Maurizio Sironi

The blockchain paradigm shift: unfortunately, we’re not there yet



10 years after Bitcoin rolled out, blockchain disruptors’ efforts seems to have a long way from re-inventing the world in a decentralized fashion. Nevertheless, startups and corporates keep on struggling to build disrupting applications in different industries. By June 2018, all 10 largest company in the world were exploring blockchain paradigm. From Industrial and Commercial Bank of China (ICBC) to Apple, all top dogs are trying not to lagging behind. Broadly speaking, the ecosystem experimenting with distributed ledger technologies is quite heterogeneous:

  • Over-The-Top players, like Facebook and Google, are investing in this technology and researching how it will improve their value proposition.
  • Traditional players, especially in the Banking, Finance and Insurance industries, want to exploit blockchain potential to offer better services and foster systemic market efficiency. In fact in order to study the new technology and defend from it, or adapt to it, over 200 members from multiple industries joined R3, a consortium where members share their effort to study the possible effects of this technology and try to take advantage of it. Following announces of big whales like Goldman Sachs, ICE, the operator of the NYSE, and others, Wall Street is moving to embraces cryptocurrencies and this is changing also public opinion on this matter.
  • Start-ups were the first to take up the challenge with blockchain-focused value proposition. They range from software houses building new infrastructure layers up to providers of P2P business applications.
  • Governments can’t stay in a corner and see what happens. Some countries, like Estonia, are already using blockchain to improve services in Public Administration and e-Governance. Others, like Hong Kong, Singapore, China and Australia, are financing the development of systemic platform to enhance national and international infrastructure for businesses.
  • Regulators are following through this transformation by introducing work groups and task forces to facilitate regulatory evolution. Notably, in February 2018 The European Commission has launched the EU Blockchain Observatory and Forum.


What pushes reality with consolidated and protected business models to embrace this technological paradigm? What is the opportunity cost of missing out?

  • On one side, such urgency is given by the systemic range of blockchain applicability. Blockchain is about setting new industry standards and bringing efficiency to markets: this is quite enough to jump on the bandwagon.
  • Blockchain stands for a ledger of transactions. Being capable to establish a fee-based transactional economy could signify a stable and defendable cash generating business for big IT vendors and technology providers.
  • In synergy with other innovative technologies, such as AI, blockchain fosters the access to services both in the B2B and B2C scenarios. This also means penetration in new markets, with a particular attention to developing markets where lots of unbanked customers can be brought on board via new channels as mobile money accounts.
  • In addition blockchain is a base layer which enables further development and convergence in the latest technological innovation, like AI, IoT, Big Data and Cloud Computing.

Despite the high level of experimentation and hype, blockchain applications at production stage, and consequently a related global-scale market, are yet to emerge. Nevertheless, by looking at biggest initiatives we are able to frame the shape market is taking and outlook possible future directions. Maersk, the world's largest container shipping company, is near to adopt in its real business a blockchain solution, developed in collaboration with IBM that will track products along all the distribution chain. Following a massive E.coli contamination, Walmart pushed its lettuce suppliers to adopt Hyperledger Fabric tracking software. Beyond the hype, blockchain paradigm is taking roots leveraging these main drivers:

  • Incumbents with high bargaining power over vertical supply chains are able to force technology adoption horizontally, involving those actors which builds the value chain up.
  • Top IT players, like IBM, Oracle, SAP, Microsoft and AWS, are adopting open source technologies, adapting them to enterprise needs and facilitating the access, offering the possibility to easily develop an infrastructure on their cloud services.
  • Enterprises Network supporters are seeking for interactions with other blockchains, as expressed by Hyperledger and Enterprise Ethereum Alliance, with possibilities to link them also to public and permissionless ledgers.


Indeed, in such a widespread but fragmented adoption it’s hard to find a single killer Blockchain application. Rather, Blockchain vertical trials occur in all major industries. Since 2014, we have continuously monitored blockchain initiatives worldwide, developing an evaluation model in order to understand blockchain potential in every use cases. The model is based on the evaluation the following parameters, which drive the use case value and applicability:

  • INTEROPERABILITY. Indicates the degree of openness of the system towards new actors: the increase can be both relative to the number of actors and to the type of actors. For example, it can be thought that blockchain allows more banks to work with each other, but also enhances the interaction in a trustless manner with different actors, such as other companies and regulators. All participants in the network are equal to each other and do not need to put trust in a central actor. This derive mainly from the decentralization of both the register and the consensus on its state. Interaction is improved also thanks to transparency and automation, peculiar characteristics of blockchain technology.
  • SECURITY. For Security we mean the resistance to system attacks. On the one hand, these attacks can be the ledger manipulation and Denial of Service attacks attempting at making the service unavailable. Decentralization of consensus and ledger redundancy are essential to ensure security as they remove the single point of failure and guarantee immutability of data. Therefore, it becomes necessary to simultaneously attack multiple nodes and control an enormous amount of computational power, which becomes wasteful and / or unachievable the more the network is decentralized; this applies to both types of attacks. Furthermore, the widespread adoption of blockchain cryptographic standards guarantees the security and integrity of communications and transactions.
  • CERTIFICATION. By certification we mean the guarantee offered by blockchain technology on the consistency of data, ensuring that data registered in the ledger have not been modified and that they are truthful. Decentralized consensus remove doubts on what is the right state of the ledger with high transparency on data, directly accessible without the need of an intermediary that could alter them.
  • INNOVATION. The innovation factor reflects how much the scenario envisaged after the application of the technology is different from the current one. In fact, the service can remain almost the same, blockchain can improve efficiency in the process changing its logics and in terms of time and costs, or it can contribute to create a completely new service. The innovative aspects also depend on the level of trustless automation which removes central entities in terms of trust, dependence, and data accessibility.
  • EFFICIENCY. For efficiency we talk about reduction of operating times and costs with regards to the current scenario. This typically occurs with the support of process optimization and re-engineering.

In the provided framework, Reply run its model for every industry vertical by evaluating each use case against the reported parameters. Summing up parameter scores, it was possible to identify most robust use cases and thus more impacted industries. As a result, here below you can find which use case emerged as promising Blockchain applications:

In conclusion, we observe that with regards to the shortlisted use cases:

  • Use of Blockchain technologies for tracking and anti-counterfeiting purposes is a common practice across all the industries, with particular effectiveness in those scenario where risk at stake is higher such as high-value items, perishable goods and food.
  • Seek for decentralization results in peer-to-peer applications trying to substitute established businesses. This sometimes represents a downstream integration opportunity for some incumbents: think about P2P insurance applications directly provided by re-insurance companies.
  • Financial service providers led the adoption in a Gartner-like hype cycle. Nevertheless, many Proof-of-Concepts are in development in other industrial sectors like Energy and Healthcare.
  • Consortiums and regulatory sandboxes are the preferred environments to study and test blockchain applications, with wide and prominent initiatives in industries such as Automotive, Media & Entertainment and Telco.

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