The Blockchain market is in its infancy, and, according to Gartner there will be no dominant platform for the next five years. In fact only 11% of CIOs interviewed in 2019 CIO Agenda Survey, stated that they have already deployed or are planning to implement blockchain.
In its survey, Gartner identified 7 causes of failure of blockchain projects. Having those causes of failure in mind will result very useful if your company is considering to deploy that technology in the future. Here we summarize them for you.
1- Blockchain Technology is being misused or misunderstood
Gartner found out that this technology is commonly only used to record data on blockchain platforms with decentralized ledger technology (DLT) which is just one of the components of blockchain. Companies tend to don’t consider other key features such as smart contracts, tokenization or decentralized consensus. Thus, they are just using one part of blockchain and not the whole blockchain.
2- Companies assume that blockchain is ready for production use
Most blockchain platforms are immature for large scale production, their market is fragmented and they mostly differentiate each other on the base of their offer on tokenization, on confidentiality or on universal computing. Gartner points out that “... this will change within the next few years. CIOs should monitor the evolving capabilities of blockchain platforms and align their blockchain project timeline accordingly.”*
3- Confuse a protocol with a business solution
Blockchain is not a complete application, it is a foundation-level technology and as such it should be complemented with business logic, user interface, interoperability mechanisms and data persistence. Blockchain’s use is wide, it can be applied to supply chain, e-commerce, healthcare and other industries. However, this technology should be looked at as a protocol that can be used to perform a certain task within an application and not as a complete business solution.
4- View Blockchain just as a database or storage mechanism
According to Adrian Leow, senior research director at Gartner, traditional databases implement a “create, read update, delete” model whereas in its current form the blockchain technology only offers the “create” and “read options because it was designed to provide a record of immutable events coming from different untrusted parties. So if CIOs are thinking about a project that needs those three options they actually need a conventional database and not one based on blockchain.
5- Assume that there are interoperability standards
Most platforms and their protocols are still in their development stage, so it is difficult to predict whether different vendors’ technology will be able to interoperate.
6- Assume that smart contracts are solved problems
Gartner states that “Conceptually, smart contracts can be understood as stored procedures that are associated with specific transaction records. All nodes in a peer-to-peer network execute smart contracts, generating challenges in manageability and scalability which we still need to fully overcome today. According to Gartner, the smart contract technology will continue to mature in the next three years.
7- Ignore governance issues
In private blockchains, governance issues are addressed by its owners but in Ethereum or Bitcoin the situation is quite different because there, governance is aimed at technical issues. Gartner says CIOs should have in mind risks associated with public blockchains to assure the success of their project.
Have you already deployed your blockchain project? Did you find any of these issues? If you are thinking of starting your blockchain project and have any questions, contact us!