The biggest clue that blockchain isn't ready for mainstream adoption is how much money vendors are spending to try to figure out why anyone would use it. As detailed in a recent Reuters article, "Companies, including banks, large retailers and technology vendors, are investing billions of dollars to find uses for blockchain." When vendors have to spend billions just to uncover reasons to use a technology, and not on building solutions to real customer problems, they're doomed to fail.
Blockchain started as a way to enable security of bitcoin transactions. While it never quite worked as advertised (bitcoin and its progeny have seen their share of theft, with over $1 billion in cryptocurrency pilfered in the last year—so much for secure transactions), vendors jumped on the bandwagon. Run a blockchain search on Google, and IBM has bought the prime real estate to sell you its solutions. Based on the last few years of its earnings, however, blockchain isn't paying the bills.
Not that Big Blue is alone in getting little from its blockchain investments. Reuters reviewed 33 blockchain projects that have been announced over the last few years, and found that roughly one-third are stuck in the testing phase, and none of them have seen "extensive usage."
They're still science projects. Very expensive science projects.
While launched to much fanfare, participants now describe them as "a shiny mirage," a "transformation...not a big bang," and a "journey" that will take another three to seven years to have a material impact. It's not clear why the next few years will make a difference given that the last few years didn't, but hope springs eternal.
My personal hope is that vendors will spend a bit more time talking to customers to figure out real problems to solve. As NASDAQ's head of market technology, Lars Ottersgard, told Reuters, "[T]he value differentiation using blockchain from using traditional technology has not been obvious." Or, as True Link Financial CEO Kai Stinchcombe wrote in 2017, "Ten years in, nobody has come up with a use for blockchain."
SEE: How it works: Blockchain explained in 500 words (ZDNet)
This is an exaggeration, but perhaps not by much. Blockchain enthusiasts can take heart in AWS' decision in 2018 to launch a managed blockchain service. AWS makes much of its "customer obsession," and that obsession seems real to me. But it's telling that in the same breath the managed blockchain service was announced, the company also announced the Amazon Quantum Ledger Database (QLDB), which delivers on core blockchain functionality without the need for distributed consensus. In other words, it's not really blockchain, which is probably just fine with real enterprises with real problems that they'll pay real money to solve.
Ultimately, the vendors who win will be those that pay close attention to today's customer needs, not those that pay billions to solve future customer needs. Those future problems are speculative—the current problems are easily discovered. You just have to talk to customers and listen to the answers. Those who do will probably spend less time developing blockchain "solutions" and more time with nuts-and-bolts databases, particularly in making them easier to use. When asked whether blockchain has proved easier or harder than expected, nearly 60% said "harder"—this is hardly a recipe for success.
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