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Blockchain: Opportunities and Critical Points - an interview with IDC analyst Mohammed Hefny

September 5, 2018 by Ivana Slaharova

Blockchain: Opportunities and Critical Points

"Blockchain is often confused with the volatility and craziness of cryptocurrency, even among technology professionals and enthusiasts."

In January 2018, IDC published its first report sizing blockchain technology across various regions and industries. To understand current blockchain trends in Central and Eastern Europe (CEE), we spoke with Mohamed Hefny, systems and infrastructure solutions program manager with IDC.


Blockchain is a relatively new technology. Do you have a simple definition?

Securing records in a chain of blocks, as a concept, goes back more than 25 years. But it started to gain momentum with the implementation of cryptocurrency about 10 years ago.

IDC defines blockchain as a data store that represents a digital ledger of records, or blocks, that are cryptographically linked, or chained. The result is an immutable and sequential set of records that can be used to drive new business and efficiency.

To simplify, imagine buying a used item from eBay without the need for eBay to intermediate and take a cut from your purchase. Or transferring money abroad without the need for a bank to take a day or two validate, handle, and charge fees on the transaction. Imagine how much time and money this technology could save.


With so many disruptive technologies, is it blockchain's time now? What are the limitations?
In theory, the technology has no limitations except for network size and user integrity. However, its complexity is challenging. There are few standard solutions. For potential clients, it is like sailing into uncharted waters. The reliable tech giants are not there to help yet. Blockchain is also developing according to need in various domains, like a custom solution. Above all, there are no rules or regulations yet to organize the domain.


I often see blockchain associated with the finance and healthcare sectors. How do you see adoption progressing in other vertical markets?

The public sector is heavily encouraging and investing in the technology. In Poland, for example, the National Centre for Research and Development, the implementing agency of the Ministry of Science and Higher Education, created the Polish Accelerator of Blockchain Technology, a €2.8 million program to support blockchain projects for a range of public institutions, including ministries, public agencies, hospitals, and critical infrastructure companies.

Despite the lack of telecommunications use cases, telcos can certainly invest in the future by focusing on the security, identification, transaction, and other aspects of the technology, especially since sector players are major investors in cloud and the heaviest spenders on tech in the region.


Could we say blockchain is a universal solution that could be used for any product or service?

The way I see it, there are various solutions, including custom-designed and use-case specific. There is not yet a single platform that works passe-partout in all cases. Central and Eastern Europe is responsive to success stories, so I expect that when major banks in Western Europe adopt a specific blockchain solution, banks in our region will subsequently implement the same. I saw this happening with virtualization and cloud. But in this case, it would be sector-specific.


What about data on infrastructure-as-a-service (IaaS) providers. Is blockchain a part of their services?

Yes. Big players such as Amazon, IBM, and Microsoft are demonstrating how easy it is to build a distributed ledger platform on their clouds. Blockchain is not that easy, but industries like telecom and gaming, which serve millions of subscribers and extend their services to the cloud anyway, are certainly benefiting from IaaS. 


Will the enhanced security of blockchain translate into a competitive advantage? Or will such security become obligatory for any digital record?

Like any digital transformation technology, the biggest driver will come from the need to remain competitive. Blockchain is not only about security, it's also about transparency and eliminating mediators, which translates to cost effectiveness and higher return on investment for both vendors and end users. Those service providers that ignore the technology — and overlook fortifying, enhancing, and accelerating their services with it — will be left behind.


Do we already have some main blockchain vendor players in the CEE market?

Tech giants such as SAP and IBM are testing the water, especially the latter, with public- and finance-sector pilot projects. However, blockchain brings a huge opportunity to startups in the CEE region, where government support and advanced skills can offer a fertile ground for things to really happen. DX is about fast progress and agility — the tech giants’ size and legacy is not an advantage here! 


Is it still mostly hype? Or is blockchain something that is really being discussed and planned for use by large sections of the population?

Blockchain is often confused with the volatility and craziness of cryptocurrency, even among technology professionals and enthusiasts. This is related to the nature of trading and mining those currencies as a product, and not to blockchain as technology. Development and adoption levels for blockchain vary across the CEE region, from initiatives and discussion (such as how the technology can help to end child trafficking in Moldova), to successful tests and being on track for implementation (one of Poland’s largest banks is using the technology for its data storage system). Other real use cases include the central government voting application in Russia. One of the biggest banks in Poland is on track to implement a blockchain document management system. These examples are just the drops before the rain.


In 2016, Colombian expats used a digital platform powered by blockchain technology to validate and authenticate a plebiscite on a peace treaty. Will blockchain enable us to vote using our smartphones?

Yes, elections can be blockchain-based, developed by a local startup, in the local language and with locally relevant customization. The only obstacle would be the lack of political will and excessive bureaucracy.

This is not only applicable to presidential elections, but to any voting system that aims for transparency and security for shareholders, members of parliament, or citizens. This is the case with the city of Moscow, where blockchain was applied to the Active Citizen app-based portal, which is allowing the city's residents to vote on and audit the results of municipal projects.

This interview was conducted by Ivana Slaharova, IDC Senior Research Analyst, Customer Insights and Analysis, CEE.

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about idc

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company. To learn more about IDC, please visit www.idc.com.

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