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Is blockchain a one-trick pony?

Despite an array of applications for blockchain, the technology is fighting some headwinds from knowledgeable naysayers. Is it just an overhyped tool for cryptocurrencies, or does it hold critical answers for industry’s supply chain and cybersecurity issues?

Blockchain has been gaining a lot of attention, but its association with Bitcoin has led to skepticism about the technology.
Blockchain has been gaining a lot of attention, but its association with Bitcoin has led to skepticism about the technology.

As a highly secure system of record keeping, blockchain has been gaining a lot of attention across the industrial sectors as a means of securing and recording supply chain transactions and as a method of automation system cybersecurity. But its use with Bitcoin, for which it records and connects transactions, has led to no small amount of skepticism about the technology.

One high-profile example of this skepticism can be found in a recent article by Nouriel Roubini, a professor at New York University’s Stern School of Business and chairman of Roubini Global Economics, in which he describes blockhain as “overhyped,” as having “only one application,” (i.e., cryptocurrencies), and as a technology that “faces massive obstacles” in its application to anything beyond cryptocurrencies. I found Roubini’s stance interesting considering the growing evidence, as cited in the opening paragraph of this article, that blockchain is expanding rapidly beyond its cryptocurrency beginnings.

Exploring the “massive obstacles” Roubini cited, I looked at the Financial Times article linked to in his post. While much of the article focused on blockchain’s current cryptocurrency and potential banking applications, the biggest drawbacks the article noted that could impact blockchain’s application in industry are its cost and complexity.

With these issues in mind, I reached out to three companies—SAP, Wipro and Xage—each of which are working with industrial blockchain applications, to find out what they thought about the arguments being brought to bear against the potential of blockchain technology.

SAP is investing in blockchain “to bring valid, digitized processes into SAP’s IoT [Internet of Things], manufacturing and supply chain solutions,” said Gil Perez, senior vice president of IoT and digital supply chain at SAP. “The value of distributed and trusted business records is immeasurable, even when we limit the analysis to a single use case of track and trace—tracking a product from inception to end of life/recycling. The ledger ensures the record’s physical, logistical, commercial and legal provenance is trackable, traceable and immutable.”

I found Perez’s comment here to be an interesting response to the Financial Times’ criticism of “blockchain fetishism.” In addition to the perceived cost and complexity issues of blockchain cited in the article, it also indicates that, for blockchain to be effective, “it would have to be adopted universally.” SAP disagrees with this viewpoint.

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