An EY Blockchain webcast revealed in a poll that 68% of participants in Asia-Pacific believe that lack of understanding and education on blockchain application is the greatest risk and challenge for boards and executives.
It also showed 66% of participants need better understanding of the possibilities, risks and benefits before thinking about applying blockchain to their organization.
The most commonly heard myth in Asia-Pacific is that “blockchain is a trust-less system and does not require a central authority” – based on a 46% polling result.
The second most commonly heard myth in Asia-Pacific is that “blockchain is not as ‘unhackable’as they say it is” – based on a 43% polling result.
During the EY blockchain webcast, Adam Gerrard, Partner, Ernst & Young LLP and EY Asia-Pacific Assurance Blockchain Leader stressed the importance of trust in blockchain application. Just like any software implementation, it is important to consider carefully the intended objectives of the blockchain solution, and then design processes and controls around blockchain. Trust is a key factor and current barrier for companies in Asia-Pacific. Understanding and education is required to build trust and confidence with aspects of a business.
Gerrard, commented: “A large part of building trust is understanding what blockchain does, and more importantly, what it does not do, and then implementing mechanisms to provide that trust.”
Alec Christie, Partner, Ernst & Young Australia and EY Asia-Pacific Digital Law Leader, added: “It will be important to include all of the business in this education processes, risk, in-house counsel, CFO, CEO, internal audit etc., so no one in the company gets left behind.”
Based on a 46% vote, the most commonly heard myth is that “blockchain is a trust-less system and does not require a central authority”.
Gerrard said, “Trust-less in this context means ‘not requiring trust’. This terminology has developed due to the distributed nature of public blockchains, which refers to the fact there is no central approving authority. For private blockchains, there is usually a central authority that controls the code and protocols. Let’s remember that blockchain is a technology, and the concept of ‘trust-less’ only applies within the blockchain. The term trustless is maybe not a ‘myth’, but it is certainly misunderstood.”
With a 43% vote, the second most commonly heard myth in Asia-Pacific is that “blockchain is not as ‘unhackable’ as they say it is”.
Dr. Jemma Green, Co-founder and Chairman of Power Ledger commented: “In proof-of-work consensus protocol, validation of transactions is done by the majority of the nodes on the network. 51% attacks occur when one entity gains control over 51% of the network hash-rate. This entity can now both prevent valid transactions from occurring as well as reverse already occurred transactions on the blockchain.”
Jimmy Ong, Partner, Ernst & Young Advisory Pte Ltd and EY Asia-Pacific Blockchain Leader, further commented: “‘immutable’ and ‘unhackable’ have been overused in the context of blockchain. They are not totally wrong, but they give people a wrong impression. Blockchain as a database stores data by linking it in blocks of transactions cryptographically to the previous block, making it extremely difficult for it to modified unilaterally. However, while the database may be ‘immutable’, the applications on top of it may not be. Blockchains will do for networks of companies and enterprise ecosystems, what an Enterprise Resource Planning (ERP) does for a single company.”
Gerrard concluded, “Blockchain can greatly improve many business processes. Before making investment decisions around blockchain, it is important to partner with the right advisors and to have a thorough understanding of (and necessary education around) the intended objectives of implementation – the risks, and of course the expected benefits.”