Even though there is more readiness to explore and adopt blockchain technology, some challenges must be addressed first. We have identified the key issues that are standing in the way of mass adoption of blockchain and ways to overcome them.
In 2019, corporate giants like IBM, Merck, Walmart & KPMG teamed up to pilot a drug supply chain blockchain project that was approved by the US Food and Drug Administration just a couple of days ago. The health and economic crisis caused by COVID-19 ravaged supply chains and drew the attention of the world’s renowned international organizations like the World Economic Forum to act on the possibilities the blockchain technology opens up for suppliers across the globe.
We do witness more readiness to incorporate blockchain in public services, supply chains, corporate departments but we also can’t ignore challenges that all stakeholders (from startups to governmental institutions to corporations) face that block the mass adoption of blockchain.
We have identified 6 challenges both larger companies and startup founders need to address in order to push the blockchain development agenda forward.
Blockchain startups have to take specific costs into consideration (smart contracts audit, meeting the legal requirements specific to each country of the EU) – it makes the funding process more complicated in comparison with other industries.
While Europe is home to a forward-thinking blockchain community and a booming startup ecosystem exploring various scenarios of blockchain adoption, the investment and incorporation levels are far behind those in the US and Asia.
However, slow and steady wins the race – investors and funds in Europe are gaining more experience in the blockchain industry allowing them to foresee the developments and supporting the success of startups. The projection is that in 3-5 years time, large tech players will be massively buying blockchain companies to implement in their core services, which signals it is the right time for investors and funds to collaborate with startups.
According to the survey conducted by Digital Systems & Technology in 2017, the main barriers are understanding blockchain and its possible use cases, assessing the cost-benefits of use cases, and letting the public and private innovation decision-makers be aware of the technology and its power to transform businesses and services. The lack of technical expertise is another major factor in stopping companies and public services from experimenting with the technology that could be very beneficial.
B-hub for Europe is a newly launched Horizon 2020 initiative that contributes to blockchain development. The program will accept blockchain technology startups into a ‘decentralized acceleration program’, training sessions will be available for SMEs and governments. Finally, participants will be matched to explore the real-world implementation of blockchain. To get early access to the launch of B-Hub’s program and participate, subscribe to the B-Hub’s dedicated newsletter.
For startups, technical expertise (39%) and business expertise (26%) are among the needs they most often mention. With blockchain, token models and ever-changing regulations to stay compliant require the ability to revamp business models. To get early access to the launch of B-Hub’s program and participate, subscribe to the B-Hub’s dedicated newsletter.
Let’s not forget about the traditional challenges larger companies and startups face when they collaborate – different mindsets, different specializations, different operational speeds.
97% of startups wish to collaborate with large industrial groups while corporates and the public sector actors also realize they have to modernize to keep up with the competition. This is where skilled matchmaking comes into play. The art of matchmaking is in seeing potential connections between companies that are essentially different from one another and making them realize that these differences are strengths rather than weaknesses – that allows for an open-minded collaboration that all stakeholders need.
Adoption is a minefield for both startups, corporations, and public services. Defining the right departmental fit, legal issues, the technical implementation is no easy task. Very often, the willingness to incorporate blockchain technology is there, but the strategy and expected results are not defined clearly.
Blockchain domain’s main challenge is to help potential customers perceive benefits related to the application and prove how the use of blockchain can make the difference in a business context allowing to gain competitive advantages. Blockchain startups can offer a wide range of opportunities to enhance public services and make them more cost-efficient. In the end, public actors will have no other option than to embrace blockchain technology to make their operations more efficient and transparent.
However, lack of awareness is accompanied by a great difficulty of public institutions to review, select, and adopt available solutions.
Producing scaleups is the ultimate goal of a startup ecosystem. In fact, because on average the top-performing 10% startups provide roughly 80% of gross revenue and job creation, scaleups production becomes the main goal of startup ecosystems. They create value by developing new solutions, but they also disrupt business models. That’s why blockchain startups face unique challenges.
Enhancing a startup’s capability to sell their technologies means supporting startups in shaping effective business models and KPIs to successfully engage with their customers and with potential sources of finance. According to the survey by Hello Tomorrow and BCG, the main challenges of startups are lengthy time-to-market (27%), high capital intensity (25%), technology risk and complexity (17%).
Finally, blockchain technology needs a community – it is much more effective if used globally rather than restricted to a small group of people with little transparency. Developing blockchain applications means making connections. To get the maximum benefit from blockchain systems, they must be able to scale to meet the needs of an ever-increasing number of participants with whom they are connected.
Cooperative partnerships between all stakeholders will be essential to sustain growth. Universities, the public sector, business angels, venture capitalists and corporates may have crucial roles to play in the development of deep-tech startups. Corporates – whether midsize, large, or enterprise-size companies – are the partners that can meet all startups’ needs, combining technical, industrial, and commercial visions and skills.
This blog is written by Evgeniya Panova, Head of Content and Communications at Connect Global. Some of you might already know Connect Global as a BerChain member and network of digital experts dedicated to producing a tangible impact on the global innovation market. Connect Global facilitates collaboration between public services, companies and startups for the blockchain development at the B-Hub for Europe project.