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Blockchain Will Test Investors’ Patience, Experts Say

Blockchain has issued many promises in the financial services space, vowing improved efficiency, heightened transparency and unmatched security. The debate continues over whether distributed ledger technology can fulfill those promises, but analysts today say that, whether these benefits are actualized or not, markets will have to be patient to find out.

FIS‘ SVP product strategy, Esther Pigg, recently told PYMNTS’ Karen Webster about this need for patience. As FIS conducts internal proofs of concepts and blockchain pilots, Pigg said, the true benefits of blockchain technology will only be discovered gradually. Change as a result of those benefits will happen even more gradually, she added.

Pigg isn’t the only one to acknowledge the importance of waiting in the blockchain world.

New research published Monday (June 4) from Cowen found that blockchain technology will take 5.9 years to gain significant traction. For financial services, analysts said it could be even longer – a quarter of a century – before widespread adoption occurs.

According to CNBC reports, Cowen’s report surveyed only 23 blockchain experts, asking them how long they believe it will take for blockchain to secure “widespread adoption.” More than a third (that is, about eight respondents), said it would take between five and 10 years.

Despite the small sample size, Cowen’s report isn’t an isolated demonstration of expectations for blockchain’s lengthy path to proliferation. The publication recalled remarks by Anoop Nannra, head of Cisco’s blockchain initiative, in an interview with CNBC last month.

“When you’re trying to drive a mindset shift, it’s almost a generational thing,” Nannra said.

Symbiont CEO Mark Smith told CNBC that the supply chain industry is likely to be the first “to really show the value of blockchain.”

But ZenCash cofounder Robert Viglione gave the publication a more tempered view of blockchain disruption.

“We haven’t disrupted a single industry yet with blockchain technology,” he said, “but the industries we are disrupting are going to respond.”

Dwight Klappich, an analyst at Gartner, offered similar expectations for blockchain’s impact on global supply chains in a recent video for SupplyChainDigest. According to the publication, Klappich said the largest barrier to widespread adoption will be “getting an entire supply chain ecosystem on board.”

“There is promise down the road, especially for supply chain finance,” the publication said, summarizing Klappich’s remarks, “but take a dose of some healthy skepticism for right now.”

“I want to be honest, I’m not against blockchain – in fact, I do see some real potential – but to be frank, not in some of the places that are being overhyped today,” Klappich told the publication.

Investors Undeterred

While experts caution that blockchain’s impact is likely years down the road, investors seem undeterred and willing to wait. This week, major funding rounds were announced for startups in the industry, including $65 million in Series B funding for Paxos, a blockchain settlement platform; $234 million in Series B funding for Hyperchain Technologies, an enterprise-grade blockchain platform; and a whopping $4 billion raised by Block.one.

According to CNBC reports this week, the investment in Block.one is particularly noteworthy, considering the firm – which raised funds via an initial coin offering of its digital coin, EOS – secured such massive support without a debut from its flagship product, a blockchain software system. The $4 billion raised over the course of a year is more than double the next-largest token sale, the publication said. Block.one has not revealed how it plans to use the funds.

The investments are only a fraction of funding for blockchain companies announced this week, making it clear that investors remain confident in blockchain’s potential to fulfill those lofty promises. Whether or not investors agree that it will take years, perhaps decades, for blockchain solutions to gain widespread traction, however, is unclear.

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