The hype of blockchain has faded, but the learning curve is moving forward


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The advent of blockchain technology created a level of hype and enthusiasm that the Fintech industry had not witnessed since, perhaps, the introduction to the masses of the Internet. A few intuitive futurists had actually discerned years back that the “Internet”, per se, was nothing more than an “enabler” of a wave of innovative thinking that has spanned more than two decades. Those same observers had also looked at “blockchain” through a similar lens and saw it, too, as just an enabler.

“Enterprise Blockchain” has experienced a learning curve so far… The first phase is filled with enthusiasm. Hope runs high that a revolution of creativity will surely take place and change the world, as we know it. Then comes the second phase – Disillusionment. It becomes obvious that the project may not be as easy as once thought. It will take a great deal of work, before even a glimmer of success graces the efforts of the project.

Yes, the hysteria over blockchain and how it will change the world has passed. It is now time for the real work to commence, but only after a few serious lessons have been learned, or so goes a recent dissertation from the folks over at Bitcoin.com. Their thought-piece revealed that:

After a shaky start, Enterprise Blockchain adoption ramps up.

Blockchain projects are beginning to turn the corner and deliver results, but the learning curve has been rough.

The essay showcases one example as exemplary of what had to be learned, before any traction was possible. It is a familiar story of centralized power plays, or at least the perception of them, attempting to control all aspects of an industry-wide project, one where natural competitors must cooperate as a group in order to benefit as a whole. This description might sound like “New Age” thinking, but “old age” cultural responses do not disappear so easily. For this type of scenario to work, trust must be the guiding principle, but how do direct competitors trust one another, when one assumes the head position?

This “lesson”, so to speak, became readily apparent when IBM and shipping magnate Maersk partnered together to produce a supply-chain blockchain solution that would “change the world”:

The product, dubbed Trade Lens, would help shipping companies manage cargo and inventory, eliminating the vast bulk of administrative work required to keep track of consignments, cutting costs by up to 20% in the process.

The problems started when the two “goliaths” determined that they should “retain all rights to intellectual property on the blockchain.” The duo immediately had problems signing up partners for the long haul. Trust was the central issue. Why would a prospective partner willingly turn over their confidential data to the control of a direct competitor and a major one at that?

Rick Schmitz, CEO of the hybrid blockchain LTO Network, has theorized that seeking an advantage within a cooperative effort tormented the deal from Day One. Blockchain implies a “permissionless” approach, where all are equal:

The real potential and the value of blockchain integration comes from creating a global level playing field. A consortium is not the optimum way to go as it merely recreates an already existing permissioned system.

It has taken two years, both filled with frustration and the predictable phase emotion of “disillusionment”, but changes were made. A re-branding, of sorts, took place to re-position the effort from being viewed as a “joint venture” to one being seen as a “joint collaboration”. IBM has had to modify its behavior drastically and be persistent in its assurances regarding data privacy, governance, and the publication of APIs. The entire set of shippers, manufacturers and suppliers had to feel like equals at IBM’s new table.

Other blockchain efforts have gone through similar experiences. If one “partner” tries to control the action, then the consequences would be a lack of trust, poor transparency, high costs, and limited functionality, any one of which could spell doom for the project. As for IBM and Maersk, they now have 15 carriers and 90 companies participating and benefiting from their blockchain platform.

The essay concludes:

If there are lessons to be learned from the performance of enterprise chains to date, it is that blockchain is only useful when you play to the strengths of the technology and work within the ethos of what made it so compelling in Bitcoin to begin with. After all, centralized blockchains are nothing more than databases controlled and run for the benefit of their owners.

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The hype of blockchain has faded, but the learning curve is moving forward

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