While blockchain technology has the potential to disrupt activities ranging from simple payments to the structure of a company as it currently exists, the technology still has major hurdles to overcome, according to Morningstar.
In its inaugural Blockchain Observer report, the research house explained that blockchain technology provides a way to decentralise three important economic functions: financial transactions, identity and data management, and marketplaces.
Decentralised solutions could therefore disrupt companies that create value by centralising these activities, Morningstar said - and the financial services sector currently abounds with companies that serve to centralise financial transaction activity.
However, blockchain technology is in its infancy, with major technical hurdles to overcome before reaching mainstream viability.
“Scalability and cost are primary concerns, as are privacy issues, despite the security inherent to encrypted, distributed ledgers. Decentralised control can exacerbate differences, slow progress, and lead to balkanisation,” Morningstar said.
“Ironically, private and permissioned blockchains might better balance the benefits of decentralised ledgers with those of centralised systems. In this case, the benefits of blockchain technology could accrue to incumbents or their customers.”
Morningstar identified some companies it believed are less vulnerable to the blockchain threat, which included American Express, TripAdvisor, and Facebook.