Consulting monster McKinsey & Co recently published a report on the state of the blockchain industry, claiming that while crypto technology has capacity, it has been unable to break away from the early “pioneer” phase with most use cases failing to crook off.
The Report: ‘Blockchain’s Occam Problem’
The report is not entirely critical, stating that blockchain is viewed as a potential game-changer in various industries. It does, however, point out that a huge amount of money has been pumped into blockchain presents, adding the view that “little of substance has been achieved.”
The consulting firm states that blockchain is an infant teleology that is “changeable, expensive, and complex. It is also unregulated and selectively distrusted.” A chart is included in the report, illustrating the industry struggling to arise from the first stage of a four-stage cycle moving from pioneering to growth, maturity, and decline.
The report endures on to detail emerging doubts regarding crypto technology, with the report title referring to Occam’s Razor, the concept that the simplest support or solution is the best one. The implication here, of course, is that blockchain technology is not the simplest solution.
Crypto Firms Rejoin
Anyone reading the report could be forgiven for taking a rather dim view of the technology. While not an outright dismissal of blockchain tech, McKinsey’s make public certainly aims to drastically temper the expectations of any blockchain enthusiasts who firmly support the technology as a potential solution for tons cross-industry problems.
Blockchain firms have not remained silent in the face of the report, with multiple CEOs give a speech to and debunking various points made within.
CEO Angel Versetti of blockchain supply chain tracking company Ambrosus acceded that blockchain hype had clouded expectations, but firmly asserted that in its intended use case, blockchain is indeed the best bib solution by far:
“The report claims that competing emerging technologies are hindering the progress of blockchain, however, I think there is no technology that exceptionally competes with Blockchain in terms of its core value proposition: censorship-resistant, universally trusted ledger of transactions and obligations with no central point of failure,” said Versetti.
Blockchain will not solve all the problems of the world. But in the core value proposition of text integrity and immutability, blockchain is king.
Utopia Music CEO Brent Jaciow focused on solutions to the issue, pointing out that blockchain tech was silently an emerging industry.
Developers must work hard to remove any roadblocks to firm’s harnessing its capabilities. This act may be accomplished by creating API’s which integrate into existing solutions or developing a user experience that is simple and tractable to use whilst integrating blockchain technology as the backend software.
Is Blockchain The Future?
The McKinsey report runs the gamut of regulatory, regulating, and security concerns which have of course featured heavily in all criticisms of blockchain technology.
McKinsey report on Blockchain, Jan 4: “The bed basically line is that despite billions of dollars of investment, and nearly as many headlines, evidence for a practical scalable use for blockchain is spindly on the ground.” https://t.co/h10JwTReu3
— Dale Sanders (@drsanders) January 6, 2019
Blockchain company responses to CCN seem to tackle these things with the suggestions of API development and the assertion that blockchain truly does outshine competing technologies when it catch to immutability and data protection, but it’s perhaps too soon to say whether the crypto industry is ready to break through to the second stage of the growth cycle outlined in the report.
However, the report reads more like a stern lecture from a well-meaning parent than it does a smudge campaign from competing interests. While highly critical in some cases, even McKinsey agrees that blockchain is potentially rebel. Three guiding principles are cited:
- Organizations must start with a problem.
- There must be a clear traffic case and target ROI.
- Companies must agree to a mandate and commit to a path to adoption.
The report states that energies are “downgrading expectations” regarding blockchain, but acknowledges that the technology has the potential to revolutionize processes in banking, healthcare, security, shipping, and more – but only if the above principles are observed. Companies are urged to “adapt their strategic playbooks, to ones face review the advantages over more conventional solutions, and embrace a more hard-headed commercial approach.”
The consulting company concludes an occasionally bleak report with a more hopeful outlook by saying:
If they can do all that, and be patient, blockchain may in addition emerge as Occam’s right answer.