The opportunity that blockchain presents for businesses continues to go from strength to strength spanning dozens of industries. Global spending on blockchain solutions reached USD 2.7 billion in 2019, and is projected to reach USD 4.1 billion this year in spite of the pandemic, while some forecasts go as far as to suggest it may get to almost USD 18 billion by 2024.
With that in mind, executives and managers are increasingly aware of the transformative potential of the technology, with a significant number of the worlds largest companies embracing the technology. From the supply chain industry to finance, blockchain is already carving out its place in the world. Prospective users, however, will first have to overcome a few common obstacles. At Web3 Labs we’ve identified three common principles that help address these.
What's Holding You Back?
Although the answer to this question is largely subjective, there are some common concerns among prospective blockchain users that should be addressed. Here are some of them:
- Selecting the wrong problem: even though blockchain can be used to solve many problems in a wide range of different industries, it is still not a panacea. Understanding what it can actually do and where its strengths best come to light is key to putting it to good use.
- Unattainable expertise: while blockchain is different from other, more established technologies, that does not mean the niche is closed to all but a select few. However, when businesses showed the need for blockchain, developers rushed in to fill it, so now there are plenty of solutions within the space to choose from—all prospective users have to do is figure out what it is that they need.
- A lack of adoption: there is a perceived lack of adoption with blockchain, but we would argue the annual Blockchain 50 reports from Forbes, shows otherwise. A number of the world’s largest corporations have already implemented the technology in one way or another. On the other hand, the decentralized finance (DeFi) space attracts institutional and retail investors alike, with more than USD 12 billion locked in the space as of the time of writing (source: defipulse.com).
These worries are reasonable, but largely unfounded, aside from the first. It’s not an uncommon issue—trying to force blockchain to solve just any problem is counterproductive. The correct use case selection is part of our three principles, which we cover below.
The Three Principles
1.Target use case
What problem are you targeting? Although blockchain can be applied to many different use cases, there are a number of them that would benefit more from a different solution—using blockchain just because it’s the shiny tool is pointless. However, there are three main areas in which blockchain excels:
- Records of ownership: recording ownership of an asset on a blockchain removes the need for asset owners to have their own internal representation of an asset. This means they don’t need to track the asset on their own internal systems.
- Cross party business processes: for large businesses with processes spanning multiple external entities, keeping them all in sync can be a laborious process which often requires trusted third parties. Blockchain removes a number of these intermediaries as it provides a single source of truth for multiple organisations. This simplifies what has historically been slow processes where data is constantly being exchanged and reconciled between multiple organisations.
- Digital fingerprints: as blockchain is immutable and tamper-proof, it can be used to certify data at the point of capture, helping in dispute resolution.
Blockchain’s first foray into mainstream was through the popularity of Bitcoin. Ethereum then introduced programmability into blockchain networks with its virtual machine. This grew the opportunities beyond simple use cases like virtual currencies, into those we touch on above.
Finding the platform to support your business depends, first of all, on whether you want a public or a private network. Public networks include the likes of Bitcoin, Ethereum, Polkadot, Cardano, and others. Private networks are consortia-driven, support greater transaction throughput, and are permissioned—in other words, aimed at businesses who need blockchain without the decentralization aspect usually associated with it. Within the private network sphere, there are several well-established platforms users can choose from which we explore further in another article.
One of the other important considerations when deploying blockchain is the level of expertise you have in your organisation to support the deployment of the platform you have chosen. Broadly speaking there are three options, ranked by complexity, from highest to lowest:
- Self hosted. As its name implies, this means onboarding a DevOps team to create a fully bespoke blockchain platform from the ground up.
- Cloud. Blockchain-as-a-Service offers third-party creation and management of blockchain networks, but still requires some understanding of how the technology works for day-to-day operations.
- Fully managed. Some providers are able to create your solution for you, as well as manage it completely.
One you have your platform deployed, smart contract development is another important consideration: which programming language do you want to use? Different providers will offer support for different languages. There is also the matter of integrations, as finding the way in which blockchain fits in with your existing infrastructure is key to successful implementation.
Finding the pain points of your business and seeing how blockchain can solve them is actually a pretty straightforward task when you’re clear about what the technology does well—as our first principle highlights. From there, following the other two principles will have you well on your way to a successful blockchain deployment!
We’d love to know what you think about our principles - do you have others that we haven’t mentioned? If you’d like to learn more you can sign up for one of our upcoming Principles of Successful Blockchain Deployments Webinars.