A length of security chain - Blockchain
Avoid Blockchain Pitfalls By Asking These Questions PHOTO: Shutterstock

The biggest challenge a company faces as it ponders a blockchain project is not the planning and implementation process, messy though it is. Rather, the number 1 issue is education about the technology, or lack thereof, says Nelson Petracek,  CTO of software integration company TIBCO,  and he illustrates his point with a story. 

A company approached Tibco with a project idea in which very large images would be stored in the blockchain network. Blockchain networks are not geared towards handling pictures of this size, according to Petracek, but that was not on this company’s radar. Rather, it was intent on being able to secure and prove the worth of a piece of digital content for its marketing operations. “A large problem in that space is around people using digital content that doesn’t belong to them,” Patracek said. “This company thought blockchain could address that part of it.”

As it turned out a solution was possible, it just required more work than the company originally expected. “We talked about them creating a hybrid model of on-chain and off-chain where the metadata was stored on-chain but the actual image would be stored off-chain,” Petracek said.

The Reality of Blockchain’s Early Days

Welcome to the reality of blockchain. The technology holds promise for the marketing industry and business in general — but these are still early days. Therefore it is only natural that early adopters are struggling through certain issues which are no-brainers in more traditional deployments, according to Adam Helfgott, CEO of MadHive. “It’s only hard because we’re so early. There’s no middleware yet — you’re dealing with the raw technology itself. You don’t have a UX on top of it or any kind of user experience," he says.

For these reasons, the technology can be difficult for organizations to understand, much less wade through, says Petracek, “You have the basic discussion of public vs. private vs. consortium vs. permission-based blockchains. Then, you have all the conversations around the various start-ups and protocols. And the company deploying the technology — it’s not writing everything from scratch — it is likely an established organization with databases, mainframes and existing applications.”

Blockchain Questions That Must Be Asked 

The upshot is that any company planning a blockchain initiative needs to know that more is involved than just the business case for the technology. There are technical and operational issues that must be considered as well. Petracek offered a few questions managers can ask to start these conversations.

  • How do you plan to get the data into the blockchain?
  • How are you going to synchronize what’s happening in the blockchain with the rest of your enterprise systems?
  • How do you extend your smart contract logic — the basis of most business-oriented blockchain projects — into your other business process logic?
  • How will you analyze the data?

The latter can be tricky, according to Petracek. “Let’s say you have supply chain data about moving perishables from a farmer’s field to the grocery store. How are you going to know what happened when and how long it took and how did each vendor perform?” he asks. In one sense the answer can seem simple, most blockchain platforms will expose an API that allows you to interact with the blockchain through code. Execution, though, is where the problems can pop up. As Petracek noted, you still need the APIs to integrate and interact with the legacy systems.

As businesses and vendors gain more experience with the technology, however, execution is getting easier. Blockchain can be an improvement over traditional data integration methods, says Mark Rakhmilevich, senior director of product management, Oracle Blockchain Cloud Service. “Often, data integration between systems of record (SORs) is driven by offline or batch reconciliation processes characterized by delays and manual exception handling,” he said. “Blockchain can help by using the cryptographically-secured consensus protocols that assure validation and agreement by all relevant parties, as well as real-time replication of data to each participant’s copy of the ledger,” he says.

Rakhmilevich also shares that it’s important for businesses to remember that not every data integration issue requires a blockchain. It’s important to keep in mind that not all solutions provide the enterprise-grade capabilities required to go from a POC to a pilot and production deployment, he added. Which begs another question.

  • Can the blockchain solution get assurance of backward compatibility when applying updates, and understand how integration options will impact the effort to run blockchain systems of record?

A Complex Implementation

Clearly much depends on the complexity of the blockchain, says Petracek. How can you tell if a project is complex or not? Ask yourself, or your project team, these questions

  • How many assets are you trying to record on the blockchain?
  • How many participants do you have?
  • What is the complexity of the smart contract?

"All of those things will come into play in an implementation," he says. Security is also an issue, Petracek continues, and certain blockchain technologies will allow you to partition the ledger — even partition the network itself — or otherwise provide controls over who can see the data. 

  • Who can see what part of the ledger?

Avoid Using Blockchain for Blockchain's Sake

Another issue — perhaps the issue — is that some companies are looking to use blockchain just for blockchain’s sake. “There’s no reason to use blockchain unless you are in the context of a network and you’re trying to create some sort of data efficiency,” Helfgott said. According to him, people think, "it’s new technology and it’s cool and I want to play with it," but you have to ask:

  • What is the value for us in using Blockchain?

That is the tenth question and perhaps the most important of them all.