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Most organizations have not implemented blockchain Technology, but few are venturing into the development stage of projects and decentralized applications. There’s immeasurable hype and promise, backed by an intense amount of research and investment but few marketable or even consumer viable solutions. Skepticism is abound, with newly anointed blockchain and crypto experts emerging daily on LinkedIn. The lack of understanding, even at the leadership level around blockchain’s capacity and lack of maturity with CIOs, hampers implementation even though the pace seems to be accelerating.
Enterprise companies are dealing with real challenges and hard questions as they consider implementing Blockchain technology. Most importantly, the fundamental Blockchain technologies seem unproven and lack success in commercial adoption. Scalability and security may top the list, but organizations also are faced with issue of finding and retaining internal Blockchain knowledge and developer talent.
"With Blockchain technologies, there’s a hope and expectation for new capabilities alongside very real technical and implementation challenges"
As the enterprise overcomes these challenges and begin to adopt blockchain in an effort to remain relative and competitive in the marketplace, they face an immense business challenge. Blockchain and decentralized technologies create trustless transactions with unrivaled level of data robustness; they also remove the middlemen and third parties from processes. Blockchains have much slower and costlier transaction processing times and in some cases less data privacy than centralized platforms.
Enterprise organizations have to refocus to be able to effectively work with competitors, suppliers, and customers along the value chain. Most Blockchain use cases involve connecting and sharing databases and processes with all of these stakeholders. Companies have to present a true value proposition and convince these stakeholders to work together to use adopt Blockchain technology.
Most Enterprise companies also manage regulatory and brand risk, such as banking and healthcare. Both can benefit immensely, but the approach to adoption comes slowly at the mercy of regulation. Many of which operate conservatively when it comes to new technology, without factoring in the negative press around ICOs and cryptocurrency’s gold rush. In many of the enterprise use cases, there’s a critical and unresolved assumption of trust and accuracy in the data inputs and connections from the physical to the digital. If the data is incorrect, then the blockchain represents inaccurate information and its ability to insert data integrity and confidence in a system become worthless.
There is the reality that the growing Blockchain consortium cannot resolve these obstacles and the technology does not live up to its great expectations. Which was also true at one time for most emerging technologies. However, there is a great deal of a hope and expectation around Blockchain’s capabilities and we are truly at the very beginning of what is possible.
If an enterprise organization has decided to adopt blockchain technology, the implementation strategy must answer some imperative questions. Transaction speeds, scalability, security, and privacy top the list. The pursuit of a private or public permission model and how much do you engage the blockchain community. Enterprise organizations are currently adopting blockchain solutions on private networks, which have permissioned rather than public access to the blockchain platform. These private networks ease some concerns around data and transaction privacy.
Private networks may deliver a greater level of trust among the participants; the underlying blockchain’s consensus algorithm usually has a weaker ability to prevent malicious or fraudulent transactions. Well known public blockchains are more fault tolerant, a function of distributed networks that provides protection against up to 33 percent of the bad actors in the network. The trade-off for security from bad actors gives private networks greater speed and in some cases, negates the need for a blockchain platform when the parties assume trust between each other.
There are Enterprises currently piloting blockchain platforms that are more well-known development and implementation solutions. These include Microsoft Azure blockchain-as-a-Service offering, Hyperledger, and other DApp platforms. Many of these companies have either created or joined blockchain consortiums, which have become integral to the R&D ecosystem. These consortiums usually involve multiple Enterprise organizations, software development startups, blockchain educational organizations, and in some cases government agencies. The participants in a consortium can be competitors, but there is an understanding that by collaborating they will derive the technology and implementation standards and accelerate the efficacy of blockchain solutions.
There continues to be an acceleration of blockchain investment and proof-of-concepts. However, very few organizations have developed scalable technologies ready for production. There will be strategic investment and acquisitions as blockchain and its use cases become more consumer friendly and comprehended by industry leaders. This year will also verify whether 2017’s consortiums deliver on the hope and promise of the blockchain solutions.
With Blockchain technologies, there’s a hope and expectation for new capabilities alongside very real technical and implementation challenges that come with the technology’s young age and arguably premature state. As the experts leading the field address critical technical and implementation challenges, Enterprises will start to see production-level applications materialize in 2018 and 2019.