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Is the blockchain overrated or not?

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One of the applications on which there is more optimism is for example the maintenance of a large distribution network, which is based on a database that can be consulted by all parties involved, from warehouses to container ship owners to national customs. But the proposed uses are many, from tracing the origin of diamonds to creating a state property more effective against fraud.

Some companies prefer to call the blockchain by other names, to avoid being indirectly associated with cryptocurrencies: “distributed ledger technology”, for example. But BitXT with operations similar to those underlying cryptocurrencies is of more interest to banks. Which are trying to build new systems to make international money transfers faster and cheaper, which today involve intermediary banks that hold commissions and lengthen their time?

Is the blockchain overrated?

It is a theory that begins to make its way, after that for months the blockchain has been exalted in a rather uncritical way, in part because it was a complicated theme on which the forecasts and promises of anyone who seemed to understand us were sometimes taken for good without too much critical spirit something. Today, when big companies have been investing and researching blockchain for a couple of years now, there are those who are starting to be more skeptical about the future uses of technology, or at least invite more prudence in judgments. The blockchain certainly has great potential, but it probably will not lead to a revolution in the short term, as expected by some overly enthusiastic insiders.

Most of the projects involving the blockchain are still in an exploratory phase, and news of successful jobs has then been downsized: such as that according to which Sierra Leone had held the first election with the blockchain in the world, when in reality the Swiss company who used technology in connection with the election only had control functions. Magnus Haglin, vice president of Nasdaq, the second market in the world by market value and among the companies most active in experimenting with the blockchain, explained to Bloomberg that it was expected to find possible jobs immediately, but it took longer because it is difficult to introduce new technology from scratch. For now, Nasdaq is not using blockchain in any major project.

This is one of the several basic causes for delays in blockchain projects: proposing a new, more efficient standard is the easy part, the difficult part is to convince everyone, including competing companies, to adopt it. And the sharing of the same standard between the parties involved is the basis for the functioning of the blockchain. According to a Gartner study, only 1 percent of CIOs (i.e. the corporate executives responsible for the IT and technology part) say they have adopted some form of blockchain, and only 8 percent say it is in the short term plans term. 80 percent say they are not interested in technology. In some cases, companies that say they have launched projects on blockchain do not really use this technology, but simplified versions.

Gary Barnett, a Global Data analyst, explained to the Economist that another major problem is that there is a great deal of misunderstanding between companies and those working with blockchains. Non-professionals often struggle to understand technology, while those who develop it are so enthusiastic that they do not pay enough attention to the concrete characteristics of the company to which it should be applied.

There are also fields in which the blockchain is useless, at least for now: Bank of Canada has tried to use it to manage national payments, however discovering that the benefits are negligible because the current system already works quite well. This is because in many cases a decentralized and distributed system such as the blockchain is much less efficient than a centralized system, because it requires much more computing and bandwidth power.

Then there is a problem of compatibility between the software sold by the different companies that deal with blockchain, and the volume of transactions they can manage: still too small for many large companies. Many companies, Bloomberg ads are simply frightened of being the first to adopt the blockchain, and therefore the first to discover its problems.