Crypto enthusiasts and blockchain companies are displeased with McKinsey after the company published a not-so-great report on blockchain technology. The American-based financial management consultant claimed that the technology has yet to become the game-changer some expected.
McKinsey changes stance on blockchain technology
McKinsey was previously an advocate of blockchain technology, with the company urging people to ignore the challenges of Bitcoin. The firm predicted that the technology had the potential to alter the capital markets industry, and was set to improve business models by reducing risk and saving cost.
In its latest report, the consultancy firm had advised companies only to make use of the technology if there is a real world use for it. Companies were urged to ensure that their problems cannot be solved by more proven conventional technology, such as a database before delving into blockchain.
The authors of the report, Matt Higginson, Marie-Claude Nadeau, and Kausik Rajgopal stated that “A particular concern, given the amount of money and time spent, is that little of substance has been achieved. Of the many use cases, a large number are still at the idea stage, while others are in development but with no output.”
They explained that blockchain has found it hard to progress due to the emergence of competing technologies. In the payment sector, for example, the report pointed out that many fintechs are disrupting the value chain. SWIFT’s global payments innovation initiative (GPI) is tackling initial pain points via higher transaction speeds and increased transparency. The collaboration of SWIFT with most banks have presented stiff competition for payment blockchains.
“Despite billions of dollars of investment, and nearly as many headlines, evidence for a practical, scalable use for blockchain is thin on the ground,” the report added. The report noted that McKinsey has worked with financial services leaders over the past few years, and has begun to notice doubts regarding blockchain. As other industries are venturing into the blockchain territory, some financial service companies have become more cautious towards the technology.
The report cast doubt on the future of blockchain technology. By 2020, there will be over 20 billion connected devices by 2020, all of which will require management, storage, and retrieval of data. The authors believe that blockchain technologies used now are ineffective data receptacles, and might not be able to handle many transactions simultaneously.
The authors pointed out that despite the stalled growth, a few positives have been recorded in the industry. The development of new protocols and partnership between firms are positives for the blockchain sector.
Crypto enthusiasts disagree with the report
The report didn’t go down well with cryptocurrency enthusiasts, with some claiming that McKinsey doesn’t fully understand the sector. Glenn Gow expressed his thoughts in a tweet.
McKinsey is confused about the reasons blockchain isn't ramping that quickly. Their main reasons are related to ALL digital transformation projects, not just blockchain. #blockchain #digitaltransformation #technology #technologyadoption https://t.co/9JWc1xeWYy
— Glenn Gow (@glenngow1) January 14, 2019
Paul Bessems also tweeted on the topic.
In most (corporate) use cases (the world of McKinsey) blockchain is not used for what it was designed for. It would have surprised me if more cases had been successfully https://t.co/wRePodvKol via #Weconomics pic.twitter.com/rWzu0PTmQL
— Paul Bessems (@paulbessems) January 14, 2019
Cryptocurrency enthusiasts believe that good time lies ahead for the technology despite the slow progress.