Two years after Bitcoin became a household name and introduced its underlying technology, the blockchain, to the masses, the tech is still struggling to achieve the adoption that seemed imminent.
That’s not to discredit its merits. Without a doubt, the blockchain is big.
The technology’s decentralized infrastructure and tokenized economy make it a perfect fit for today’s digital-first initiatives. By almost any measure, it’s the heir apparent to our current internet-based economy, and the blockchain is frequently identified along with machine learning and artificial intelligence as world-altering technology, especially at the enterprise level.
According to a PwC survey, 84% of participating business leaders are actively involved in blockchain adoption. Sectors from banking to shipping are pursuing the technology’s burgeoning abilities, making it an intriguing priority at many institutions.
However, there is a growing chasm between ambition and implementation, and it’s clear that business leaders are finding the latter to be a challenging proposition. While the numbers vary, it’s estimated that only 1% of business CIOs currently deploy blockchain technology.
Although a relatively comprehensive ecosystem, including technology sector incumbents like IBM and a cadre of innovative startups, already exists, the technology still has a nagging, persistent problem – these platforms lack connectivity and a true understanding of decentralization.
Connectivity Is a Prerequisite for Adoption
While blockchain technology has many structural and philosophical benefits that make it more prescient than our current internet infrastructure, the world wide web has one significant advantage – it works with everything.
In contrast, blockchain platforms are almost entirely isolated, making it difficult for enterprises to integrate their capabilities with legacy systems or other blockchain platforms. Deloitte’s 2018 Global Blockchain Survey cites blockchain interoperability as a significant hurdle for enterprise clients, noting, “37 percent of our survey respondents indicated adaption to legacy systems as a key barrier to blockchain technology in their organization.”
Even for non-enterprise users, blockchain connectivity is a veritable must have if the technology is going to garner broad support.
To be sure, blockchain platforms are aware of this, and several projects are working to provide a remedy. In the finance sector where major banking institutions like J.P. Morgan Chase and individual investors holding various crypto as assets, are similarly pursuing blockchain implementation, Wanchain is creating tools for blockchain companies and traditional financial institutions to create the connectivity necessary to actually implement blockchain technology. The platform already connects projects working with Bitcoin and Ethereum, and EOS connectivity will be available soon.
As the platform transitions to a PoS consensus algorithm, there will be additional opportunities to hasten the speed and efficiency of cross-chain transactions, something that is critical for broad blockchain adoption.
By developing a platform that financial institutions can use to develop dApps or enterprise smart contracts with cross-chain functionality, Wanchain is making interoperability a reality. For instance, banks can develop applications that manage the flow of digital assets using on-chain resources, which promotes both decentralization and connectivity among digital assets and traditional financial tools, thereby reducing fees to customers and increasing speed.
More broadly, Cosmos is developing its Interblockchain Communication Protocol to connect disparate blockchain economies. This protocol, which the company likens to the prominent TCP/IP protocol for web platforms, makes the blockchain more usable as it can communicate with other entities using this protocol. Describing itself as the internet for blockchain, Cosmos is committed to building connectivity into the blockchain ecosystem.
In short, blockchain needs interoperability if it wants to be widely adopted at the individual or the enterprise level, something that will need to be addressed by the sector at large.
Decentralization is Critical
As blockchain continues to proliferate, it’s easy to presume upon the priority of decentralization. This not only includes technological distribution, but also the governance and oversight that dictate a platform’s future.
Unfortunately, at the enterprise level, p2p decentralized models are definitely the exception, not the rule, which represents a significant hurdle to broad adoption.
However, while decentralization is a critical component of the blockchain ecosystem, it’s not a binary feature. It’s a spectrum. By focusing on and prioritizing solutions that operate effectively on this spectrum, it’s possible to hasten blockchain adoption.
To put it simply, transitioning from a centralized infrastructure to a decentralized model requires users to break with decades of implementation patterns, which can slow the adoption process.
Even so, the transition is both necessary and imminent.
Blockchain adoption might be occurring more slowly than many people want, but the technology is sure to play a prominent role in the digital age. As interoperability and decentralization become more commonplace, expect adoption to follow closely behind.
Disclaimer: This content does not necessarily represent the views of IWB.