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While there is still a fair amount of confusion about the potential for blockchain across industries, many senior executives recognize the technology as crucial to their competitive advantage going forward.

Blockchain technology is emerging as a business focus for U.S. companies in many industries. Consumer products, manufacturing, technology, media, and telecommunications are the sectors most likely to already have blockchain projects in production, while health care and life sciences leads all sectors in plans to deploy blockchain projects this year, according to a survey by Deloitte.¹

But senior executives’ understanding of the technology is uneven, according to the survey responses, with many still knowing little or nothing about blockchain, and others placing it among their company’s highest priorities. Commitments to blockchain vary by industry—in ways that may be surprising.

Thirty-nine percent of the senior executives at large U.S. companies initially surveyed indicate they have little or no knowledge about blockchain technology. The majority, though, claim blockchain knowledge ranging from broad to expert, with many deeming the technology crucial for their companies and industries. Of this group, 55 percent think their companies would be at a competitive disadvantage if they failed to adopt the technology; 42 percent believe it will disrupt their industries.

“It is fair to say industry is still somewhat confused about the potential for blockchain,” says David Schatsky, managing director at Deloitte LLP. “More than a quarter of knowledgeable execs say their companies view blockchain as a critical, top-five priority. But about a third consider the technology overhyped.”

Even at companies whose executives report a broad understanding of blockchain technology, investment and adoption patterns vary. For instance, despite the relative immaturity of the technology, 21 percent of firms across a range of industries have already brought blockchain into production, and 25 percent plan to do so within the next year, according to respondents. Twenty-eight percent of companies have already invested $5 million or more in blockchain technology, with 10 percent investing $10 million or more. Looking forward, 25 percent expect to invest more than $5 million in blockchain technology during the next calendar year.

Blockchain Activities Extend Into Many Industries

Although many in the financial services industry were early to show interest in blockchain and account for a significant portion of investment and activity, the survey reveals other industries may be even more aggressive in pursuing blockchain strategies. “Most financial services companies have been involved in blockchain via their labs, investments, and pilots for a while now,” says Eric Piscini, a principal at Deloitte Consulting LLP and the global financial services blockchain leader. “Other industries are now starting to realize the potential for disruption as well as the new opportunities blockchain creates.”

Executives in the consumer products and manufacturing industry, for instance, express the most bullish outlook, with 42 percent planning to invest $5 million or more in the coming calendar year. Technology, media, and telecommunications (TMT) executives follow at 27 percent, then financial services at 23 percent.

The pace of blockchain technology deployment, referring to actual projects companies intend to implement or have implemented, varies by industry as well, with TMT and consumer products and manufacturing companies leading the way. In those industries, about 30 percent of companies have already brought blockchain into production. Health care and life sciences companies have the most aggressive deployment plans, with 35 percent of companies intending to deploy blockchain within the next calendar year. In contrast, just 12 percent of financial services companies have deployed blockchain, although 24 percent plan to go live in the coming year.

In an op-ed in CoinDesk, Piscini calls 2017 the make-or-break year for blockchain technology in financial services. The industry “will need to move away from churning out proofs of concept, shifting instead toward full-blown solutions.” This is easier said than done, Piscini says, and requires companies to think differently about blockchain.

“If significant headway isn't made, or real value delivered in cost savings or new revenue generation, by the end of 2017, I suspect momentum for developing the technology will slow down,” Piscini adds.

Patent filings, which are often viewed as a measure of innovation, also differ sharply by industry. Twenty-one percent of organizations have filed for blockchain patents. Consumer products and manufacturing companies lead the way, with 38 percent having filed patents, which suggests that industry could be on the threshold of a period of significant blockchain innovation.

Barriers to Blockchain Adoption

While views on blockchain's primary value vary, there is more agreement about the barriers to widespread adoption. Per the survey, a crucial obstacle is the lack of technical standards. More than half (56 percent) of respondents believe technical standards would create the tipping point leading to widespread adoption.

“There are multiple competing blockchain platforms and diverse implementations of capabilities, such as consensus and smart contracts, among many others,” Schatsky says. “A number of standards organizations were formed in 2016, but they have their work cut out for them.”

Another key barrier is regulatory uncertainty. Nearly half (48 percent) surveyed say federal regulations that support the use of blockchain for business purposes such as contracts and financial audits would likely tip the scales in favor of mass adoption. For example, affirmation that private blockchain activity represents an inherently reliable confirmation, or that a smart contract represents a legal contract in a court of law, could encourage businesses to deploy blockchain technology. Such developments would likely require changes in regulations, laws, practices, and protocols.

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