This week, the British professional services company Deloitte released a report on the aspects of the blockchain industry that are most likely to yield significant progress on the road to widespread adoption.
The report’s author and managing director at Deloitte, David Schatsky , spoke with Distributed.com to add depth to his analysis of each of these vectors.
First and foremost amongst the limitations Schatsky identified were those endemic to the various smart contract and blockchain platforms themselves, namely the issues of throughput, efficiency and performance. As many different experimental projects and big-name companies alike have discovered, the verification methods for distributed ledger technology often slow the progress of any large network to a crawl, taking up large amounts of electrical energy to process transactions on any sort of mainstream scale.
If blockchain entrepreneurs are going to disrupt industries that can carry out transactions through the traditional channels, they will at some point need to streamline consensus protocols to bring the competitive edge back to blockchain technology on multiple fronts. Schatsky mentioned several different consensus protocols that seemed likely to one day increase user throughput, but ultimately claimed in the interview that the “key point is that a diversity of mechanisms are emerging, and this is a good thing because different use cases will require different approaches.”
A Human Element
An obvious solution to the efficiency problem has been, for advocates of centralized models, to simply process transactions and contracts through a distinct institution with its own goals and actors rather than through a trustless network. It is here where Schatsky lays out the bulk of his analysis, by placing the largest amount of uncertainty at the doorstep of human actors.
The second barrier Schatsky identified in his article is the headache-inducing amount of conflicting “industry standards” across the blockchain space, leading to confusion from “multiple coding languages, protocols, consensus mechanisms and privacy measures.”
Although there are sure to be many different innovations from programmers in the space, Schatsky said that when “major enterprises gain confidence in the business value of deploying blockchain [technology] … they will be the ones to drive standards as a way of lowering cost and technology risk.”
Schatsky named the third vector as the complexity and expense associated with actually building the blockchain platforms to run complicated apps, but stated that cloud-based solutions seem like a clear-cut way of solving this problem. In implementation of such an ambitious program, Schatsky said that “the big tech vendors will be key, as well as open source initiatives.”
Naming firms like Amazon, IBM and Microsoft as the most likely movers and shakers into cloud-based platforms, Schatsky stuck with the general theme that the technology to solve these problems exists and that the main problems are in effecting change.
One issue totally out of the hands of even the most ingenious web developers is the problem of regulatory unfriendliness, which all private industries must grapple with in one way or another. As the efforts of lobbyists and the efforts of developers seem totally unrelated to each other in most circumstances, Schatsky said that “the best tack to take is education.” Providing the most and highest-quality information is a project that anyone in the industry can contribute toward, and this can be a big help as “even proponents can be confused about the technology and its capabilities.”
The final vector for more widespread adoption is not a potential obstacle to future adoption, but rather a symptom of more acceptance and institutional knowledge in the present day. The number of blockchain consortia across the board is increasing, with various conferences around the world meeting to do everything from connecting developers to one another and developers to potential investors as well as spreading public awareness and many other functions besides.
Schatsky views this as an indicator of a rosy future in the world of distributed ledger technology, claiming that “Consortia can serve multiple purposes. Certainly technical consortia are vital, [but] so are industry consortia that can take advantage of the benefits of blockchain technology.”
A Bright Future for Blockchains
All in all, Schatsky seems enthusiastic about the industry’s chances of overcoming some of these barriers and finding new paths into widespread blockchain disruption across all manner of private sector enterprises. The technology is strong and has a diverse and dedicated base of developers, and there is a real possibility for expansion.
Schatsky spoke positively of the potential applications of centralized blockchain development, with his view being that “as antithetical as it may seem to proponents of decentralized technologies like blockchain, even where technology is adopted there is likely to be a role for various types of intermediaries in the foreseeable future. Companies will need to be pragmatic to get value from blockchain.”
Although the exact nature of some of these platforms may vary wildly from the most decentralized to those run exclusively through massive corporate interests, the platforms themselves seem poised to grow rapidly.