So your CEO was flying back from Denver and read an article on the plane about how blockchain is going to change the world — and you’re now tasked with rolling out this much-hyped technology.
Your CEO is not alone. Juniper Research released a study in 2017 that found nearly six in 10 large corporations are either actively considering or in the process of deploying blockchain technology. It has the potential to disrupt everything from healthcare to supply chains — but is it the right fit for your organization?
As an IT pro, you might find yourself trapped between what Forrester principal analyst Martha Bennett calls the “two parallel universes” of blockchain. The first is press and vendor hype, which “remains firmly in the phase of irrational exuberance,” she writes in a Forrester blog.
“The other is the world of enterprise business and technology professionals actually working on blockchain projects; this world is firmly anchored in the phase of rational assessment, and everyone’s agreed that large-scale, widespread deployment of blockchain-based (or indeed blockchain-inspired) networks isn’t imminent,” writes Bennett.
Is blockchain for you?
Essentially, blockchains manage data, so they compete with traditional data management systems, such as relational databases. “Public blockchains are a tremendous improvement on traditional databases if the things you worry most about are censorship and universal access,” writes Morgan E. Peck in an article for IEEE Spectrum.
Examples of public blockchains include Bitcoin and Ethereum. Permissioned blockchains, on the other hand, restrict access and enable more privacy; these could be used if trust issues exist between multiple participants, or where an organization would benefit from redundant copies of the data spread across a distributed network. “But,” Peck argues, “you should also consider the possibility that you don’t need a blockchain at all.”
Chris Haley and Dr. Michael Whitaker, with consulting firm ICF, agree. In an article for Forbes, they say traditional centralized databases are “capable, robust, and scalable, and in the near-term should be the default choice for many enterprise data management use cases.”
While blockchain offers structural security (and shows promise in hybrid relationships with relational databases), they say blockchain is still vulnerable at the application and user levels (such as unpatched firmware on edge devices and even phishing attacks).
As far as speed is concerned, Haley and Whitaker point out that while permissioned blockchains may be faster than public blockchains, they’re still slower than traditional databases. On the other hand, “digital contracts in blockchain could offer order-of-magnitude improvements in the speed of complex, multi-stakeholder transactions,” such as real estate and intellectual property transfers.
Other considerations: maintenance and support infrastructure isn’t well developed, and energy costs and storage requirements limit scalability. And the cost of blockchain remains unclear.
In some cases, blockchain will be a good fit, but it’s not the answer for every organization. Bring these concerns to your CEO, and keep in mind that Forrester expects a “serious pruning” of blockchain projects in 2018: “Initiatives will increasingly be assessed against standard business benefit models, and those found wanting will not be given the go-ahead, or they’ll be stopped if already underway.”