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Despite having pockets of adoption, blockchain technology is still in its infancy, with consolidation in the supplier market expected to take place over the coming years, according to an industry expert.
Speaking to Computer Weekly in an exclusive interview, Tom Sprenger, CTO of AdNovum, a Swiss IT security company with offices in Asia, noted that many startups and investors are jumping on the blockchain bandwagon, but it is not always clear whether the use of the technology is really necessary.
Of the three main classes of blockchain applications – cryptocurrencies, transactional use cases such as smart contracts and business functions such as logistics – Sprenger noted that cryptocurrencies are overrated, volatile and have no real value behind them.
Sprenger said the transactional applications could make sense, but there is still a need to prove that blockchain is the right technology to use.
“If you look at all the proof-of-concept and innovation projects on blockchain, you have to be really critical and ask if blockchain is really needed,” he said.
“My guess is that in half of those projects, blockchain is used because it is easy to get money, not because there is an added value.”
Asked about the issues that have led to the current situation, Sprenger singled out three main areas. First, he said that although blockchain technology is developing quickly, many projects struggle to ensure stability in large-scale deployments.
“For example, if you are using smart contracts, you can’t replace them like regular code,” he said. “So you have to think about how to patch a production blockchain of smart contracts at scale.
“And if you run a blockchain in your datacentre alongside your core systems, the network security layer is untouched, so there is a lot work to do to bring blockchain into a production environment.”
Sprenger also highlighted challenges in motivating businesses – and their rivals – to join a blockchain network, which often results in the democratisation of information.
Read more about blockchain in APAC
- Asian carriers are counting on personalised services, blockchain-enabled loyalty programmes, automation and predictive maintenanceto lower costs and improve passenger experience.
- Although blockchain is no silver bullet, experts say Australian organisations should embrace and invest in the technology.
- Singapore-based Global eTrade Services has launched an open trade blockchain network to boost cross-border trade between China and the rest of Asia.
- More consumer goods companies across the APAC region will follow on the heels of the financial services firms and adopt blockchain technology over the next five to 10 years, according to Ernst & Young.
“Now, that is very attractive to smaller firms because they have a chance to come together to beat the bigger companies,” he said. “But not so much for the market leaders, without which the blockchain ecosystem won’t spin up fast enough.”
Sprenger also touched on the security of blockchain systems that are deemed secure as far as the immutability of information is concerned. However, he said that notion would not apply to data privacy and access management.
Citing AdNovum’s Car Dossier project, which uses blockchain as a technological basis to create trust and drive value within the used and second-hand car industry in Switzerland, Sprenger said details such as the location of a car that had been involved in an accident could be captured on a blockchain.
“So you have location information and you know who owns the car at a certain point in time – that’s very sensitive information, at least in Switzerland,” he said. “Data privacy is a big concern and it’s not yet resolved by the blockchain frameworks in the market – and that’s where we jump in as a security company to provide access management capabilities.”
According to market research firm Netscribes, the global blockchain technology market is expected to grow at a compound annual growth rate of 42.8% and be worth nearly $14bn by 2022. The Asia-Pacific region is expected to adopt this technology at a faster rate because of its wide adoption in China and India.