Disruptive Technologies – A 2021 Update
A ComTechAdvisory Report
Blockchain There are new blockchain initiatives announced almost daily, yet it doesn’t appear that many commercial applications that rely wholly on blockchain are yet in widespread use in the commodities industries. Further, and particularly over the last year, there have also been a growing number of more critical commentaries noting an apparently growing belief in the industry that blockchain has been over-hyped. In all, the jury is still well and truly out as to if and when blockchain will find its potential in energy and commodities. Despite this ongoing negativity toward additional investment in Blockchain, there has been no lack of initiatives, consortia and POCs announced many of which come to nothing. There are so many blockchain initiatives targeting energy and commodities that it is impossible to cover them all and so the narrative below uses examples and is not a definitive list. There are some notable blockchain efforts in the market like Vakt and Komgo that have resulted in at least some adoption in specific parts of the industry. However, when you press Vakt about blockchain, its role in their solution is suddenly diminished and is described as a just a small aspect of the entire solution. In fact, Blockchain appears to be less than 20% of the Vakt solution. As previously noted, Blockchain requires standardization and consortia (market agreement) to work and to be attractive to new players - two things that have historically not worked well in the commodities markets: 1. There have been many standardization attempts in the industry and none have really ever produced
what was intended, but rather ended up as a compromise between a standard and extensions or customizations. While there have been numerous calls for greater standardization in the industry, and with increased frequency, the fact remains that standardization often gets in the way of differentiation and the potential for competitive advantage in the industry. As a result, it is often given lip service and does not, in the end, result in little more than some type of standard reporting. However, as the industry seeks greater efficiencies and reduced costs via digitalization and automation, standards will need to emerge even if it means that the competitive and innovative side of the business, commodity trading (often where the true complexity is) remains non-standard. 2. While there are many industry bodies and affiliations, this has also been an industry in which working as consortia has not proven to be particularly successful either. This failure to reach agreement is primarily because the establishment of a blockchain platform really requires that each participant gives up some control to a ‘central authority.’ This is why most blockchain initiatives have depended on a consortia structure in which the overall solution is owned by an entity that is subsequently co-owned by the participants. Again, whether this model can really work in an industry that has mostly been cutthroat, highly secretive and competitive remains to be seen as the results of such efforts to date have fallen well short of their founding goals.
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