By David Drake
A report published by Forrester Research on blockchain in business shows that 90% of all blockchain initiatives across industries in the US will never reach fruition. The US-based market research firm predicts that 2018 will witness abandonment of many blockchain-based projects.
In fact, it notes that in some cases, they will never be integrated into the daily operations of most companies. Since blockchain got introduced globally, companies have sought to diversify their business endeavors by integrating the technology into their operations, or at least, that was the initial idea.
Over the last two years, blockchain technology has been used to develop innovative projects that solve real problems. For instance, URAllowance uses blockchain-based family smart contracts while IOU is using the technology to foster online customer satisfaction. At the same time, BQT is applying the technology in hedge fund and crypto trading while Gath3r is utilizing the technology in web-mining optimization.
But most companies that opted to use blockchain are yet to fully utilize the capabilities of this new technology to date. As a matter of fact, only 1% of companies have so far adopted the technology for use in operations, a whopping 80% have recorded lack of interest in blockchain in general.
At inception, blockchain was introduced to companies as a way of instituting a fool-proof digital ledger that would make it easier for companies to track customers, payments, and products. However, integrating the technology in operation has not been as easy as companies thought.
Though useful, implementing a whole new way of doing business creates a shift in company cultures and therefore, cannot be expected to happen overnight. Magnus Haglind, Senior VP at Nasdaq once said that “introducing new technologies requires broad collaboration with industry participants, and it all takes time.”
This single fact makes blockchain technology a no-no for some companies, especially those that just wanted in on the hype.
Not for All
Blockchain technology is not an ideal fit for every business. Before opting for this technology, businesses should undertake an internal evaluation to determine its suitability within their operational framework.
BlockVest CEO, Reginald Ringgold insists that businesses should interrogate their reasons for going the blockchain way.
He says, “First and foremost a business should ask itself whether it makes sense to integrate blockchain into its current business operations. Often, I find that businesses try to do an ICO or create a token for a crowdfund offering just for the purpose of raising capital or being relevant, not realizing that without proper due diligence and steps to ensure you’re operating with a culture of compliance, you could end up with more problems than a normal startup is faced with.”
The size of the company also should be considered when deciding whether or not to integrate blockchain technology. Currently, blockchain is unable to withstand voluminous transactions, which makes it less ideal for large corporations. It is also not dynamic enough to operate across industries at once. With so many companies showing interest, it is hard to formulate a concrete system that can manage them all.
Joseph Oreste, founder and CEO of Qupon notes that, “Confirmation times and transactions per second are two important factors. The rest really depends on what the business is trying to use it for.”
He further encourages businesses to evaluate the nature of their current ledger system before considering blockchain, weigh the risks and be cautious.
“Companies need to decide if a private ledger or a public ledger will do. The costs are much higher when a business is setting up a private system. It is very early in the evolution of decentralized technology – caution is prudent. But there are clear leaders in the space. Companies will have to weigh their own risk/reward metrics to determine whether they should adopt one of the leading solutions.”
No one wants to be the ‘guinea pig’ and risk losing. The best course of action is to analyze the business and determine its needs before buying into blockchain. Though the technology offers cost-cutting and time-saving measures, it is critical to exercise patience to avoid joining the 90% statistic of companies that will never utilize blockchain technology despite its projected benefits.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.