If blockchain is such a good idea, why hasn’t the enterprise IT industry already put it to work at scale? As it turns out, the reasons behind blockchain’s slow rate of adoption are as complex and multifaceted as blockchain itself. Here are some ideas on how to speed adoption.
Blockchain has been in the news recently with a number of notable players announcing the creation of advantageous partnerships, industry-savvy consortiums, and operationalised use cases.
In the last week, systems integration powerhouse Accenture announced an innovative mechanism to connect disparate blockchain platforms, while IBM together with Telefónica announced a joint effort to use blockchain to streamline international call routing operations. Both investment and positive speculation remain at an all-time high for blockchain.
Despite this continued, ravenous vendor investment, just how far has the enterprise IT industry come in putting blockchain to work in the service of actual business? Are customers that much further along the maturation curve from those early days when blockchain was inexorably tied to the volatile and highly speculative pipe dream that is cryptocurrency?
Unfortunately, it has not progressed as hoped. For example, one of the largest and most well-respected blockchain platforms, Ethereum, maxed out at 1.3 million transactions per day this January. Compare that with the PayPal platform, which currently supports more than 2 million consumer and professional transactions per day. If only in terms of scale, blockchain has plenty of room to grow if even to support the needs of one individual ecosystem like PayPal.
Key problem and opportunity with blockchain
In a way, the root of the problem rests in the beauty of blockchain itself. As Richard Dawkins so elegantly put it, “The solution often turns out more beautiful than the puzzle.” And that’s exactly how things are with blockchain.
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The idea of a decentralised network of immutable, trusted transactions sounds quite elegant, something that might change the way consumers buy lettuce, go to the doctor, or do their taxes. As Ethereum co-founder Joseph Lubin discussed recently, blockchain should be considered downright revolutionary, allowing us to move from a mentality of scarcity to that of abundance.
Such lofty pronouncements aside, within enterprise IT, the perceived benefits of blockchain are not so erudite. It is not as easily realised as its purported value.
Employing blockchain for even the most rudimentary tasks is no small matter, both in consideration and execution. Even if customers are simply plugging into an existing blockchain, there are a myriad of technological, business, and legal hurdles to clear before injecting that first transaction. Clearly, blockchain success is a multi-vendor, multi-month, multi-skill endeavour.
How could more businesses start using blockchain?
So, what’s the answer? Simplicity? Certainly, but that’s just one tiny piece of the puzzle. Blockchain (including its proponents, providers, and practitioners) will need to band together to address a number of challenges before blockchain can successfully enter the mainstream IT landscape.
Here are a few ideas on how the IT technology marketplace can make blockchain much more of a mainstream venture.
Reclaim the mantle of security: First and foremost, blockchain needs to find a way to distance itself from perceived security issues, which stemmed from several historic, high profile Bitcoin thefts. Those thefts, however, were not tied to the Bitcoin itself but rather to the storage of bitcoins on regular IT infrastructures.
No more crypto: Blockchain needs to distance itself from the strange and volatile world of cryptocurrency itself – that includes blockchain-based games (i.e., CryptoKitties) and highly speculative schemes like Kodak’s KODAKOne image rights management platform.
Architect for interoperability: This notion must dominate the discussion among blockchain platform providers. So far, efforts have focused on a technology-agnostic stance, supporting multiple blockchain implementations side by side. What remains is for vendors to build transaction-level points of integration between those implementations.
Power up please: Because each peer-to-peer node on a blockchain must process every single transaction, performance at scale remains a challenge for blockchain sellers. This is a huge challenge that platforms providers like Ethereum are actively addressing with ideas like sharding, where only select nodes process every transaction. Thankfully, this foundation work is nearing active deployment with several tests underway.
Put AI to work: Very briefly, AI needs to play an active and foundational role within blockchain implementations, speeding up transactions and traffic routing, while staving off or at least mitigating cyber attacks.
Dive into digital transformation: Lastly and most importantly, blockchain needs to become part and parcel to the Internet of Things (IoT) and to ideas like digital transformation in general. There are innumerable benefits to be had in bringing the two together. As an example, IBM is working on a plan that would use blockchain to virtual IoT deployments, allowing disparate collections of devices to be managed as a single, geographically distributed IoT network. This would not only simplify management practices but also heighten (dramatically) security across the entire IoT implementation.