Fear of Missing Out – or FOMO – is a primary driver for Enterprise (Permissioned) blockchain.
This is what we learned in our recent survey of large Chinese and U.S. firms that work with Blockchain and it validates what we hear in our client inquiries. See “Key Takeaways from Gartner Survey of U.S. and China Enterprises to Guide your Post COVID-19 Blockchain Future”
First the sobering news:
These five mistakes were common across survey respondents from both China and the U.S. Most of the companies had no clear measurements of blockchain success or failure and were just experimenting with blockchain with no goal in mind. Project sponsors popped up from all over the organization – across IT and business divisions. Unfocused Adoption Drivers Equate to Confused Goals.
Nonetheless, companies in China were further along with blockchain than those in the U.S., and differences in attitudes were readily apparent across the continental divide.
Bright Blockchain Spots Emerge – Asset Tracking, Payments and Digital Currencies
Asset Tracking, Supply Chain Financing, and Payments
Our survey was fielded in December 2019, before the rampant spread of COVID-19. Since then, Chinese companies such as Ant Duo Chain and Xiang Hu Bao in China, both owned by Ant Financial, have been able to leverage blockchain for COVID-response, such as financing suppliers in need of quick credit, or processing coronavirus insurance claims to support faster payouts. See Ant Duo-Chain.
Interestingly and notably, we have been getting inquiries from clients interested – for the first time – in using blockchain to assure the integrity of Covid-19 related supplies or information records. Blockchain distributed ledger technology is a great platform for these kinds of use cases as it supports a shared single version of truth, based on immutable data, across multiple entities where no single entity is in control. See “Assessing the Optimal Blockchain Technology for Your Use Case” (G00383505) which includes this decision tree, adopted from NIST.
Indeed the global Mipasa blockchain consortium was recently formed to help track Covid-19 transmission. Mipasa brings together big tech companies like Oracle, IBM and Microsoft with health organizations such as the WHO, US CDC, John Hopkins University, Government of Canada and others.
Digital Currencies on the Blockchain
Digital currencies on Blockchains are gaining lots of traction. Just consider these recent notable events:
a. China’s roll out of mobile app interfaces to their digital currency testing – Starbucks, McDonalds, Subway and others participating https://www.coindesk.com/starbucks-mcdonalds-among-19-firms-to-test-chinas-digital-yuan-report
b. JP Morgan’s new relationship with cryptocurrency exchanges See https://www.bankingdive.com/news/jpmorgan-banking-services-crypto-exchanges-coinbase-gemini/577758/)
c. U.S. Digital Dollar initiative as part of CARE act (or lack thereof for the time being) : https://www.forbes.com/sites/jasonbrett/2020/03/24/digital-dollar-and-digital-wallet-legislation-surfaces-in-the-us-senate/#55d33f4c3866
d. Bank of England’s Digital Currency Initiative and their discussion paper https://www.bankofengland.co.uk/paper/2020/central-bank-digital-currency-opportunities-challenges-and-design-discussion-paper
e. Visa’s filing of a digital currency Patent https://twitter.com/cuysheffield/status/1262165232027185152
Digital currency on the blockchain will alter our payment systems dramatically over the next decade.
Blockchain has many unique features that make blockchain DLT a much more efficient and secure payment network than the centralized networks still running on 20th century rails.
Blockchain-based payments will likely become the next battleground for control of permissioned payment networks. Further, the migration of sovereign currencies to permissioned blockchains will surely accelerate use of public decentralized currencies like Bitcoin. The network rails and customer “on ramps” will become more ubiquitous, while value-added services, like KYC and fraud detection, will become more pervasive. This could have significant global economic impact but that of course remains to be seen.
One thing I am certain of – printing money devalues currency when it is not accompanied by a commensurate increase in goods, services and productivity. How and when these phenomena play out relative to digital public and sovereign currency is a big unknown. Ten years from now it should all be clear.
The second thing I am certain about is that blockchain is adding value for those who know how to use it and more importantly — understand why they need it.