Global accounting firm Deloitte published its annual blockchain survey, titled ‘Breaking Blockchain Open’ recently, in which the company provides insights into the opinions and actions of established organizations and their top executives with regard to blockchain technology.
Deloitte interviewed 1,053 top-level executives from organizations that averaged over 500 million in annual revenue. The executives were based in Canada, China, France, Germany, Mexico, United Kingdom, and the United States. The majority of the respondents came from the U.S. (284). Chinese respondents numbered 205 followed by the UK at 150, and Germany at 132.
The respondents identified as having an average to above average understanding of blockchain technology. Additionally, due to their top level status, the respondents were able to provide insightful views with regard to their organization’s views on blockchain technology. They were also able to comment on the future plans of the company as they were privy to this kind of information.
Deloitte conducted the survey online between March 26 and April 5, 2018. The respondents represented organizations from 10 different industries. While the majority of them came from the finance sector, a significant portion worked in the technology, media and telecommunications sectors. Consumer products and manufacturing were also well represented.
The pros and cons
For the majority of the respondents, blockchain technology’s greatest selling point over the existing legacy structures in their organization was speed. Due to the inherent design of blockchains, they enable real-time information sharing. The executives believe that this factor would be able to help their companies maximize productivity and increase profits. Additionally, they thought blockchain technology would help reduce inefficiencies and costs where possible.
Another major advantage was increased security. 84 percent of the executives thought that blockchain technology is secure. In fact, the respondents stated that the blockchain is more secure than traditional ledgers or databases. Despite the perceived advantages that organizations would achieve if they were to include blockchain technology in their organizational structure, the respondents pointed to a number of issues that affected the pace of adoption.
Interestingly, most of these issues had little to do with the technology itself. Instead, these were centered around the problems impacting the cryptocurrency industry as a whole. Respondents said that the fluctuating nature of the cryptocurrency market led to a negative opinion of blockchain technology at the boardroom level. Due to a lack of understanding, boardroom level executives conflated blockchain technology with cryptocurrencies and thus were unwilling to get on board.
Additionally, an uncertain regulatory framework meant that top executives were less likely to consider blockchain technology. Also, due to the fact that the blockchain sector is fairly new yet is growing at a rapid pace, blockchain ‘experienced’ labor is unavailable and this creates a significant barrier to entry for those that do want to incorporate blockchain into their company.
Lastly, respondents revealed that organizations were slow to adopt blockchain technology because it would require a complete overhaul of their business model as well as their organizational structure. “Because blockchain, when properly implemented, should fundamentally change how a business operates, it impacts the entire organization, creating new tax and cyber implications along with a variety of governance and regulatory issues that need to be addressed,” the report states.
These wide-reaching implications lead to a significant level of apprehension which, in turn, affects the pace of adoption. “Blockchain represents a fundamental change to their business. In and of itself, this helps explain that while a majority (74 percent) of our survey respondents report that their organizations see a ‘compelling business case’ for the use of blockchain technology, only 34 percent say their company has initiated some sort of blockchain deployment,” Deloitte said.
Token hype affecting blockchain adoption
Crypto’s ability to capture headlines with stories of impending large scale business disruption, with little real-world evidence, is also backfiring as 39 percent of the global sample said they believed blockchain is “overhyped.” This anti-hype sentiment was most evident in the U.S., where 44 percent of the respondents believe that blockchain technology is overhyped.
Curiously, the number of executives with this belief has actually grown. In 2016, the percentage was at 34. Attempting to explain this metric, Deloitte states: “This perception may be driven by the steep increase in token values over the last 18 months, and survey members conflating blockchain with the incentive layer of public blockchains, namely tokens.”
For the majority of the organizations, their blockchain-related activities are handled by their IT functions (39 percent), or their innovation/R&D functions (16 percent). This points to the fact that blockchain technology is not viewed as a business tool rather it is viewed as a technological tool. interestingly, the majority of Chinese corporations took the opposite stance with their blockchain-related activities being handled as a whole business decision. 60 percent of the Chinese respondents reported this.
41 percent of respondents revealed that their organizations were working on bringing blockchain into their organizational structure within the next year. Conversely, 21 percent of global respondents stated they did not find enough reasons to justify the significant resources that would go towards implementing blockchain technology. Again, this number was higher in the U.S. where 30 percent respondents believed the same.
Interestingly, 78 percent of the survey respondents believe they stand to lose competitive advantage if they do not eventually implement blockchain technology. However, for those already working on implementing blockchain technology, they revealed uncertainty as to whether they would see any return on investment. A third of the respondents expressed this belief.
Overall, the survey shows that businesses think blockchain is important or very important. Almost half of the respondents revealed that blockchain technology was a priority for their organization. 43 percent of the organizations characterized blockchain technology as a top-five priority. Additionally, the survey found that 39 percent of the polled organizations are planning to invest five million dollars or more in blockchain technology in the coming year. Another 16 percent had plans to spend more than ten million dollars.
Despite this apparent enthusiasm, security concerns about public decentralized ledgers were to the fore and for most of the organizations, the focus was on permissioned, private or consortium blockchains. Open and decentralized blockchains as they exist in cryptocurrencies were not a popular choice.