Why do Companies Fail at Blockchain?
Blockchain technology has been touted as the next great innovation of our time. Disruptive and revolutionary, there has been no shortage of insight into the decentralized world of the future. As cryptocurrency markets experienced a parabolic rise in 2017, it seemed the solution to all of life’s problems rested within the blockchain. Regardless of industry or scale, if it was decentralized and tokenized, it was better.
The market reversal of 2018 proved to be a much-needed wake up call. That is not to understate the potential impact of blockchain, but understanding that to leverage the benefits of the technology, it will require more than decentralizing and tokenizing. Like any other technology or innovation, the benefits a company can reap from blockchain will depend on several aspects, such as correct implementation, fit, consumer willingness etc. Here are 4 reasons why traditional companies fail at blockchain.
- Blockchain for the sake of Blockchain
Alongside the slew of startups to come out of the woodwork during the blockchain craze, were traditional companies also trying to ride the wave. In the absence of a use case for distributed ledger technology and correct implementation, this can prove detrimental and can even be considered fraudulent behaviour. In a TechCrunch article titled, “SEC warns against public companies adding blockchain to their name,” we can see instances of this behaviour: stock prices of Long Island Iced Tea skyrocketed in upwards of 500% following a name change to Long Blockchain. Additionally, investing in blockchain without a clear current or future use can result in significant wasted resources.
- Customers don’t understand or want to use cryptocurrency
Despite the hype around cryptocurrencies, actual use rates are still very low. Over the last 24 hours, the Bitcoin network processed 215 864 transactions. Comparatively, on average the Visa network processes upwards of 150 million transactions on a daily basis. Cryptocurrencies are still a nuance asset, and a lack of understanding or technical inclination may limit the degree to which customers will use them. A proper understanding of your customer base and whether crypto is a viable payment option is important before incorporating it into your business.
- You Don’t Need to Decentralize
Dispersing control and influence from centralized authorities to multiple entities throughout the network is a powerful concept. The benefits are vast, spanning from democratized decision making processes to the increased security enjoyed when information is not held at a single point. However, not every business or operation needs to be decentralized, and impractical use of decentralize may not only prove costly, but result in operations being less efficient than a more traditional, centralized system.
- Blockchain Startups Do it Better!
Jack of all trades and master of none. As any business seeks to expand operations, it experiences a strain on its current resources. In many cases, we see certain operations outsourced to firms that specialize in that line of work. Blockchain technology has the potential to benefit many businesses, but this does not mean that every company has to spin up a blockchain division and develop a unique protocol. To transfer an existing legacy system to a blockchain framework, in many cases it may be best to engage the services of an experienced blockchain team.
Blockchain technology has revolutionary potential. The innovations and developments we are seeing today may very well set the groundwork for a decentralized future. However, to quote Uncle Ben, “with great power comes great responsibility.” Blockchain, like any technology is a tool, and what we derive from it will be a function of how it is used.
