Why it will take another decade for blockchain to become mainstream?

     Chris Skinner, a man with extensive experience in both banking and technology, chairs the Financial Services Club, which was created in 2004 to chart the future of companies serving the financial markets.

     I am often asked how soon the changes I have outlined will occur, and my answer is between 10 and 20 years.

     Basically, financial networks using blockchain and mobile phones on the Internet will take a decade before they become mainstream. Some people say, "That's still a ways off. Can we talk about something that's going to happen soon?"

     It’s an interesting reaction, and sure, we can talk about how the Apple Watch payment app doesn’t work properly or can’t do large transactions with digital wallet payment solution Chase Pay. I’m not talking about incremental innovation here, but foundational.

     The entire financial market is being rebuilt using a shared ledger, with seven billion people in the financial network via their phones. These are big ticket items. Another user of payments upstart Stripe is interesting, but it’s not a huge change. So why does this fundamental change take at least a decade? Because that’s how long it takes for any major change to become mainstream due to a “cascade effect”.

     The waterfall effect is just that: the cascade of fluid change from an idea to an implementation plan that becomes mainstream. And you have to remember that there are many players in this space right now.

Starting point

     It starts with a new technology, such as the blockchain shared ledger protocol.

     The technology was then built into some powerful things and new providers - Blockapps, Chain, Chainalysis, Case, Circle, Coinbase, ConsenSys, Epiphyte, Ethereum, Eris, LedgerX, R3CEV, Ripple, Symbiont, TradeBlock, etc., all of which were created to innovate and allow for the adoption of this technology.

     Incumbent technology vendors then begin their plans to onboard these new innovators and bring them into an architecture that works for their own banking customers.

     Some people say that today's technology companies are developing too slowly.

     In fact, some argue that the real problem is not with the banks’ legacy systems, but with their legacy vendors. Eventually, vendors will get it, adapt and incorporate the technology into their own frameworks and architectures.

Prime Time

     Finally, it's ready for prime time in banks.

     Then that’s another topic, because now banks have to adapt and adopt the frameworks and architectures of their incumbent providers and innovative startup partners. This takes time, and different banks move at different speeds, depending on the use case and their ability to change.

     Let’s say it takes about six years, which is how long it took for it to get a shared ledger, from Satoshi’s white paper to significant use cases being adopted by banks as proofs of concept (POC).

     There is still a long way to go from proof of concept to implementation and mainstream adoption, and in many cases the latter still takes 3-5 years. For the sake of argument, let’s say ten years from white paper to mainstream consolidation.

Consumer changes

     Now we are getting somewhere, but we are still successful because businesses and consumers have not been touched. Oftentimes, banks can innovate, sometimes even faster, but then their customers have to change. Companies will adapt and adopt a technology that will reduce costs and increase processing power, but it's a bit like the bank and its incumbent provider, the business still has the legacy system and the legacy provider, but they have to adapt and change.

     It will take five years before consumers finally have the service. But will they want it?

     According to many of my friends in banks, every time they update their banking app with new features and change interfaces, their Net Promoter Score (NPS) goes down. This is because 80% of customers don’t like change.

     Therefore, it takes a year or two for consumers to switch to the new cheaper and faster services.

Complete acceleration

     But the waterfall effect—new technology, startup developers, incumbent suppliers, major markets for adoption, customers of major market users, and finally customers’ consumers—means that any major technological change takes at least a decade and likely thirty years to become mainstream.

     After all, the mobile phone was invented in 1973, but it took nearly 30 years for it to become a mainstream device.

     We talk about how things move faster, applications go viral in seconds, but as soon as you modify the underlying architecture, things change, and that’s why breaking changes take decades.

     But once you make a change, everything in the underlying architecture changes at the speed of light.

     This is why it will take another decade before blockchain becomes mainstream as it changes the foundations, tracks, and paths of finance.

     This isn't a trivial thing, but it's like most apps.