Jumping onto the blockchain bandwagon? Avoid these mistakes
BLOCKCHAIN technology is incredibly exciting with new and emerging commercial applications passing the proof of concept stage every month.
Although there’s a good chance that today’s blockchain projects will need to be tweaked in the future when there’s more standardization, companies can’t afford to stay away. They need to explore what it offers and find ways to leverage it to disrupt their industry and delight customers.
What’s keeping a lot of businesses on the fence is their fear of failure.
According to Gartner, it’s necessary to understand the root causes for failure in order to be able to avoid them and charge ahead to success with blockchain projects. Here are some common mistakes that businesses make:
# 1 | Misunderstanding blockchain technology
“DLT is a component of blockchain, not the whole blockchain. The fact that organizations are so infrequently using the complete set of blockchain features prompts the question of whether they even need blockchain,” said Gartner Senior Research Director Adrian Leow.
Gartner has observed that the majority of blockchain projects are solely used for recording data on blockchain platforms via decentralized ledger technology (DLT), ignoring key features such as decentralized consensus, tokenization or smart contracts.
“It is fine to start with DLT, but the priority for CIOs should be to clarify the use cases for blockchain as a whole and move into projects that also utilize other blockchain components.”
# 2 | Assuming blockchain is ready for production use
Blockchain is an interesting technology and has several key features that allow it to transform business operations.
However, unlike artificial intelligence (AI) and the internet of things (IoT), the technology has a long way to go before it can be scaled beyond the proof of concept phase, especially where use cases expect industry-wide adoption.
Although the technology is making quick progress in the supply chain and financial services industries, Gartner advises CIOs to continue monitoring the evolving capabilities of blockchain platforms and align their blockchain project timeline accordingly.
# 3 | Viewing blockchain as a database or storage mechanism
Blockchain technology was designed to provide an authoritative, immutable, trusted record of events arising out of a dynamic collection of untrusted parties.
This design model comes at the price of database management capabilities.
In its current form, Gartner points out that blockchain technology does not implement the full “create, read, update, delete” model that is found in conventional database management technology. Instead, only “create” and “read” are supported.
“CIOs should assess the data management requirements of their blockchain project. A conventional data management solution might be the better option in some cases,” Leow said.
# 4 | Assuming that interoperability standards exist
Regardless of what vendors in the market claim, interoperability of blockchain platforms in the way that was initially envisioned is yet to hit the market.
Gartner points out that it is difficult to envision interoperability when most platforms and their underlying protocols are still being designed or developed.
The think tank believes organizations must view vendor discussions regarding interoperability as a marketing strategy.
It is supposed to benefit the supplier’s competitive standing but will not necessarily deliver benefits to the end-user organization.
“Never select a blockchain platform with the expectation that it will interoperate with next year’s technology from a different vendor,” Leow advised.
# 5 | Ignoring governance issues
“Governance in public blockchains such as Ethereum and Bitcoin is mostly aimed at technical issues. Human behaviors or motivation are rarely addressed,” explained Gartner’s Leow.
“CIOs must be aware of the risk that blockchain governance issues might pose for the success of their project. Especially larger organizations should think about joining or forming consortia to help define governance models for the public blockchain.”
Ignoring governance is quite a substantial issue — although, truth be told, it’s not going to have an immediate impact on businesses. They’ll feel its impact only when they scale up projects across the enterprise, in the future.
- New Zealand to echo Australia on law for news content by tech giants?
- Will economic uncertainties affect tech spending in 2023?
- Heading to the new year with a robust setup for resiliency
- Found in 150 countries, ransomware to cost victims US$265 billion by 2031
- Cloud computing in 2023: Data grows greener, faster and more local