According to a Gartner report, blockchain ranks amongst 2020’s Top 10 strategic technology trends. The enterprise blockchain will play an important role in digital transformation, with “evolutionary and incremental improvements” in trust and transparency.
In its report, titled “Top 10 Strategic Technology Trends for 2020“, Gartner believes that blockchain has the potential to reshape industries by enabling trust, providing transparency and enabling value exchange across businesses. Other benefits include a reduction in transaction costs and settlement times and improvements in cash flow.
The report reads: “Blockchain and other distributed ledger technologies provide trust in untrusted environments, eliminating the need for a trusted central authority. Blockchain removes business and technical friction by making the ledger independent of individual applications and participants and replicating the ledger across a distributed network to create an authoritative record of significant events. Everyone with permissioned access sees the same information, and integration is simplified by having a single shared blockchain model. Blockchain also enables a distributed trust architecture that allows parties that do not know or inherently trust one another to create and exchange value using a diverse range of assets. With the use of smart contracts as part of the blockchain, actions can be codified such that changes in the blockchain trigger other actions.”
As per Gartner’s 2019 CIO Survey, 60% of CIOs expect some kind of blockchain deployment in the next three years. In terms of industries that have already deployed blockchain or plan to deploy it in the next 12 months, financial services leads the way (18%), followed by services (17%) and transportation (16%). It is likely that organizations in these industries have a greater need than organizations in other industries for the simpler use cases that limited use of some blockchain components can support, such as record keeping and data management.
“Blockchain has the potential to reshape industries by enabling trust, providing transparency and enabling value exchange across business ecosystems, potentially lowering costs, reducing transaction settlement times and improving cash flow”, says the report. “Assets can be traced to their origin, significantly reducing the opportunities for substitutions with counterfeit goods. Asset tracking also has value in other areas, such as tracing food across a supply chain to more easily identify the origin of contamination or tracking individual parts to assist in product recalls. Another area in which blockchain has potential is identity management. Smart contracts can be programmed into the blockchain where events can trigger actions. For example, payment is released when goods are received.”
Blockchain will be scalable by 2023
Gartner believes that blockchain’s key revolutionary innovation is that it eliminates all need for trust in any central or “permissioned” authority. It achieves that largely through decentralized public consensus, which is not yet used in enterprise blockchain, where organizations and consortia govern membership and participation. But enterprise blockchain is proving to be a key pillar in digital transformation that supports evolutionary and incremental improvements in trust and transparency across business ecosystems.
“By 2023, blockchain will be scalable technically, and will support trusted private transactions with the necessary data confidentiality. These developments are being introduced in public blockchains first. Over time, permissioned blockchains will integrate with public blockchains. They will start to take advantage of these technology improvements, while supporting the membership, governance and operating model requirements of permissioned blockchains.”
The report also mentions that blockchain brings little value unless it is part of a network that exchanges information and value. “The network collaboration challenges have initially driven organizations to turn to consortia to derive the most immediate value from blockchain. Choosing a consortium requires due diligence across numerous risk criteria before sharing data and engaging with an outside party. Understanding and evaluating these risks will be critical in extracting value from consortia involvement. Four types of consortia exist: technology-centric; geographically centric; industry-centric and process-centric. One option is to work with an industry-wide consortium, but other types of consortia are also worth exploring. Organizations need to carefully consider how these consortia will impact the enterprise participation in particular industries and the competitive landscape.”