Building PoC on Blockchain: Myths and Reality
The Six Most Popular Myths around Building PoC on Blockchain
Today, a huge number of businesses are implementing blockchain PoC because blockchain technology has become really hyped, especially in 2019.
Let’s start by identifying what PoC development means. Building PoC on blockchain includes building a business concept, assessing it, applying the business possibilities of blockchain technology, and implementing new business strategies that involve blockchain technology.
Building PoC on Blockchain as a Stage of MVP
The more large-scale process is known in the business world as MVP. MVP is a product that provides consumers with a minimum list of available functions and operations, and helps test the potential of project development via alpha/beta options. MVP is applied to transfer the product’s potential opportunities to consumers, and find out whether the concept is directed at the target audience. An alpha/beta version of the future product is issued on the market in order to receive feedback from consumers and to consider whether the market is ready to accept this concept.
Marketing specialists think it’s the easiest and the most effective way to get a truthful reaction from potential clients. An alpha/beta version should consist of the partials necessary for presentation of real product features to consumers, providing them with the ability to take a view on how this product works.
MVP is necessary for the reduction of potential risk and for gaining a better understanding of the target features of the finished product. Of course, you can also figure this out by manufacturing a ready product and selling it, but this requires much more time, money, and effort. It’s much easier build MVP, part of which is PoC, for your product. After receiving feedback from your target audience, you can work on improving the disadvantages of your product.
Currently, building MVP (including PoC) for startups is a widespread trend because in the business world, companies and startups don’t want to waste their money, time, and effort just to determine the chink in their product’s armor. An MVP product is really necessary for startups who understand the high level of potential risk and want to correct the final options of their product. In this way, entrepreneurs and startups can save money and effort by directing their product in a more useful direction. Building MVP allows you to reduce costs and improve your product in several easy steps. One of these steps is PoC (Proof of concept), which allows specialists to determine a product’s framework and minimum requirements for development.
Why Building PoC Is Necessary for Blockchain Startups
Today, blockchain startups are becoming more and more popular, providing people with innovative products and services designed to make people’s lives easier and more efficient with the huge number of opportunities offered by blockchain technology. It doesn’t matter if it’s developing a new DApp or implementing blockchain technology in a non-commercial or commercial project; it’s very important to realize how to bring a fresh idea to life. The main task of any startup is to understand which product will be produced and what will be necessary to accomplish this.
For this reason, many organizations and enterprises try to understand the new opportunities provided by blockchain technology for their business, and also the pitfalls of building PoC on the blockchain. Let’s examine which facts about building PoC on blockchain are myths, and which belong to reality!
The Six Most Popular Myths around Building POC in the Blockchain Field
Applicature would like to dispel the six most popular myths that exist about building POC in the blockchain field.
- All attempts to implement blockchain in business are crowned with success. Myth or reality?
It’s definitely a myth. When it comes to blockchain implementation in business, the most valuable experience is when POC is involved in live production use. But the reality is that there are few successful examples in real life. This is why one of the most important elements of of building POC on the blockchain is to specify a necessary business case that will enable production use. Any blockchain service should have a specific blockchain platform to provide a high level of scalability to the development of large-scale projects.
According to research by Mary C. Lacity, the results of which are published in the article “Enterprise Blockchains: Eight Sources of Business Value and the Obstacles in Their Way,” despite the billions of dollars that had been invested in blockchain technology worldwide, at the end of 2017, only a few blockchain products had been developed successfully.
According to a study by TCS, between 70 and 80 percent of blockchain Proofs of Concept (POCs) fail to meet their goals. Additionally, a study of 200 blockchain projects completed by by HFS Research in the 4th quarter of 2017 found that only 5 to 10 percent of blockchain pilots were progressing to production.
2. Five out of 10 blockchain initiatives fail because the business problem is not identified at the start. Myth or reality?
It’s partially true: according to market research by Gartner, 9 out of 10 blockchain initiatives fail because the business problem is not identified at the start, and one out of ten initiatives is successfully brought to life. Currently, there are few live-production instances of blockchain implementation.
It is essential that the selected consultant should not only be deeply experienced in blockchain technology, but also understand the business, its vertical aspects, and its implications applicable to blockchain vis a vis existing organizations/ecosystems. Further, the service provider should ideally be able to integrate blockchain into existing business processes, architecture, and legacy systems.
During the vendor selection phase, the consultant must be able to discuss, and have experience in ideation and building POC for his/her clients. They must also show the client how to apply this to their businesses. Client references to POCs may be confidential, in some cases, but experienced service providers will have use cases to show what can (and what has been) developed. At times, blockchain is not necessarily the answer to a business problem. Many client organizations approach service providers hoping to implement the latest “shiny object” into their organization when it is actually not necessary to invest the time, effort, and money into blockchain projects.
3. A PoC blockchain application’s potential business system has only advantages compared to a traditional business system. Myth or reality?
This is also only partially true. To realize that it’s a myth, imagine an ecosystem within which several blockchain enterprises are processing transactions. In a traditional system, there is a middleman in the form of a bank that charges high fees for its services. But when a third party that normally provides companies with protection and a high level of privacy is absent, blockchain enterprises can communicate with each other without a middleman. In today’s business world, each party in this scenario maintains their own systems to record debits and credits on their private ledgers, which means there are multiple versions of the truth. This leads to disputes that require expensive reconciliations and could cause slow settlement times.
Each party can only see the transactions coming in and out of its own organization; the rest is opaque. Each party spends significant resources protecting their IT perimeters against hacking attacks. The result: today’s trading ecosystems have high transaction fees, slow settlement times, low transaction transparency, and high security vulnerabilities. Blockchain applications should overcome all of these limitations to build a truly decentralized society.
4. Building PoC on blockchain is similar to traditional marketing research. Myth or reality?
It’s not true. Unlike traditional marketing research, which determines the demands and preferences of the target audience and facilitates investigation of customer experience, the MVP technique will allow you to take an additional step forward. With this service, you get not only exhaustive information about customer behavior, but also the ability to change your product according to the specific characteristics of the target audience.
Building PoC on the blockchain is a large-scale process, and it includes many stages intended to launch the business growth mechanism that helps turn a startup built on the blockchain into a big, successful company. It’s a difficult process that includes the interaction with operators, engineers, marketing specialists, and customer support specialists. Each of these takes part in the building and implementation of the product.
Startups and large-scale IT companies build PoC on the blockchain as a starting point for developing software products. Blockchain framework development allows the development of an initial product base while referring to all requirements of the target audience and successfully scaling of the blockchain into the future.
5. Around 90 percent of ICOs fail. Myth or reality?
To consider the real situation on the blockchain market, you can see that ready products are not always based on DApps or a public ledger disconnected from the centralized (off-chain) environment. For developers, it’s hard work to combine an actual product with innovative technology and to implement blockchain in the actual product. A huge number of bugs can appear. There are a lot of examples of products built on the blockchain, but each has its own imperfections.
For instance, IOTA boasts high-speed, fee-free offline transactions, but doesn’t support smart contracts. Technically, they aren’t built on blockchain technology, but on Tangle technology. However, the developers of IOTA are still going to implement the Internet of Things. Currently, it is in the planning stages, but experts believe it’s the next step to scaling the blockchain.
When it comes to popular, large-scale platforms for developing DApps, we should mention that Ethereum isn’t that fast.
Hyperledger is a hub for open industrial blockchain development that provides the opportunity to build a hub for open industrial blockchain development, but it has one essential disadvantage: it’s not scalable.
6. Major PoC projects are implemented in the USA. Myth or reality?
It’s partially true. According to the market research of Gartner, which has investigated 129 PoC blockchains, the top three regions where POC blockchain is implemented are North America (23%), Asia/Pacific and Japan (30 %), and EMEA (40 %). The U.S. is the country with the most POCs.
Tips on How to Build PoC on the Blockchain Successfully
To avoid disappointment in building PoC on the blockchain and in order to build truly sustainable solutions, Applicature offers the following tips:
- The journey for the consumer who wants to implement blockchain technology into his/her business should start with an investigation into the industry and the development of a business strategy to form a concept for blockchain implementation.
- The consumer should then develop a business-requirements plan for stakeholder buy-in in order to make blockchain implementation possible and free up the funds to invest in a blockchain POC.
- The most important tip that entrepreneurs and startups should follow is to realize that building PoC on the blockchain can fail, even if deep-market analysis and business expertise are achieved.
Currently, a huge number of myths have been spreading around blockchain technology, particularly building PoC on the blockchain. It’s a lot of hype, and even though almost every startup and enterprise wants to follow the latest trends on the market, there are many pitfalls in this field. In this article, Applicature has tried to dispel the six major myths circulating around blockchain. Let’s reexamine them:
- All attempts to implement blockchain in the business are crowned with success. It’s a myth.
- Five out of 10 blockchain initiatives fail because the business problem was not identified from the start. It’s partially true: 9 out of 10 blockchain initiatives fail.
- A PoC blockchain application’s potential business system only has advantages when compared to a traditional business system. It’s a myth.
- Building PoC on blockchain is similar to traditional marketing research. It’s a myth.
- Around 90 percent of ICOs fail. It’s a reality.
- Major PoC projects are implemented in the U.S. It’s partially true. Major blockchain POCs are implemented in the U.S. as well as the rest of North America (23%), Asia/Pacific (30 %), EMEA (40 %), and Japan (30 %).