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|Robert Trong Tran, Cyber Security and Privacy leader at PwC Vietnam|
The new research from PwC—Blockchain is here. What’s your next move?—surveyed 600 executives in 15 countries and territories, on their development of blockchain and views on its potential.
As blockchain rewires business and commerce, the research provides one of the clearest signals yet of organisations’ fear of being left behind as blockchain developments accelerate globally, opening up opportunities including reduced cost, greater speed, and more transparency and traceability.
A quarter of executives report a blockchain implementation pilot in progress (10 per cent) or fully live (15 per cent). Almost a third (32 per cent) have projects in development and a fifth (20 per cent) are in research mode.
The US (29 per cent), China (18 per cent), and Australia (7 per cent) are perceived as the most advanced currently in developing blockchain projects. However, within three to five years, respondents believe China will overtake the US (30 per cent), shifting the early centre of influence and activity from the US and Europe.
The survey reflects the early dominance of financial services developments in blockchain, with 46 per cent identifying it as the leading sector currently and 41 per cent in the short term (3-5 years). Sectors identified by respondents with emerging potential within 3-5 years include energy and utilities (14 per cent), healthcare (14 per cent), and industrial manufacturing (12 per cent).
“What business executives tell us is that no-one wants to be left behind by blockchain, even if at this early stage of its development concerns on trust and regulation remain,” said Steve Davies, Blockchain leader, PwC. “A well-designed blockchain not only cuts out intermediaries, but also reduces costs, increases speed, reach, transparency, and traceability for many business processes. The business case can be compelling, if organisations understand what their end game is in using the technology, and match that to their design.”
Blockchain’s biggest benefits will be developed and delivered through shared industry-wide platforms. But the study notes that this will not happen without industry specific companies—including competitors—agreeing on common standards and operating together.
|A well-designed blockchain not only cuts out intermediaries, but also reduces costs, increases speed, reach, transparency, and traceability for many business processes. The business case can be compelling, if organisations understand what their end game is in using the technology, and match that to their design.|
Despite the technology’s potential, respondents identified trust as one of the biggest obstacles to blockchain’s adoption. 45 per cent identified it as an obstacle to blockchain adoption; 48 per cent believe its regulatory uncertainty. Concerns about trust among users is highest in Singapore (37 per cent); UAE (34 per cent) and Hong Kong (35 per cent), reflecting in part the dominance of financial services in blockchain development. Concern about regulatory uncertainty was highest in Germany (38 per cent), Australia (37 per cent), and the UK (32 per cent).
“Blockchain, by its very definition, should engender trust. But in reality, companies confront trust issues at nearly every turn. Failing to state a clear business case from the outset leads to projects stalling,” continued Davies. “Businesses need to put more effort into building into their design how they can tackle trust and regulatory concerns.”
“Creating and implementing blockchain to realise its potential is not an IT project. It is a transformation of business models, roles, and processes. It needs a clear business case, an ecosystem to support it, with rules, standards, and flexibility to deal with regulatory change built in,” he said.
One in three of those respondents who reported little or no involvement with blockchain cited the reason for the lack of progress as cost (31 per cent), uncertainty over where to start (24 per cent), and governance issues (14 per cent).
“Blockchain is an indispensable trend in technology. The potential of blockchain applications in Vietnam is huge. We have seen a great deal of events held in Vietnam that focus on the importance and application of blockchain in many industries and business fields. However, security in blockchain should also be taken into serious consideration. From a technical point of view, blockchain is one of the most secure technologies currently. Yet the risk from cyber-attacks still exists because blockchain still operates on a traditional platform. Therefore, we cannot remove the requirements of information security and privacy out of the development of blockchain,” said Robert Trong Tran, Cyber Security and Privacy leader at PwC Vietnam.
The study identifies four key areas for focus in the development of internal or industry wide blockchain platforms. First, to make the business case, organisations can start small, but need to set out clearly the purpose of the initiative so other participants can identify and align around it.
Second, to build an ecosystem, participants should come together from different companies in an industry to work on a common set of rules to govern blockchains. Of the 15 per cent of surveyed respondents who already have live applications, 88 per cent were either leaders or active members of a blockchain consortium.
Third, it is neccessary to design deliberately around what users can see and do, partners need rules and standards for access permissions. Involving risk professionals including legal, compliance, cybersecurity from the start will ensure blockchain frameworks that regulators and users can trust.
Fourth, managers should navigate regulatory uncertainty. The study warns that blockchain developers should watch but not wait as regulatory requirements will evolve over the coming years. It is vital to engage with regulators to help shape how the environment evolves.
The study examines the views of 600 executives in 15 countries of Australia, China, Denmark, France, Germany, HK, India, Italy, Japan, Netherlands, Singapore, Sweden, UAE, UK, and the US. 14 per cent had no activity in place and 7 per cent have paused their development.
Of the 15 per cent who already have live applications, 88 per cent were leaders or active members of consortia who were responsible for the blockchain infrastructure supporting their application. Companies that take a leadership role in a consortium have principal funding and control considerations, including IP ownership.