Ernst & Young (EY), the third largest multinational professional services firm, believes blockchain technology is poised for critical mass. In its latest report, “Blockchain Reaction: Tech companies plan for critical mass,” the company explains how tech firms will experience impact through the blockchain’s “potential-rich, but still immature, technology.”
Also Read: ‘Radical Political Decentralization’ Could End Nation States
Critical Mass Is Coming, and There May Be an Inflection Point That Excludes Firms
EY provides assurance, financial audits, consulting and advisory services to companies all around the world. In its recent report on blockchain technology, the company explains the potential of this emerging landscape and what challenges currently prevent it from reaching critical mass.
The paper has a few contributors, including Angus Champion de Crespigny, Anne Freden, Paul Brody, and other EY executives. EY’s Financial Services Blockchain and Distributed Infrastructure Strategy Leader Angus Champion de Crespigny explains how firms should look into this new protocol:
“We recommend companies not focus on how this technology fits into their current business but instead look at what their products and services look like in a blockchain-enabled world.”
The multinational firm says that blockchain technology could be the “right tech, at the right time” meaning that, as data breaches and security loopholes are on the rise, a tamper-proof digital record will be of great importance to businesses. Alongside this, EY says distributed ledgers have brought about algorithmic trust that could replace institutional practices with trust among peers. Additionally, it is bringing new models and markets into society, says the firm, which will arrive “simultaneously with the IoT and the sharing economy, not to mention digital transformation. It has the potential to accelerate them all.”
On the downside, EY says that the protocol is still immature and may be too slow to scale. EY also cites PR problems regarding the blockchain’s association with Bitcoin, which is still a conterversial innovation in the financial industry. These issues could raise flags among investors or creators entering the blockchain space.
Furthermore, startups and legacy institutions need imagination, early experiments, and extensive testing with R&D programs for ideas using blockchain technology to succeed. There are also debates over transparency, privacy, regulatory uncertainties, and tax implications.
However, to simply brush off the potentials of distributed ledgers as merely hype may not be fruitful, as Angus Champion de Crespigny explains:
“Blockchain is developing much faster than anyone expected.To think the impact to your industry is many years away is very risky.— It’s time to think through, in a logical, strategic way, how to effectively disrupt yourself before others do it to you. Companies should identify new blockchain-enabled opportunities, assess the risks and time their entries to capture and build competitive positions.”
EY’s report notes how the impact of blockchain technology is already staking a claim within the financial sector. EY Global Chief Innovation Officer Jeff Wong says, “if companies aren’t thinking about this now, there will suddenly come an inflection point, and then it will be too late.”
According to EY, startups and legacy firms should achieve readiness early by not trying to figure out their own blockchain strategies, but rather how they will operate in a world where the technology already encompasses everything.
The report explains that blockchain progress will still be relatively slow at first as industry standards are hashed out between the finance and tech industries. Yet, this doesn’t mean that companies should sit back and watch it progress on the sidelines. EY states that, “should critical mass be reached, blockchain’s impact will be felt far, wide and fast.”
What do you think about EY’s thoughts on blockchain technology and critical mass? Let us know in the comments below.
Images courtesy of EY, YouTube.