Likely barriers to blockchain adoption in developed countries

by Lumai Mubanga

An earlier article looked at the most likely obstacles developing countries are most likely to contend with in adopting blockchain technology in their businesses and government operations. These included self-preservation, old habits die hard, infrastructure, and defining and launching the right products. While the last two factors are technical in nature, the first two are mainly due to attitude and lack of knowledge to fully appreciate the power of technology.

However, this does not mean that all developed countries will easily adopt blockchain as it becomes available. Studies show that blockchain is not an easy project to deploy. Hence, they too will and continue to face unique obstacles. The following paragraphs discuss these.

Cost of deployment

The cost of deploying and adopting blockchain technology is enormous. With estimated costs of as high as $200, 000.00 for deployment, many companies and institutions find the cost too high for a technology that is still undergoing development and study.

Absence of cost Reduction

The lack of direct cost reduction in the adoption of blockchain is another challenge for developed countries. Setting up infrastructure, human resources, training, and research as well as identifying workable use cases demands alot of investment. In comparison to current technologies, those costs could be more than the needed costs of maintaining current technologies.

Scalability issues

Another big challenge hovers around scalability. Think for a moment a company with operations in about 200 countries, with over a billion customers. You will need a scalable technology that will quickly process data as quickly as possible. Because some blockchain technologies are still in their infancy and have limited scalability challenges, adopting it for such large-scale deployment remains a big challenge. Until such a time when developers tackle scalability issues with some blockchain applications, many will prefer staring from the sidelines in a wait and see scenario.

Regulatory uncertainty

While regulatory requirements for centralized systems are straightforward and many institutions are already compliant, there are many uncertainties regarding decentralized systems and applications. As an example, there are many countries were bitcoin has not yet been adopted as an asset for value exchange. This has been largely due to regulators failing to formulate user-friendly regulations that could easily be adopted by the masses. Thus, the uncertainty of straight forward regulations in blockchain adoption has caused and will cause a lot more traditional financial institutions to be reluctant to get more involved because they don’t know how regulators will react.

Reluctant Managers

Like developing countries, developed countries too are expected to overcome attitude barriers depending on the type of managers available. Some managers know the risks involved in adopting and implementing new technologies. It is a risky project to pitch for blockchain to be implemented inside your organization when you are not too sure of its success. Very few are eager to adopt new technology because of lacking the technical knowhow. Anybody who has done any kind of deployment of new technology inside a financial institutions knows how difficult it is, and how risky it is, and if it goes wrong, normally somebody is fired. Like the “self-preservation” theory slapped on developing countries, it will take some time before companies take the courage to fully adopt and implement some types of blockchain technology.

Disclaimer: the views in this article are based on the writer’s opinions.