4 Signals That Explain How Businesses Are Adopting Blockchain
The new State of the Enterprise Blockchain Study contains some key signals to how business is adopting blockchain technology. These signals identify its progress, but also highlight the best inroads to working with enterprises and the work the industry needs to complete to build on the progress.
1. More best practices are needed.
While 75% of respondents agreed that blockchain will be mainstream technology by 2025, enterprises—especially large ones—are still waiting for patterns of success before opening their wallets. 62% cite a lack of tooling and internal skills as roadblocks to adoption. 50% need further proof in the form of use cases or pre-built solutions to develop their blockchain business case.
In short, blockchain is still too hard to learn for busy IT shops running at scale, and too poorly understood to justify projects. To change that, tooling to simplify interactions with blockchain solutions needs to become more prevalent and more turn-key solutions with publicly proven benefits need to emerge.
Full disclosure: I work for Provide Technologies, whose mission is to make blockchain developers more productive through platform development and turn-key solutions like providepayments.com.
2. Early adopters are most likely small, privately owned organizations.
Of the nearly $9M spent last year on blockchain projects by respondents, 82% came from organizations with less than 99 employees. 70% of that investment poured in from privately owned companies.
This is a typical adoption pattern for new technologies. Smaller companies often possess a stronger appetite for risk—seeking competitive differentiators more aggressively to win customers or establish new markets. Larger companies wait until concrete patterns emerge that save time, money or attract new customers. Then with deeper pockets and larger resource pools, large enterprises catch up.
This pattern is likely to exist for a couple years before the balance normalizes. For the next five years, small company blockchain budgets will continue to outpace the larger enterprises.
3. Blockchain starts with IT.
At the end of the day, blockchain is a technology, so it makes sense that IT directs the majority of its adoption today. If the decision is clearly cut from either business or technology teams, it is 40% more likely that IT initiates the project. In fact, it appears that IT is central to blockchain projects getting started. 75% of the time, technology teams are either initiating or partnering with the business as the driving force behind blockchain adoption.
Business teams still participate in over half of the decisions to use blockchain, but the gap in participation underscores that business executives struggle to identify (and justify) business use cases for blockchain.
Or maybe they do envision what their markets look like after decentralization, and they are resisting the change. That is a dangerous view, though. Remember, it only took Netflix three years to drive Blockbuster to bankruptcy by embracing Web 2.0. Decentralization is at the core of the Web 3.0 evolution underway today, and—as I outlined in a previous post—even Netflix isn’t safe.
Regardless, decentralization is still a very technical discussion, and technology companies and partners would better serve future projects by providing technology teams with the tools to be their blockchain champions.
4. It’s a polychain world.
Not surprisingly, Ethereum leads the market for enterprise adoption. 62% base their blockchain projects on Ethereum, the protocol designed for developers — allowing them to put business logic on chain using smart contracts. A respectable 42% use the Bitcoin network.
However, the really impressive number is 78% of the respondents reported supporting projects for two or more chains. Certainly, many of these projects involve accepting cryptocurrency.
However, it is logical that while technologists work out best practices, and software providers craft turn-key solutions, many chains will root themselves in niches and prosper. Similar to how companies already rely on several relational databases to power facets of their business, we should expect to see chains to follow a similar pattern.
About the State of the Enterprise Blockchain Study
The study sampled the current state of blockchain adoption for 82 organizations ranging in size from startups to juggernauts. The median size company employs 250 people, while the mean employs closer to 30,000. The study started began in December 2018 and concludes with this report.
Provide Technologies, Emory University and Aprio sponsored the State of the Enterprise Blockchain Study. Special thanks to Dr. Benn Konsynski and Jagruti Solanki for their help in completing this study.
