By David Drake
Forrester, a market research firm has forecasted a grim future for blockchain. In a report released recently, the firm estimates that up to 90% of active blockchain projects will either be put on hold or abandoned altogether. The report, further states that adoption of distributed ledger technology in businesses has reduced drastically in the United States.
Though these market predictions may not sound encouraging for the nascent blockchain and crypto market, market players see them as positive signs of market growth, where hype is differentiated from reality. According to Aljaž Pogorelčnik, media consultant at Behaviour Exchange, the predictions are results of simple market logic where too much hype has been used as a marketing tool.
He says, “The way we see it is that many of the so-called blockchain projects – wanting to jump on the hype train – tried to create an artificial need for blockchain in their business models and, of course, will fail to come up with something useful. While distributed ledger technology is indeed a very useful tool, one sometimes can’t help but feel that the word ‘blockchain’ in the business plans of certain startups is akin to a ‘Gluten free’ certificate on a bottle of water: a transparent marketing trick.”
According to Martha Bennett, Principal Analyst at Forrester Research, businesses need to consider three key factors when integrating blockchain technology into their operations to avoid pitfalls.
The first is research and development. For blockchain-based networks to flourish, there is a need to reinvent entire business processes and determine how public-sector organizations should function. This means that companies should consider it critical to invest more in research and development of blockchain and distributed ledger technology.
Direct benefits to the business should also be evaluated. Businesses should assess the benefits of the technology against their set business benefit standards. They should evaluate technological advantages in relation to accruing business benefits, and drop the technology where advantages are minimal.
The potential for long-term transformation needs to be considered to ensure that investments are made in projects that are reliable, scalable, and offer wide-reaching solutions. Agreeing with these points, John Hoelzer, the CEO and founder of ONe Network adds that companies also need to consider speed and privacy before opting for blockchain.
He says, “There are a lot of decisions to be made when an existing business is looking at using blockchain technology for their business and sector. These include privacy, scalability, speed, and immutability of the blockchain they choose.”
Despite the gloomy prediction, all is not lost for blockchain and distributed ledger technology. Industry experts see this as a passing phase in market development that will pave way for the flourishing of genuine and valuable projects.
Already, viable projects are being developed on the blockchain. They include family smart contracts project, URAllowance, hedge fund trading platform, BQT, digital asset portfolio management platform, BlockVest, online customer satisfaction platform, IOU, and mortgage lending and investing platform for mortgage backed securities, HFC Coin.
Varun Mayya, CEO of Avalon Labs, says, “We feel like the initial enthusiasm around blockchain has died down, which is a good thing. Folks were tokenizing pretty much everything. The good news is that good projects will continue to survive and authentic ones will continue to reap the benefits of both blockchain and smart contracts. We see internal company private ledgers to be the next big thing.”
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.