By David Drake
Blockchain technology has been hailed as having the potential to revolutionize traditional business processes, especially in the supply chain management and finance sectors.
This is because the distributed ledger technology provides security, transparency and significantly reduces transaction costs compared to centralised systems.
These are the reasons why big companies such as IBM, Amazon, Royal Bank of Canada and Walmart have been exploring application of blockchain in their processes.
Blockchain technology has inspired development of innovative tech solutions by startups across sectors. Some of these include the peer to peer hedge trading and cryptocurrency exchange platform, BQT, web-mining monetization platform, Gath3r, mortgage lending and investing platform for mortgage backed securities, HFC Coin and the crypto coupon advertising marketplace, Qupon.
In the social circles, blockchain technology is powering family smart contracts on URAllowance, customer satisfaction in the e-commerce space on IOU and social interactions on ONe Network.
But, Forrester Research, a US-based market research firm has published a report that paints a gloomy picture on adoption of the technology in the US.
Titled “Predictions 2018: A Year of Reckoning”, the report shows that up to 90% of active blockchain initiatives will be abandoned by the end of the year. The research firm also points out that companies that have been working towards incorporating blockchain technology in their operations are downgrading on their ambitions and pulling back.
The report further projects that 90% of pilot blockchain processes will not be used by companies that initiated them in their operations, while a majority of such pilot projects will be put on hold in the US in the course of this year.
Factors to Consider
The statistics contained in the Forrester report indicate that businesses should consider certain factors before they decide to integrate blockchain technology in their operations to avoid forming part of the 90% statistic.
According to Reginald Ringgold, founder of BlockVest, businesses need to consider the risks to rewards involved in integrating blockchain technology before adopting it.
He says, “There are many business models where blockchain technology, although revolutionary, does not make sense. For instance a pizza parlor might have a hard time selling how integrating blockchain will improve their business operations. Next question is probably the most important. What are the risks and reward involved in integrating blockchain? How much will it cost to make your current systems interoperable with current blockchain technology? Then what will the business gain as a result of blockchain integration?”
On his part Aljaž Pogorelčnik, media consultant at BehaviourExchange, points out the need for businesses to determine whether the distributed ledger technology is an integral part of their operations to the extent that there is no other option.
He says, “On the other hand, many business models vitally depend on the technology. BehaviourExchange is a good example because the platform simply does not work without using blockchain for its user profiles. If distributed ledger technology is an integral part of your business, scaling down or abandoning it is not an option.”
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.