Tech Transformers

Blockchain technology being considered by more than half of big corporations, according to study

Key Points
  • Blockchain (distributed ledger technology) is being considered by more than half of the world's big corporations, according to research
  • Two thirds of firms say they expect the technology to be integrated into their systems by the end of 2018
  • Companies should consider alternatives before diving straight into blockchain, the author of the research said
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More than half of the world's large corporations are looking into blockchain (distributed ledger technology), according to a study by U.K. research firm Juniper Research.

The research, released on Monday, found that 57 percent of large corporations – defined as any company with more than 20,000 employees – were either actively considering or in the process of deploying blockchain.

And two-thirds of companies surveyed by Juniper said that they expected the technology to be integrated into their systems by the end of 2018.

"It is clear that companies across the board have a significantly greater understanding of blockchain technology than was the case 12 months ago," the report said.

"This stems in part from a surge in R&D (research and development) both internally and in partnership with third parties, with a recognition that blockchain has the potential to be deployed in a variety of use cases."

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The report added: "As the number of research projects has increased, so too has awareness, both amongst the participants and elsewhere in their industries, with competitor companies in turn beginning to consider whether they too should seek to gain competitive advantage from deployment."

"For financial technology (fintech) start-ups in the blockchain space, this can only be good news, since it demonstrates the high level of demand within an enterprise space that is increasingly well-informed about blockchain," Windsor Holden, blockchain specialist at Juniper, told CNBC via email.

The blockchain specialist added that the digital element of distributed ledger technology, which is processed by a network of computers, could benefit industries other than the financial services as well.

Holden said: "Essentially, blockchain offers particular benefits to improve efficiency and corporate transparency; if an enterprise is heavily dependent upon paper-based storage and has high volumes of transactions or transmitted information, it can be especially effective."

What is blockchain?

Blockchain is a form of distributed ledger technology (DLT). This means that it maintains records of all virtual currency transactions on a distributed network of computers, but has no central ledger.

The original blockchain network was created by bitcoin-founder Satoshi Nakamoto to serve as the public ledger for all bitcoin transactions.

In June, tech giant IBM was selected to build a blockchain-based international trading system for seven of the world's biggest banks, including Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit.

It signaled for big financial institutions.

Firms should consider alternatives

The research by Juniper also warned against using blockchain technology without first considering other alternatives.

"In many cases, systemic change, rather than technological, might be a better and cheaper solution than blockchain, which could potentially cause significant internal and external disruption," Juniper's Holden wrote.

The research found that some companies underestimated the scale of challenge of deploying blockchain.

Survey respondents indicated progressive concern as their companies came closer towards full deployment. Concerns were also raised over clients refusing to embrace the technology.