90% of these tests will fail to become a part of their actual operations, according to Bloomberg, citing Forrester Research. Some enterprises are reducing ambitions for their pilot tests, while others will soon be closed down. “We predict we’ll see some serious pruning of projects in 2018,” Forrester wrote last year.
Rushing into a blockchain project risks becoming a wasted investment, frustrating teams that may reject the “game-changing technology,” according to David Furlonger, an analyst at Gartner. One of the challenges is finding qualified engineers, and around three-quarters of chief information officers said their companies have no interest in distributed ledger technology or no plans to develop or investigate these networks, according to a Gartner survey.
But technology adoption takes time. The likes of email and the World Wide Web rely on the TCP/IP protocol that was invented in 1972, but didn’t find widespread use until the internet really caught hold with the general public in the 1990s, according to the Harvard Business Review. The publication wrote last year that, similarly, blockchain’s transformation of government and businesses is many years away. But because it’s a “foundational technology,” creating the basis for other uses and applications, the impact could be immense in the coming decades.
Blockchain is a “team sport,” IBM’s Wieck says. A distributed ledger is essentially a database that is shared and synchronized across a network of computers, which certify that the database is accurate. While it takes time to build an ecosystem, Wieck says the engineers who have gotten their hands dirty in the technology can quickly see its value. Blockchain has grown from corporate “tourism” in 2016 to actual live networks this year, though the tipping point is still a few years away, she says.
Still, not everything needs a blockchain—a plain old database will often suffice. Wieck argues that blockchain, which is like doing a crossword puzzle in ink, can be a better option when it comes to preserving a historical record of data over time for things like shipping. The traceability is available in real time, without having to rely on a third-party who may have a conflict of interest. The system’s redundancy may also provide added security.
Though research firms have become more pessimistic about blockchain in the near term, they acknowledge “Amara’s Law” that people also tend to underestimate technology over longer periods. Gartner forecasts that blockchain technology will add $176 billion of business value by 2025, and more than $3.1 trillion by 2030.