The advent of Bitcoin, in a sense, gave birth to Blockchain. Blockchain and Distributed Ledger Technology (DLT) became synonymous with organizational disruption. Now, nine years after inception, the question that’s asked is -
Has Blockchain delivered on its promise?
The jury is very much out on this question. The answer is not straightforward ‘Yes’ or ‘No’. The answer might lie somewhere in between.
Before delving into this subject, we need to understand different types of Blockchains-
A Public Blockchain is a permissionless Blockchain. Anyone can join the Blockchain network, meaning that they can read, write, or participate with a public Blockchain. Permissioned networks place restrictions on who is allowed to participate in the network and in what transactions.
Public Blockchains usually cost more to operate and do not have the speed seen with a consortium of private Blockchains. However, they offer better transparency than the others and let anyone connect to the network.
Private Blockchains work based on access controls that restrict the people who can participate in the network. There are one or more entities that control the network and this leads to reliance on third parties to transact.
Private Blockchains limit who can access and write additional information to the chain. Private companies tend to use this option because they can control the features and modify them for various reasons.
Consortium Blockchain - Consortium Blockchain platforms have many of the same advantages of a private Blockchain, but operate under the leadership of a group of businesses instead of a single entity.
A pictorial representation for Blockchain types
There is no evidence to suggest that Blockchains have been overwhelmingly successful and is the next big thing. There have been instances of success and failure. Here are some statistics on companies that had dabbled around with Blockchain - 3% had large-scale use, 10% companies were piloting it, while 87% had only tested Blockchain proofs of concept.
Some industries that have embraced Blockchain have had remarkable success. Here are some success stories -
Walmart
Walmart used Blockchain for food safety and tracking application - source-to consumer-traceability. An initial test to track mangoes without Blockchain took six weeks. The same tracking with Blockchain took a mere few seconds. This was an amazing example of a display of DLT benefits in the non-financial sector.
Kroger
Kroger (https://www.kroger.com/) is one of the largest grocery retailers in the US and, like any other food industry enterprise, there are many challenges that Kroger is facing and one of the biggest is traceability. Federal regulations are forcing companies to get an understanding of their entire supply chain because ultimately they are going to need to not only know where they are getting the goods from and whether those goods are safe to eat, but they also need to know where exactly the good came from as well.
For Kroger, one of the largest grocery retailers in the US, food recalls are quite costly because it often must pull unaffected products from the shelves. By implementing a Hyperleger Blockchain with industry-specific IBM modules for food traceability, the retailer can work with suppliers to trace food from the farm to its shelves, helping it identify which products to pull, and which are safe for its customers.
True Tickets
True Tickets (https://true-tickets.com/) provide a digital ticketing delivery experience that’s both scalable and secure while integrating with existing ticketing platforms and CRM’s—Making buying, selling, and transferring entertainment tickets simple and safe.
The big issue for people who buy tickets to concerts and sporting events is counterfeiting. Anytime a person buys a ticket in the secondary market, the threat is always there. Blockchain technology provided an ideal tool for adding the end-to-end transparency and security that was sorely lacking in the ticketing business.
True Tickets is in the process of building a Blockchain solution that provides two very important outcomes –
It creates and preserves ticket provenance by identifying all buyers and sellers, ensuring that both the tickets and the people buying them are legitimate.
The ticketing platform serves as an immutable ledger, allowing artists, venues, promoters and fans to track a ticket through each stage of its lifecycle, from creation to its use at an event.
RCS global
RCS global (https://www.rcsglobal.com/) is a company that offers data-driven responsible sourcing services. They work with companies at every stage of the supply chain to meet market and stakeholder expectations for responsible sourcing through auditing and monitoring responsible human rights practices and environmental regulatory compliance. They use Blockchain technology to build trust among companies as they trace minerals through the supply chain.
iPoint
iPoint-systems GmbH (https://www.ipoint-systems.com/) empowers companies to collect, analyze and report all necessary data to assess the environmental, social, and economic impacts of their products and related processes. iPoint needed help to track 'conflict minerals' and 'blood diamonds'. Conflict minerals and Blood diamonds are minerals and diamonds sold from countries with the sole purpose of the proceeds being used to fund conflict and wars in the regions they are mined. Conflict resources are not just mines and diamonds. They could be mobiles, car batteries, etc. And today conflict doesn’t mean just war financing. It includes child and forced labour, modern slavery and poor environmental practices.
The EU and The US have regulations that required companies to make purchases from conflict-affected resources to ensure that they are conflict-free. iPoint set out to design a Blockchain-based solution to verify whether mines and mineral sources operate sustainably and responsibly, allowing upstream purchasers to confirm compliance with US and EU regulations
Marsh LLC
Marsh LLC (https://www.marsh.com/uk/home.html) is a global leader in insurance broking and innovative risk management solutions. They help clients quantify and manage risk – and help them unlock new opportunities for growth. Construction companies that hired contractors required that they submit proof of insurance before commencing work on a project. Getting these proofs and submitting them through manual processes was a time-consuming and laborious process. The IBM services team helped Marsh integrate salesforce.com with the IBM Blockchain Platform to create an immutable proof of insurance record that could be accessed by all permissions network members to increase efficiency and boost trust among all parties to transactions.
However, for every success story, there have been more than one failure.
One such failure was a Blockchain for the provenance - the place of origin of something – of art and creative ownership. A test in form of a man claiming to have painted ‘La Gioconda’ (better known as Mona Lisa) successfully added it to a Blockchain. Other such attempts also failed miserably because of a lack of understanding between Blockchain ‘technologists’ and industry experts.
Another failure was putting royalty payments onto a DLT. Artists and other users found the process of Blockchain usage very complicated and convoluted. Lack of user motivation resulted in the failure of this Blockchain.
Why do Blockchains fail?
Here are some major reasons for Blockchain failure -
Lack of Attention
Many Blockchain projects are VC funded. VCs, in a literal sense, throw money into projects not knowing how they actually work. A hands-off project doesn’t work for Blockchain projects. VCs need to be hands-on providing resources like engineering talent, business counsel, educational materials etc. Considering the newness of the technology, such hand-holding is a sine-qua-non.
Lack of expertise
There are 23 million software developers and over 7 million javascript worldwide. The number of Blockchains worldwide pales in comparison – the number is less than half a million.
Lack of speed
Many Blockchain implementations failed simply because of the extraordinarily long build times. Projects need to be on the ‘success track’ quickly else they lose momentum leading to their eventual failure.
What is the way forward for Blockchain?
Blockchain as a technology has a transformational capability. Failures are due to faulty vision or bad implementation. The Blockchain community is a tightly-knit one. And this community is seriously committed to making it successful having a wider adoption across industry sectors. And finally, given the ‘resource hungry’ nature of a Blockchain project, VC commitment to a project is going to be a key determinant to its success.
I am deeply investigating publishing domain successes and failures to explore what can be done in this space. If you are interested in this space, please get in touch for a more in-depth phone conversation.
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