A recent study by Gartner has shown that blockchain has reached the ‘peak of inflated expectations’ phase of the hype cycle as the chief architect of ACI Worldwide states that the distributed ledger technology is not yet able to handle financial transactions at scale.
The study by Gartner ‘Hype Cycle for Emerging Technologies, 2016,’ found that blockchain won’t reach mainstream adoption for another five to ten years.
According to Mike Walker, research director at Gartner, the Hype Cycle for Emerging Technologies report is the longest-running, providing an overview of what technologies are doing and where they are heading in the future.
In the report, he said:
The Hype Cycle for Emerging Technologies is unique among most Hype Cycles because it distills insights from more than 2,000 technologies into a succinct set of must-know emerging technologies and trends that will have the single greatest impact on an organization’s strategic planning.
Each Hype Cycle demonstrates five key phases in a technology’s life: technology trigger, peak of inflated expectations, trough of disillusionment, slope of enlightenment, and plateau of productivity.
Mike Walker added:
This Hype Cycle specifically focuses on the set of technologies that is showing promise in delivering a high degree of competitive advantage over the next five to ten years.
In last year’s Hype Cycle, cryptocurrencies and cryptocurrency exchange were listed further along the five stage phase in the trough of disillusionment; however, neither were mentioned in this year’s Hype Cycle.
Yet, with blockchain technology peaking it may come as a surprise that the technology is yet to be applied in any meaningful way.
A report published by Morgan Stanley in May found that with challenges facing the widespread adoption of blockchain use, practical applications of the technology will be slow.
The practical applications of the blockchain will take time—as well as regulatory blessings and long-term industry adoption—but clients and investors could benefit significantly, as would the financial industry itself, via streamlined and less costly operations, as well as better products and services for customers.
According to Roger Oliphant, chief architect of ACI Worldwide, another problem surrounds blockchain technology: it’s not currently able to handle financial transactions at scale.
He said to Bank Innovation that:
Large global banks have done tests, POCs, but they haven’t gone farther yet. It’s a waiting pattern, a holding pattern for the maturity of the technology to catch up.
Not only that, but Oliphant adds that the blockchain is too slow and says that the proof of work is too CPU-intensive.
If you need five nodes for consensus, the amount of time the CPU cycles – it can be 3, 4, 5, or 7 seconds for consensus.
Seven seconds in ACI’s opinion is too long and is a seeking a four, five or six-millisecond range.
Of course, as the development of blockchain technology continues the speed and just as important, it’s security, will need to be improved on before banks can realize its full potential.
Featured image from Shutterstock.
Last modified: May 21, 2020 10:17 AM UTC