7 blockchain mistakes to avoid according to Gartner Computerworld

With its many cloud service offerings and its universe of multiple platforms with highly variable capabilities, the blockchain industry still looks a bit like the Wild West. Companies should therefore be careful not to jump to conclusions about the technology.

Companies are cautiously venturing into the world of blockchain hoping to find efficiencies in distributed ledger technology for their business processes. But those who are ready to take the plunge can avoid many mistakes. Based on his research on blockchain implementations, Gartner this week published a guide to the seven most common mistakes companies make when engaging in blockchain projects. The research firm evaluated the maturation of the new technology through a five-phase life cycle: from trigger to widespread adoption if the technology covers needs that are not limited to niche use, through proof of concept and productivity.

According to Adrian Leow, senior director of research at Gartner, blockchain is currently the subject of some disenchantment. Interest in blockchain is on the decline as pilots and proofs of concept fail to deliver, forcing technology vendors to either fix problems or abandon the technology. “The market for blockchain platforms and technologies is still in its infancy and there is no consensus within the industry around key elements like product concept, features and fundamental application requirements,” Leow said in a statement. “We don’t think a platform will prevail in the next five years.”

A necessary renewal

In fact, last week, in another study, Gartner claimed that by 2021, 90% of current enterprise blockchain platform implementations will need to be replaced to remain competitive, secure, and relevant. “Many CIOs overestimate the capabilities and near-term benefits of blockchain technology to achieve their business goals, creating unrealistic expectations when evaluating platform vendor and service provider offerings,” said in this study Adrian Lee, senior research director at Gartner. According to the research firm, by 2025, the business value added by blockchain is expected to reach just over $176 billion and then exceed $3.1 trillion by 2030. should prepare for rapid evolution, early obsolescence, changing competitive landscape, future consolidation of offerings, and potential failure of early-stage technologies/features in the blockchain platform market” , said Adrian Lee.

Blockchain consultants interviewed by Gartner earlier this year confirmed that CIOs aren’t even using the technology to take advantage of its coolest features. Primarily, companies use blockchain as a database for maintaining shared records and tracking assets while ignoring one key thing: blockchain is an immutable audit trail. “The fact that no one is using these innovative features calls into question why they are using blockchain. In that case, you might as well settle for a database,” said Avivah Litan, vice president of Gartner and eminent analyst, in a previous interview.

Still insufficient maturity

The feeling that technology is not meeting business expectations has translated into palpable disillusionment among IT managers due to the mismatch between expectations and the actual needs of business projects. The problem also comes from a simple fact: the blockchain is not yet mature enough to meet all the use cases of the company.

Here is an overview of the 7 errors.

1 – Do not use blockchain to create immutable data audit trails

According to Gartner and other research organizations like ABI Research, IT managers who have embarked on blockchain primarily deploy it in proof-of-concept testing, often to solve problems that a traditional database might address. . According to Gartner, “they are not using it as a decentralized ledger capable of supporting audit trails of immutable data to exchange a single version of transactional truth, the primary function of the blockchain. For many, blockchain remains a technology in search of a problem.”

2 – Assume the technology is mature

A second mistake companies make is to assume that blockchain technology is ready for production use when the platform offerings in the market are still very fragmented and trying to differentiate themselves in diverse ways. Some blockchain platforms are more developed for privacy, others for tokenization or digital representation of fiat currency or goods; still others are created for universal transactions. According to Gartner, most of these offerings are too immature for large-scale production, which also requires suitable systems, security and network management services. However, this situation is expected to change over the next few years. “CIOs should monitor the evolving capabilities of blockchain platforms and scale their blockchain project accordingly,” the report recommends.

3 – Confuse protocol and business solution

A third mistake is to confuse protocol with business solution, because blockchain is a foundation technology that needs applications to meet specific business objectives. Even though blockchain can and is used in a variety of scenarios that range from supply chain management to sharing data between health information systems, it must also include user interface, business logic, and software. interoperability in particular. “In the case of blockchain, there is an implicit assumption that the technology is not far removed from a complete application solution. Which is not the case,” Mr. Leow said. “Blockchain should be viewed as a protocol to perform a given task within a complete application. No one would assume that one protocol is enough to run an e-commerce system or a social network”

4 – Misconceptions about scaling

A fourth misconception is thinking of blockchain as just a database or data storage system. In terms of scaling, the technology is not yet scaling well enough, as each node in the peer-to-peer network receives a full copy of the distributed ledger each time it is updated; as it grows, the performance slows down. According to Gartner, the blockchain was designed to provide a reliable, immutable, and trustworthy record of events involving a dynamic set of untrusted parties. This architecture is possible at the cost of database management capabilities. In its current form, the technology does not fully implement the “create, read, update, delete” model found in traditional database management technology. Instead, it should be thought of as a distributed ledger with a single write, but with many participants. “In some cases, a conventional data management solution is arguably a better option,” Leow said.

5 – Expecting interoperability too quickly

A fifth mistake companies make is assuming that the blockchain universe includes interoperability standards. According to Gartner, even though some blockchain platform vendors talk about interoperability with other blockchains, it is difficult to envision interoperability when most platforms and their underlying protocols are still being designed or developed. For now, all vendor talk about platform interoperability should be viewed by CIOs and others as marketing. “Never choose a blockchain platform hoping it will interoperate with technology that another vendor will deliver in a year,” Leow said.

6 – Assume that smart contracts are mature

A sixth mistake is to assume that smart contract technology is mature. Even though they represent one of the most powerful functions of the blockchain because these automation applications make transactions dynamic, problems remain. Conceptually, smart contracts are software scripts that store procedures associated with specific transaction records. For example, a smart contract can notify a manufacturer who is waiting for parts to locate the shipment. Unlike a stored procedure in a centralized system, smart contracts are executed by all nodes in the peer-to-peer network, which poses scalability and management issues that have not been fully resolved. The technology of these contracts will undergo significant changes. CIOs should therefore wait before planning full adoption and start by experimenting. According to Gartner, this area of ​​blockchain will continue to mature over the next two to three years.

7 – Poor understanding of governance

In a private or permissioned blockchain, governance of the network is usually left to the owner of the chain. So while a supply chain consortium may have dozens of members, it is usually up to the company behind the blockchain to manage the onboarding of new members, verifying identifiable information, and finances and resolve any disputes. This is not the case with public blockchains. “In public blockchains like Ethereum and Bitcoin, governance is mainly focused on technical issues. Questions of participant behaviors or motivation are rarely addressed,” said Leow. “CIOs need to be aware of the risk blockchain governance issues can pose to the success of their project. Large companies, in particular, should preferably join consortia or form consortia to define governance models for public blockchain.”

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7 blockchain mistakes to avoid according to Gartner Computerworld

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