2017 was the year of Bitcoin buzz. The cryptocurrency hit a high of $20,000 and was on the tip of many tongues. Blockchain, which is an open source digital ledger that collects transactional records, has applications across many industries. What has happened since last year?
Partly due to regulatory scrutiny from governments around the world, the price of Bitcoin has fallen dramatically to $6,000. However, interest in its underlying technology, Blockchain, continues to grow, and along with Bitcoin, other alternative cryptocurrencies have emerged, and people are still speculating about which are the most promising altcoins.
In early 2018, Deloitte surveyed over 1,000 executives at major companies around the globe. According to the 2018 Global Blockchain Deloitte survey, 39% of respondents indicated their companies planned to invest $5 Million or more in blockchain technology in the coming year. 72% of respondents claimed that the technology was either important or a critical part of their strategic priorities. $5 Million in investments isn’t pocket change, but it’s not a high bar either. For perspective, Siemen’s awarded a $135 Million industrial grant to Swinburne Institute of Technology to build a facility focused on 3D Printing.
Blockchain has drawn the most investment from the financial and information technology sectors. The Top 10 US blockchain patent holders include familiar names such as Bank of America, Mastercard, Dell and IBM. Companies in the financial technology sector are primarily looking to blockchain to improve privacy, scalability and cybersecurity. Information technology companies have more varied ideas about how they want to apply blockchain. Microsoft and Dell see the technology as a way to speed up business, by simplifying operations and reducing costs of reconciliations and transaction disputes. IBM’s interest is in using an Enterprise Blockchain system to verify digital identities in instances where read-write permissions are role-based or where transactions require the consensus of multiple individuals.The surge of blockchain technology in insurance markets aims to decrease fraudulent activities within insurance claims, as well as completely secure insurance records, as well as client details, plus much more.
Blockchain Meets the Supply Chain
While 44% of manufacturers believe blockchain is only relevant to the financial services sector, the spread of blockchain technology isn’t limited to Financial Technology and IT. Some major retailers and airlines are using it to track their supply chains more efficiently. In fact, supply chain applications are the most common use case for blockchain technology, according to Deloitte. Walmart has been using it to implement farm to table product traceability. British Airways has begun using it to track flight data and reduce conflicting information.
In addition, UPS and FedEx have joined the Blockchain in Trucking Alliance (BiTA). BiTA is an alliance of over 60 companies (including Precision, a division of QAD) collaborating to invest in and develop supply chain and logistics technology that uses blockchain to streamline transportation and create more transparency. BiTA stands to bring some much needed innovation to the freight industry, which lacks transparency. The problem is so dire that the FBI estimates that there is over $30 Billion in cargo theft per year.
Adoption in Manufacturing
According to the Deloitte survey, 56% of manufacturing executives believe blockchain will be disruptive to their organization’s industry. That’s a narrow majority. That being said, one manufacturing vertical stands out among the rest: Life Sciences. Interest in blockchain technology among Life Sciences companies has increased substantially over the past year. More than 60% of executives in the Life Sciences and HealthTech industry believe they will lose competitive advantage if they do not adopt blockchain. These organizations see a lot of potential for blockchain to reduce their reliance on intermediaries, increase auditability, facilitate industry collaboration, and even generate new business models.
Still, in the US, only 37% of respondents said they had blockchain projects planned or in production. That’s a strangely low number compared to respondents from Mexico (94%), Germany (93%) and China (91%), who either already used blockchain or plan to deploy it in the next year.
What’s Next for Blockchain?
There still remain some obstacles to widespread adoption. The returns on investing in blockchain are not as clear as they are for other Industry 4.0 technologies, such as Additive Manufacturing and the Internet of Things. The top five most frequently cited reservations about the technology include regulatory issues, implementation, security threats, uncertain ROI and a lack of in-house understanding of the technology.
While reservations are understandable, the fact that of all industries, Life Sciences seems to be leaning in the most should still send a strong signal. Historically, Life Sciences tends to be very risk-averse. If they’re moving towards blockchain, you should think about it too.