According to Gartner’s research and consultancy firm, interest in blockchain technology continues to be high, but there is still a significant gap between hype and market reality.
Only 11% of IOCs declared that they had implemented the blockchain, or started short-term planning, in 2019 CIO Agenda Survey, Gartner survey of over 3,000 CIOs.
This, the analysis company explains, may be due to the fact that most projects fail to pass the initial phase of experimentation.
Gartner points out that blockchain technology is currently slipping towards the Trough of Disillusionment in the company’s latest Hyper Cycle for Emerging Technologies. According to the analysis company, the platform and blockchain technology market is still under development and there is no consensus in the industry on key components such as product concept, feature sets and core application requirements. Gartner does not expect a single dominant platform to emerge within the next five years.
To successfully conduct a blockchain project, you need to understand the causes behind the errors. For this reason Gartner identified the list of the seven most common errors in blockchain projects and indicated how to avoid them.
Common errors in blockchain projects
1. Misunderstanding and Misuse
Gartner found that most projects are used exclusively to record blockchain platform data through decentralised ledger technology (DLT), ignoring key features such as decentralised consent, tokenization or smart contracts.
The DLT is a component of the blockchain, not the whole blockchain, Gartner points out. The fact that organizations so rarely use the complete blockchain feature set causes one to wonder if they even need this technology. It’s okay to start with DLT, Gartner points out, but the priority for IOC should be to clarify the use cases for the blockchain as a whole and move on to projects that also use other components of this technology.
2. Suppose the technology is ready for use in production
The blockchain platform market is huge and largely composed of fragmented offers that try to differentiate themselves in various ways. Some focus on confidentiality, others on tokenization, others on universal computing. Most are too immature for large-scale production.
However, according to Gartner, this will change in the coming years. IOCs should monitor the evolution of blockchain platform capabilities and align the timeline of their blockchain project accordingly.
3. Confuse protocol and business solution
Blockchain is a basic technology that can be used in a variety of sectors and scenarios, ranging from supply chain to management to medical information systems. It is not a complete application as it must also include features such as user interface, business logic, data persistence and interoperability mechanisms.
When it comes to blockchain, Gartner highlights, there is the implicit assumption that foundation-level technology is not far from a complete application solution. This is not the case, the analysis company stresses. It helps, consider blockchain as a protocol to perform a certain task within a complete application. No one would assume that a protocol could be the only basis for an entire e-commerce system or social network.
4. Blockchain as a database or storage mechanism
Blockchain technology has been designed to provide an authoritative, unchangeable and reliable record of events resulting from a dynamic collection of non-trusted parts. This design model pays a cost in database management capabilities.
In its current form, blockchain technology does not implement the complete model ….create, read, update, delete…..that is in conventional database management technology. Instead, just “create” and “read” are supported. Therefore, IOCs should assess the data management requirements of their blockchain project. A conventional data management solution could be the best option in some cases.
5. Assuming that interoperability standards exist
Although some blockchain platform vendors talk about interoperability with other blockchains, it is difficult to imagine interoperability when most platforms, and their underlying protocols, are still being designed or developed.
Organisations should consider vendors’ claims on interoperability as a marketing strategy. A strategy that is supposed to benefit the supplier’s competitive position, but will not necessarily benefit the end user organisation. According to Gartner, you never have to select a blockchain platform with the expectation that it will work with the technology of next year another supplier.
6. Suppose Smart Contract technology is ready
Smart contracts are perhaps the most powerful aspect of blockchain technologies. They add dynamic behavior to transactions. Conceptually, smart contracts may be understood as stored procedures that are associated with specific transaction records. But unlike a procedure stored in a centralized system, smart contracts are executed by all nodes in the peer-to-peer network, resulting in scalability and manageability problems that have not yet been fully solved.
Smart contract technology will still undergo significant changes. The IOCs should not yet plan to adopt them fully, but to carry out small experiments first. This blockchain area will continue to mature over the next two or three years, Gartner argues.
7. Ignoring governance problems
While governance issues in private or authorized blockchains are usually handled by the blockchain owner, the situation is different for public blockchains.
According to Gartner, public blockchain governance such as Ethereum and Bitcoin is mainly aimed at technical problems. Human behavior or motivations are rarely addressed. IOCs must be aware of the risk that blockchain governance issues may pose a problem for the success of their project. Especially should larger organisations think of joining consortia, or training them, to help define governance models for public blockchain.
More information is available on Gartner, at this link.