The reality of large-scale enterprises adopting blockchain technology 

The reality of large-scale enterprises adopting blockchain technology 

Toby Gilbert

by Toby Gilbert, CEO and co-founder of Coinweb

It is important to draw a clear distinction between blockchain technology and the token economy, more commonly referred to as crypto. Whilst the two are inextricably linked as crypto is required in most cases to remunerate the participants of blockchains to operate them (miners and/or validators), they both exist today at different stages in their lifecycles.

Crypto has been aggressively traded for the past seven or so years, driven by speculative investors in the hope that token prices would rise. This is a far cry from the intended purpose of crypto, where projects go to lengths to prove that their tokens have true utility within their platforms. 

The underlying technology, unlike the token economy, is however in its infancy with only a handful of use cases breaking through usually focused on tokenisation, which shouldn’t be confused with the native tokens of a platform as mentioned above.

Stable tokens, NFTs, and tokenisation of real-world assets are being adopted by the likes of BMW, LVMH, Audi as well as a number of football clubs and other large-scale enterprises. Blockchain technology is more than capable of handling this application today albeit with pain points that include the need to hold two types of token, the one you are using and a second one as the underlying fee basis to operate the first, fluctuating gas fees, varying network speeds, barriers around fiat on and off ramping as well as a number of others that projects such as Polygon, Circle and us at Coinweb as working to resolve. 

Blockchain technology promises considerably more than tokenisation, which in large part is an improvement to existing technologies where point systems have been widely used for decades.

The ability to automate expensive manual processes in legacy systems from supply chains to banking can deliver significant cost savings and speed up processes that have no excuse in today’s day and age to be sluggish, such as the international banking payment messaging system, Swift.

However, we are simply not there in terms of development, regardless of what many projects market, and this is proven by the drastically low volume of traffic that flows across chains today. To put it into perspective Grab, the Southeast Asian ride-hailing app has around 60 million customers of which 30 million are active daily and considering the wide range of services they provide, it is not beyond the pale to guesstimate each user uses the platform twice a day, that’s 60 million transactions per day. Ethereum handles a total of one to two million transactions per day, in total!

There’s no doubt that large-scale enterprises are interested in the technology with green shoots appearing but there is a lack of understanding and easily useable product in the market, crowded with protocols, few of which have been stress tested and constant news of bad actors committing fraud.

Dependable information is hard to come by, so whilst enterprises are cautiously inquisitive, driven in large part by FOMO, they need to run a deep educational process that takes time.

If the enterprise promises a PR coup, high volume of transactions or is prepared to pay fees, then the protocols will afford them the time to educate them, with a view to getting them to build on top of their platform. Problem number 1 starts here; the teams usually educating the enterprises are entirely biased to their own platform which carries several risks, such as regular outages as has been seen with Solana and even worse catastrophic platform failure as we saw with Terra. Not a great prospect if you’re a large-scale enterprise with millions of customers.

Problem number 2; after an enterprise business has been educated and sold on the technology, they are left with the daunting task of not only rolling the dice on which platform to build on top of but how to connect their legacy systems to it and architect, build and ship product that supports the technology. Not to mention the acquisition and operation of regulatory licenses in multiple jurisdictions.

This is the real barrier to entry and where many ideas die before they turn into reality. Developers usually specialise in a particular blockchain and existing products (wallets etc) are clunky at best and building from scratch takes time and expertise which is in short supply having been soaked up by well-funded blockchain projects who pay over the odds for a specific experience. 

There is little doubt that large-scale enterprises can accelerate and deliver adoption for blockchain, converting the use case for crypto from speculative investment into true utility driving supply, demand and stability.

For this to happen protocols need to prove themselves to reliably handle transactions, regulation needs to be introduced safeguarding retail users and clarifying use cases in a number of countries especially the United States, and useable product needs to be delivered, opening up the developer space and lowering the barrier to entry. In the meantime, we will keep educating and building.

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