As blockchain evolves and moves closer to the mainstream in the enterprise technology stack, the obstacles to that development are increasingly clear. So while respondents to the Deloitte 2019 Global Blockchain Survey remain optimistic about blockchain and its use cases, that optimism is tempered by the work of early adopters who have, after applying it to numerous different cases, identified its limitations.
Blockchain has been around for a decade now and has become strongly identified with bitcoin specifically and cryptocurrency in general. In these circumstances, the report explains, early users found it difficult to identify other use cases for it, which is also true of early disruptors in the space. The report reads:
“While emerging disruptors remain nimble, our research suggests that they, like the larger enterprise respondents, are approaching blockchain with caution. Despite the innovative vitality that emerging disruptors bring to the blockchain world, they, too, reveal a measure of skepticism, with nearly 20% saying blockchain is overhyped, a figure comparable to enterprise respondents.”
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Blockchain: Proceed With Caution
So even as blockchain is moving towards the mainstream, those who embrace it do so cautiously as they continue to receive pushback from pockets of resistance within their organizations. Agnelo Marques, VP technology and head of blockchain for Mphasis, said there are “many barriers” to adoption, and specifically cited one area which echoed Deloitte's findings: regulation. Marques sees the hesitation of governments, central banks and regulators to accept crypto specifically as a barrier to its growth.
The emerging disruptors in Deloitte's report overwhelmingly (71%) cited regulatory issues as the greatest barrier to blockchain adoption in the enterprise, raising questions of what future rules may hinder the growth of broader uses of blockchain.
Marques said because of difficulties with blockchain for specific industries, several types of blockchains will exist for their own applicability. Enterprises mostly will end up using a consortia-based blockchain, which is private to the consortium, but because of its scale can be termed as a semi-public network of related members.
Interbank payment and operations networks, trade finance for global trade and counterfeit applications using blockchain are examples of consortium blockchains. Some enterprises for specific use cases among a smaller number of B2B partners may end up using private blockchain or large global MNCs would chose to use private blockchains for specific interbranch use cases, take for example a reconciliation use case.
“It is important to note that several governments have taken note of this new technology, a majority of the use cases when considering public services qualify well for the use of public blockchains with appropriate levels of security and access control,” he said.
One area of divergence the Deloitte study found was on the area of security, with 71% of enterprises in general believing blockchain offers greater security levels than traditional IT solutions, while only 48% of the emerging disruptors saying the same.
Related Article: Will Blockchain Disrupt ECM or Is It Just a Lot of Hype?
Blockchain’s Data Problem
Blockchain also has a data problem, according to Brian Platz, co-founder and co-CEO of Fluree. Blockchain has promised a bevy of enterprise benefits, but project managers are finding they have to address the key issue of data and data management before they can deploy blockchain solutions in mission-critical applications, he said.
Public blockchains are optimized and designed for very simple asset transfer, which requires minimal data management needs. But when you retrofit that same simplistic ledger format to enterprise applications, metadata becomes challenging to store, query and manage on-chain in existing legacy systems, he continued.
As most blockchains connect through the business logic tier of the application stack, project managers have realized they still need to push blockchain-related data and metadata to a centralized, static database system. The lack of complete data storage on-chain leads to an integration layer that is unnecessary, and therefore blockchain is forced into a stack that rejects it.
Tendü Yogurtçu, CTO at Syncsort agreed with Platz that data and data trails are a major problem. She said in distributed environments like blockchain, the costs of bad data go beyond the bottom line. While blockchain has many advantages like creating an audit trail for data, one downside is if the ledger is populated with bad data, that data can’t be changed. Blockchain is designed to be immutable.
“Most enterprises using blockchain are still in the early stages and haven’t necessarily set data quality parameters yet. While blockchain has the promise of better data governance and visibility into transactions, it will be critical to address the quality of data entering the distributed ledger,” she said.
Related Article: Blockchain for Business: Ready or Not, Here it Comes
Lessons From the Blockchain Gaming World
Research Global Markets, a market intelligence firm, recently published research that highlighted the obstacles to blockchain deployments in the enterprise. Mangala Bhattacharjee, senior marketing and communications for research with the company, noted issues specific to blockchain's application in the digital gaming space which can apply across the entire blockchain spectrum, specifically:
- Scalability — Scalability is a big issue hindering the growth of blockchain games, but it is easy to see how this could carry over to an enterprise use case. Current blockchains do not have the capacity to sustain the millions of interactions required to sustain a blockchain-based game, an issue first highlighted with the launch of CryptoKitties. A big portion of Ethereum transactions got occupied by this game, driving transaction costs higher. At the time of peak usage, the Ethereum network was rendered broken and unusable.
- Speed — Speed is another major problem faced by the blockchain games which could have critical implications in the enterprise. Blockchain gaming is inherently slow, which has reduced many games to being just basic iterations of mobile games. The implications here for the workplace, especially in contexts directly involving interactions with customers are clear.
As a final thought, Fabio Canesin, co-founder of Nash, said there’s still a lot of work to be done to improve the development experience — that is, the user experience of developers building on top of blockchain platforms.
More and more technologies are essentially ready to offer enterprise solutions. Even in their present state, they could be extremely useful for consortium-level applications. However, the developer experience needs to improve. For the technology to reach maturity, developers building blockchain infrastructure need to absorb knowledge and training, and tools and documentation need to improve.