Blockchain: a disruptive force

In recent months, the success of Bitcoin has focused attention on its underlying technology, blockchain and led to the realisation that blockchain could be used in many industries beyond digital currencies and financial services. The result has been a multi-billion-dollar wave of investment in the blockchain technology by a host of start-ups and big corporates alike.

In our latest report for Counterpoint’s Emerging Tech Opportunities service, we analyse the blockchain technology with a particular focus on its potentially disruptive impact across a number of different industries. We discuss the challenges facing companies planning to implement the technology during the next few years.

Some of key findings from our research include:

  • Distributed Ledger Technology (DLT) will impact multiple industry sectors in increasingly fundamental ways. However many people are not looking past cryptocurrencies to see either the real threats or the real opportunities the technology presents.
  • DLT can be applied to a wide range of applications and industries. In the financial services sector, expect DLT to result in banks being able to dramatically reduce staff required for authenticating and approving transactions and thereby boosting their ROE. Start-ups such as Chain, Ripple and Abra have partnered with major financial institutions to reinvent settlement, trade finance and remittances.
  • Beyond financial services the range of potential DLT applications is almost limitless. However, most of these applications are largely untested. The reality is that blockchain in non-financial services applications is still in its infancy and there are considerable challenges including cost, scalability, privacy and legal issues. Nevertheless – expect leading players to start implementing DLT on a modest scale by end 2019, and widespread by early the 2020s.
  • Expect blockchain to be challenged by other DLT solutions that address its limitations. However, while blockchain is at an early phase in its development, many other technologies that might challenge it are still at a nascent stage and untested in the wild.
  • Distributed ledger technologies such as blockchain have the potential to have a profound impact on the world. However it is likely that adoption will be gradual and steady rather than sudden, primarily because coordination costs between multiple parties will limit the speed of development. As a result, despite the potential, do not expect an internet-like revolution in DLT use beyond cryptocurrencies. At least, not yet.

To access the full report, talk to us about subscribing to Counterpoint’s Emerging Tech Opportunities service.