Technology

Are blockchain applications barely visible?

Industries Buying Into Hyperledger May Be Disappointed

Any company that nowadays integrates blockchain into their products can join Hyperledger — a global collaboration, hosted by The Linux Foundation. Existing members of the effort include Deutsche Bank,  Airbus SE, IBM, Intel, Fujitsu, J.P. Morgan, Daimler, SAP and other giants. To join them will cost you $250K.

In return, though, you will get three invitations to Hyperledger Annual Member Summit, ongoing engagement with Executive Director of the project, Brian Behlendorf, as well as permission to display the Hyperledger logo on your website, to indicate membership.

However, Behlendorf said thatEarly uses of blockchain will barely be visible.” He explained that even though the blockchain revolution is coming, you might not see it.

He is right, we don’t see it. According to Forrester Research Inc., 90% of distributed ledger technology projects will never become part of a company’s operations. Yet, in practical terms, it’s very interesting how companies contributing $250K to the collaboration face blockchain challenge and how Hyperledger helps them start the revolution mentioned.

10 companies completed 7 trade transactions across 5 countries

Last year, Deutsche Bank announced a blockchain based trade platform we.trade for SMEs, in collaboration with HSBC, Rabobank, KBC, UniCredit and several other partners. They were looking for a way to trade internationally. The platform is meant to use both distributed ledger technology (DLT) and smart contracts. It links the buyer, buyer’s bank, seller, seller’s bank and transporter involved in trade and registers the entire trade process, from order to payment, displaying it at a user-friendly interface.

IBM was selected by the consortium of banks as the project’s IT vendor through “a global competitive bidding process” in which vendors were invited to make a proposal for the platform’s development.  According to KBC’s general manager of trade finance, Hubert Benoot, “ultimately, the decision between vendors came down to a choice between Hyperledger and Corda, as all bids were based on either of the two.” But the consortium decided to go for Hyperledger, the one which they thought was “more mature.”

It should be mentioned that the IBM blockchain is powered by Hyperledger Fabric that was initially contributed by Digital Asset and IBM, as a result of a hackathon. The Hyperledger website states, “Intended as a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to be plug-and-play. Hyperledger Fabric leverages container technology to host smart contracts called “chaincode” that comprise the application logic of the system.”

This August, UniCredit said, it has succeeded in completing the first ever international transaction on we.trade. The operation involved the German online retailer Navabi GmbH, which used the platform to place an order with a Spain-based supplier.  After a year into the development, this July,  ten companies managed to complete seven trade transactions across five countries.

By contrast, Mastercard can process 3.4 billion transactions per day at 38,000+ transactions per second, with an average response time of 140 milliseconds.

Distributed ledger technology will be wound down this year

Analysts say that in 2018, they expect to see a number of projects stopped that should never have been started in the first place. “The disconnect between the hype and the reality is significant – I’ve never seen anything like it,”  said Rajesh Kandaswamy, an analyst at Gartner Inc. “In terms of actual production use, it’s very rare.”

As soon as the blockchain technology passed a peak of popularity,  a new period of stagnation has started. Several companies demonstrated a piece of scepticism geared towards blockchain in general.

According to Bloomberg, Nasdaq Inc.,  which intended to deploy blockchain for voting in shareholder meetings and private-company stock issuance in 2016, isn’t using the technology yet.

ASX Ltd., a demutualized company which operates Australia’s primary national stock exchange and equity derivatives market is planning to accomplish a blockchain-based clearing and settlement system at the end of 2020 or the beginning of 2021.

Australian mining company BHP Billiton Ltdannounced in 2016 that it would deploy blockchain to track rock and fluid samples in early 2017. But it currently doesn’t “have a blockchain project/experiment in progress,” according to spokeswoman Judy Dane.

Bloomberg reports, Microsoft, IBM and Accenture have grabbed more than half of blockchain spending so far. Because blockchain is supposed to be a substantial future revenue for big corporations, they remain upbeat. “We see tremendous momentum and progress in the enterprise blockchain marketplace,” Microsoft said in a statement. “We remain committed to developing cutting-edge technology and working side-by-side with industry leaders to ensure businesses of all types realize this value.”   

“We do have anecdotal evidence around IBM closing 400 business deals around blockchain-based technology, and Hyperledger is their technology of choice,” Behlendorf said.

It should be mentioned, IBM’s revenue grew 5% YoY in Q1 2018 — its second consecutive quarter of growth after more than 20 quarters of declining revenue for about six years. Total revenue for Q2 rose about 4% to $20 billion.

For Q418, Microsoft posted revenues of $30.1 billion (£23.1bn), an increase of 17% on this time last year.  Azure was the big winner, going up 89% year over year.  Microsoft Azure is an ever-expanding set of cloud services. With Azure Blockchain Workbench, you can configure and deploy a consortium network with just a few clicks.

To conclude, the question we can pose ourselves is: are early blockchain uses barely visible because they are being implemented at a slow rhythm, or because only certain players are implementing them? Or at least trying to? Given that a bubble of hype still surrounds blockchain, there is no way of knowing precisely what will happen. While it is disrupting industries, some sectors may take more time to implement the technology to the fullest.

Related post:

IBM and CLS don’t give up their blockchain ship

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Iuliia Sukhomlinova

A blockchain enthusiast and a content writer with a zest for technologies. My final goal is to help readers find what they need, understand what they find, and use what they understand appropriately.

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