Interest in blockchain continues to be high, but there is still a significant gap between the hype and market reality. Gartner’s 2019 CIO Agenda Survey of more than 3,000 executives shows that only 11% of CIOs have deployed or are in short-term planning with blockchain. For Adrian Leow, senior research director at Gartner, the reason is simple: “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,” he said in a statement. So, what do you need to do to achieve success with a blockchain project?
“It’s no secret that blockchain and artificial intelligence (AI) are having a media moment. However, hype around blockchain is well established, perhaps to an even greater degree than AI. Over the past six months, there have been hundreds of different use cases identified for blockchain across the extended enterprise,” said Mark Morley, director of strategic product marketing for business network at OpenText.
Take, for example, manufacturing and supply chain space. IDC predicts that one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities — a version of AI — by the end of 2020; increasing cost efficiency by 10% and service performance by 5%. Taken together, blockchain, Internet of Things (IoT) and AI can completely revolutionize the process via the first truly “autonomous” supply chain.
Of all three technologies, blockchain as an enterprise workplace tool is probably the least exploited, largely as a result of its association with cryptocurrencies. However, to build a digital workplace, enterprises need a digital foundation in place whereby all information being exchanged with the external ecosystem is electronic in nature.
A global business network can provide such connectivity with a trading partner community and as a result, integrating blockchain along with AI will fold real-time tracking, forecasting, problem solving and record keeping into one unified system across the supply chain, said Morley.
John Wagster, co-chair of Frost Brown Todd’s blockchain practice group, pointed out that with the development of blockchain perhaps the most important mistake to avoid when launching is to go ahead without dependable financing.
Blockchain startups relying on the sale of a token to fund development need to make certain they abide by the issuance frameworks advocated by governmental and regulatory authorities. While the potential uses for blockchain technology are broad and deep, blockchain startups require the same planning, marketing and due diligence as any other new enterprise.
“The hype around blockchain, even if true, is no substitute for hard work and business acumen. Having an actionable idea is a good start, but blockchain startups still need skilled advisors, technology partners and often established strategic partners to succeed,” he said.
Blockchain Needs a Mission
Once the financing is secured, there are a few things that enterprises should start looking at. For starters, they should know why they are really doing the project, said Scott Carlson, head of blockchain security at Kudelski Security
Almost every company follows an architectural review process which talks about the technology, operational controls and business costs. Even if it isn’t a formal review, make sure to think how to sell the project and how to meet the normal enterprise needs even though this is new technology.
It’s important to note that as a new technology, it is very likely that CIOs won’t find tools to accomplish availability, monitoring and security control check boxes. It’s best to bring in an expert to help with these steps.
In sum, enterprises must know why are they undertaking the project, understand the actual costs and how to measure outcomes, understand what the risks for the project are and how to solve business/information security risks and understand the level of trust they are hoping to accomplish.
This generates some specific problems that enterprise leaders need to be aware of before launching a blockchain project. Michael Yuan, chief scientist of CyberMiles Foundation, outlined a number of mistakes blockchain developers or leaders may make when initiating a project:
1. Overestimating Blockchain
As a high-tech ledger system, blockchain has the potential to secure and drastically streamline transactions. However, though touted as a secure technology, it certainly is not without faults and isn’t always the most efficient, as each “node” (i.e. network computers or users) must process every transaction.
2. Underestimating Network-building Challenges
While Initial Coin Offerings (ICO) can help solve one of the biggest problems of network-building, cold start” most don’t have tens of millions of dollars to pour into the market to jumpstart it. We know that the real value of blockchain technology may lie in its ability to facilitate digital currencies, which can allow businesses to entice users and compete better against established industry players.
The Future for Blockchain Seems Bright
Despite the severe market lows of 2018, investment in blockchain has only been on the increase. Citing data from International Data Corp, Michael Mildenberger, CEO of seriesOne, predicts that the total corporate and government spending on blockchain should hit $2.9 billion this year, an increase of 89% over the previous year, and reach $12.4 billion by 2022.
With that said, its clear why entrepreneurs and startup founders haven’t been entirely discouraged by a slew of scandals, market lows, and heavy criticisms from mainstream thought leaders. Blockchain founders aren’t that much different from founders in other industries, but the pressure is certainly different for those in traditional industries. In order to stay afloat, blockchain leaders must ask themselves three key things:
Am I solving a real-world problem? Or am I adding an unnecessary blockchain layer to an existing solution?
Will integrating this technology be easier and of better value than existing solutions?
Does this project rely on interactivity with other blockchains?
“As the sector matures, players are constantly being reminded that a good idea alone won’t sustain a business. Strong fundamentals are still essential for long-term success, stability, and companies in the blockchain space are no exception to that rule,” he said.
Blockchain Companies Need To Do More
He’s not the only one that thinks blockchain companies need to do a bit more. Hassan Miah is co-founder of Robin8 a blockchain specialist that launched an Initial Coin Offerings (ICO). He advises organizations that are looking at blockchain for whatever reason to look for blockchain vendors that are developing it as a product in much the same way they would develop any other offering. Key to that is marketing. Companies that are developing blockchain projects should remember that: Blockchain is cutting edge technology so your branding should be too. The company should offer:
1. Easy to remember
- High-end, yet easy to follow website
- Quality Whitepaper with graphics
- Well branded social media
2. Differentiate Your Project
There are a ton of blockchain projects launching each week. Make sure you don’t have a project that uses Blockchain just for record keeping. Be truly innovative and solve a problem.
3. Simple Terms
Blockchain is like the internet back in the 90’s. It’s becoming very popular with buzz, but the mainstream still does not understand it. Use easy to understand marketing and tech language.
4. Building Your Community
Spend some time doing teaser marketing to build up your community before you launch. Partner with influencers to build credibility and word of mouth with your project.