Blockchain, and the cryptocurrencies that these digital ledgers underpin, have seemingly become less popular of late on the commercial front, but they are still hold value for many organisations and CIOs in particular.
Curiously though, the bast majority of blockchain projects that a CIO may try to develop for their business fail to get out of the experimentation phase. In fact research firm Gartner recently ran the numbers for blockchain in their 2019 CIO Agenda Survey, and 11 percent of the 3 000 respondents noted their failings.
According to Adrian Leow, senior researcher director at Gartner, blockchain currently finds itself in a bit of a rudderless state, with its potential seemingly left untapped.
“Blockchain is currently sliding down toward the Trough of Disillusionment in Gartner’s latest ‘Hype Cycle for Emerging Technologies,’ The blockchain platforms and technologies market is still nascent and there is no industry consensus on key components such as product concept, feature set and core application requirements. We do not expect that there will be a single dominant platform within the next five years,” explains Leow.
The mistakes you need to avoid
In order to get a blockchain project up and running, he has highlighted seven key mistakes that are often made by CIOs.
The first mistake is a simple misunderstanding of blockchain in Leow’s view, with the decentralised ledger technology (DLT) the only aspect of blockchain that is being implemented in an organisational setup.
“DLT is a component of blockchain, not the whole blockchain. The fact that organisations are so infrequently using the complete set of blockchain features prompts the question of whether they even need blockchain. It is fine to start with DLT, but the priority for CIOs should be to clarify the use cases for blockchain as a whole and move into projects that also utilise other blockchain components,” he points out.
Next is assuming blockchain is ready for production use.
The blockchain platform market is huge and largely composed of fragmented offerings that try to differentiate themselves in various ways. Some aspects focus on confidentiality, some on tokenisation, others on universal computing, but most are too immature for large-scale production work that comes with the accompanying and requisite systems, security and network management services.
“This will change within the next few years. CIOs should monitor the evolving capabilities of blockchain platforms and align their blockchain project timeline accordingly,” advises the Gartner exec.
The third mistake worth avoiding is confusing a protocol with a business solution.
“When it comes to blockchain, there is the implicit assumption that the foundation-level technology is not far removed from a complete application solution. This is not the case. It helps to view blockchain as a protocol to perform a certain task within a full application. No one would assume a protocol can be the sole base for a whole e-commerce system or a social network,” adds Leow.
The next mistake is linked closely to the previous one, especially as blockchain is viewed purely as a database or storage mechanism.
This is incorrect in Leow’s opinion, with it being designed to provide an authoritative, immutable, trusted record of events arising out of a dynamic collection of untrusted parties.
“In its current form, blockchain technology does not implement the full ‘create, read update, delete’ model that is found in conventional database management technology. Instead, only ‘create’ and ‘read’ are supported. CIOs should assess the data management requirement of their blockchain project,” he advises.
The fifth mistake also hinges upon assumption, particular when it comes to thinking that inoperability standards exist.
While some vendors of blockchain technology platforms talk about interoperability with other blockchains, it is difficult to envision interoperability when most platforms and their underlying protocols are still being designed or developed.
“Organisations should view vendor discussions regarding interoperability as a marketing strategy. It is supposed to benefit the supplier’s competitive standing but will not necessarily deliver benefits to the end-user organisation,” warns Leow.
The sixth mistake pertains to one of the most powerful blockchain-enabled technologies – smart contracts. According to Leow smart contract technology is not a solved problem.
“Conceptually, smart contracts can be understood as stored procedures that are associated with specific transaction records. But unlike a stored procedure in a centralised system, smart contracts are executed by all nodes in the peer-to-peer network, resulting in challenges in scalability and manageability that haven’t been fully addressed yet,” he explains.
“Smart contract technology will still undergo significant changes. CIOs should not plan for full adoption yet but run small experiments first,” adds Leow.
The final mistake that CIOs should avoid lies with ignoring governance issues, as the Gartner research director notes that such issues are different when dealing with public blockchains.
“Governance in public blockchains such as Ethereum and Bitcoin is mostly aimed at technical issues. Human behaviours or motivation are rarely addressed. CIOs must be aware of the risk that blockchain governance issues might pose for the success of their project. Especially larger organisations should think about joining or forming consortia to help define governance models for the public blockchain,” he concludes.[Image – Photo by Clint Adair on Unsplash]