A study conducted by the World Economic Forum and the Global Blockchain Business Council shows the reasons why the blockchain industry still lacks clearly defined standards on a global level.
The study, dubbed the Global Standards Mapping Initiative, notes that the gaps, differences, and overlaps in the standardization landscape of the blockchain industry are the biggest challenges the industry faces.
Most of the organizations involved in setting standards for the industry have shown great interest in one area and completely neglected the others. This creates an overlap in some areas of the blockchain industry while creating a gap in the standardization of the other parts.
The interest and volume of standard-setting activity has also changed with the hype surrounding the technology. Many organizations that set out to set standards during the height of the blockchain hype have either ceased operations or are yet to achieve reasonable results.
According to the report, security, Internet of Things, identity, DLT requirements and DLT terminology are among the top five areas where interests overlap.
While there is great interest in setting standards for DLT terminology, the study suggests that blockchain terminology remains uncertain around the world. Consistent definitions and terminology for the blockchain industry are key to growing the industry, the report says.
The study suggests that the blockchain industry still lacks the standards that could formally define the suitability of blockchain technology for certain processes. Setting global standards can help more players assess the potential of the technology for their company and understand the benefits and potential risks involved.
There are also no formal standards that define the procedure for testing blockchain platforms. Most of the innovations in the industry so far have come from industry actors and technical development rather than formalization and standardization, the report says.
Going forward, the report suggests that regulators should read up on the technology before setting national or global standards. The report mentions that “the effectiveness of standards ultimately depends on how well the technology is understood”.
Organizations and regulators performing isolated operations to set blockchain standards have also created a lot of confusion. The study emphasizes that breaking through these isolated organizations is critical and that geographic barriers “enable more functional frameworks”.