Ernst & Young Survey: Majority of Asia-Pacific Companies don’t Understand Blockchain

According to a survey conducted by Ernst & Young, nearly 70 percent of companies located in the Asia- Pacific region remain slow to adopt blockchain technology as its benefits are still misunderstood. The poll covered 576 respondents in the region as part of a blockchain-focused webcast that the firm conducted last month. As reported by South China Morning Post, July 17, 2019.

Growing Pains

Over the past few years, there has been a great deal of excitement around blockchain where most of the businesses are trying to figure out what it is, and how to leverage it in their operational procedures. In particular, at the end of 2018, the Asia-Pacific region had seen a significant growth thanks to the increase in the number of investments in blockchain-based companies. According to a report by Global Market Inside, by 2024, the market is estimated to be worth over $16 billion.

Blockchain is often associated with cryptocurrencies and are spreading very fast between retail investors as well as businesses. In fact, most of the trading volume generated by cryptocurrencies comes from this region as people can count on very popular exchanges such as BitThumb or Korbit. Furthermore, it is largely believed that blockchain technology can impact any sector including real estate, banking, healthcare, governance, and so on.

However, all this enthusiasm seems all hat and no cattle.

According to a recent survey by Ernst & Young, one of the largest professional services firms in the world, most companies in the Asia-Pacific region remain slow to adopt blockchain technology as they do not understand how reliable it is and which benefits it can bring to business.

The E&Y poll covered 576 respondents of which 68 percent declared that they have not adopted blockchain technology as there is lack of understanding on what blockchain does, and more importantly, what it does not do. The only country not to be taken into consideration within this study would be China. For all other countries, development is slowing compared to that of the western world.

According to the study, China’s blockchain spending is expected to reach $319 million, a figure that is still well below U.S. and Europe expenditures which sit at $1,1 billion and $674 million respectively, for a worldwide total $2,9 billion approximately. The funds mainly come from the financial sector, where the banking, securities investment services, and insurance industries combined will invest more than $1,1 billion this year.

Common Misunderstandings

One of the common problems of all companies when it comes to blockchain is decentralized architecture. Not having a central controlling authority is a truly important paradigm shift to accept. This is why companies often decide to opt for private blockchains, in which rules can be set up to restrict participants and transactions and where a central authority is needed.

Another feature that sparked interest across many industries is blockchain’s ability to effectively record and track information that can never be hacked or altered. But even this is a false myth. The reality is that no system is ever completely secure. Public blockchains can suffer from 51 percent attacks, a specific type of attack on a blockchain that aims to gain control over the network itself. Instead, using private blockchain is not very different than using centralized databases. As a matter of fact, the latter is often a more efficient solution compared with blockchain.

It is still unclear what the benefits of the blockchain may be, and despite the fact that numerous companies are trying to apply it in any sector, all the project are still in a proof-of-concept stage.