Do Not Panic: Enterprise Blockchain Is Not Dead. What Can We Expect in 2023?

There’s Plenty to Look Forward to in the Next Year

2022 has been a somewhat rough year for blockchain and associated technologies, with big-name, industry projects such as the Australian Securities Exchange (ASX) CHESS replacement, the Blockchain Insurance Industry Initiative (B3i), TradeLens, and we.trade shutting up shop, much to the amusement of the blockchain haters and skeptics. Nonetheless, these project failures by no means signify the death of enterprise blockchain, although they definitely do leave some important lessons learned behind.

It’s Not the Technology’s Fault

First-generation enterprise blockchain projects — such as the ones mentioned previously — were typically too costly and too broad in scope. In an industry-wide network, member organizations need to understand and accept that blockchain technology is not an internal tool, and implies collaboration with partners as well as competitors — it’s we versus me.

At the same time, these undertakings must serve business purposes, and therefore all participants need to get value out of it and have a decent return on investment. Also, the size and complexity of these initiatives require proper project (and people?!) management, which in the case of the ASX project, in particular, was definitely missing, in my opinion.

More Adoption Is Coming in 2023

On a more cheerful note, there’s plenty of innovation going on in terms of multiparty applications and solutions that are backed by distributed ledger technology (e.g. blockchain). Blockchain and associated technologies have been successfully incorporated into information management systems across industries. Smaller and simpler blockchain endeavors — leveraging open standards and open source technologies — that support easier integration with existing enterprise systems are already operating in the real world. I expect this trend to continue in 2023.

Blockchain and associated technologies offer some unique and compelling capabilities for the management of transactions and assets, however, full replacement of existing systems is wishful thinking, at least in the foreseeable future. Where this set of technologies is taking hold — for now — is primarily emerging / enhanced areas and new businesses.

At the end of the day, we are talking about a foundational technology — it breaks traditional thinking patterns and practices — so adoption is gradual. Let’s be honest — we will read about more failures, but there will also be a growing number of success stories. Many of these stories will probably not make the headlines as they will just be things that work. Good stuff doesn’t typically grab the headlines (anymore), does it? ;-)

Technology & Vendor Solutions Are Evolving

Both big and small technology vendors have learned from their own experience and/or that of others, and have been fine-tuning their offerings, value propositions, and go-to-market strategies. I believe that today’s solutions are both more sophisticated and targeted, and overall, offer a wider choice.

Distributed ledgers continue to evolve — e.g. Ethereum’s much-awaited switch to proof-of-stake consensus — in order to satisfy not only sustainability demands, but also to better navigate the blockchain trilemma of decentralization, scalability, and security, and minimize the tradeoffs. There is an increasing demand for hybrid applications — blending permissioned and permissionless ledger features — in a B2B2C scenario, that vendors will want to address sooner rather than later.

With a number of technology components and protocols in play, vendors and service providers — alongside their customers — continue to explore what combos provide more business value and a better return on investment. Powerful offerings at the intersection with technologies such as AI and IoT will also hit the market to fight disinformation and secure device data, among other use cases. In other words, we can expect to see more varied combinations of blockchain and other technologies.

The Open Source Force

Industry associations and foundations must continue promoting the adoption of these technologies as a force for good — responding to actual market demand and trends, rather than succumbing to the will of big tech players. I just want to remind everyone that a relatively new piece of technology — especially when it is foundational — is hardly ever perfect, and it doesn’t need to be. It just has to be better than the alternatives, and be continuously improved.

Open source and open collaboration are fundamental to blockchain and associated technologies. Notions of collaboration, decentralization, and transparency don’t go well with the closed-source and proprietary concepts. Openness is critical to make enterprise blockchain projects work, and it starts with the code — open-source foundations have a key role in making this happen, by keeping the community active and engaged. [Read more about this topic here.]

User Data, Decentralized Identity, and Provenance Are Key Themes

The lack of trust and transparency in economic and social systems is not being taken lightly anymore. Going forward, users will begin to own their data and decide who has access to what. This will have a significant impact on healthcare and financial services, as well as advertising and social media.

Owning and controlling our data are fundamental rights according to the Web3 vision. Web3 is an aspiration for a more decentralized and fair internet, with the potential to materially change the way in which corporations use users’ data, and break the dynamic driven by a tradeoff between convenience and control. Blockchain technology is a key foundation of Web3. [Read more about Web3 here.]

In the case of decentralized / self-sovereign identity, in particular, the focus is on protecting personal autonomy and data ownership alongside providing convenience. What it looks to achieve in practice is that attributes — e.g. age, nationality — that make up our identities, can be verified in real time, and without involving a centralized directory or paper-based document, for any purpose, e.g. renting a car, getting a loan or turning on utilities. We — the data owners — do not need to overshare (for example, we can demonstrate that we’re adults without sharing birth dates), and the recipient does not hold unnecessary data, nor can use or share our personal data without our consent. [Read more about decentralized identity here.]

The establishment of an ecosystem that includes end users, as well as organizations and systems that issue, verify, and accept credentials and identity claims, is critical for decentralized identity to work. Currently, there are multiple vendors attempting to create these ecosystems and work out appropriate monetization strategies. Regulations, standards, and interoperability efforts are also pretty much a work in progress. However, we will hear more about decentralized identity in 2023.

Digital provenance is another area that has great potential to provide immense value across a number of industries, if done right. Provenance captures the origin and life journey — including the ownership history — of any physical or digital asset. By recording provenance data on a distributed ledger, provenance information becomes more trustworthy, and its management is more efficient.

By using a blockchain-backed provenance solution, fraud, contaminations, and counterfeits can be quickly flagged. Businesses can also demonstrate that their products are environmentally friendly, and were produced in a socially and ethically responsible way. Supply chains can become more efficient and resilient.

Blockchain technology is no stranger to supply chain traceability — there are a number of vendor offerings out there — however, provenance is a much bigger opportunity than that. I look forward to seeing digital provenance applied to a wider set of assets, across a wider range of domains and industries. [Learn more about provenance here.]

P.S.

No need to panic. Enterprise blockchain is not dead. When bad news dominates the headlines, it doesn’t mean that good things are not happening. Blockchain and associated technologies are providing value in the enterprise space, and they are here to stay. Foundational technologies don’t need to take front stage.