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According to Deloitte’s Global Blockchain survey, 84% of business leaders consider blockchain as scalable technology and think that this technology will eventually go mainstream. 74% of executives think that blockchain has huge business potential. That is why 23% of companies are willing to invest anywhere from 5 million to 10 million in blockchain technology.
Despite all these statistics, there are certain challenges that businesses must overcome for wider adoption of blockchain technologies. Some of them are as follows:
- Poor perception of blockchain technology
- Higher energy consumption
- Integration with legacy systems
- Scalability and compatibility issues
Even if businesses manage to overcome these challenges, they end up making blockchain mistakes that prevent them from reaping the real rewards from the blockchain technology.
In this article, you will learn about the seven biggest blockchain mistakes you are making without even realizing it.
7 Blockchain Mistakes Your Business Might Be Making
Here are seven blockchain mistakes that you should never make.
1. Thinking of Blockchain as a mature technology
Just like every other technology, Blockchain is not perfect. It is still in its infancy and will evolve as the time progresses. Considering blockchain as a mature technology is a mistake most businesses make. Blockchain platforms still have a long way to go before it can be used for large scale production. These platforms still struggle when it comes to accommodating legacy systems and offering security and network management services.
Then, there is an issue of fragmentation among blockchain platforms. Some platforms are designed to offer good security while others focus on tokenization. If you want both features, you have to use both in conjunction because there is not a single platform which can offer it all. The good news is that things will improve in years to come as these blockchain platforms mature.
2. Misinterpreting Governance
Unlike traditionally used public blockchain technology, governance of the network is the responsibility of the owner in a private blockchain environment. Even if your private blockchain has dozens of members, they control the owner and they are responsible for adding new members, verifying financial information and transactions. Moreover, they also must take care of issues and challenges associated with the blockchain network.
Even though the technical issues can easily be addressed because the focus is on these issues, human behavior and motivations are mostly ignored. Large scale enterprises should team up with a governing body to set up rules and outline the governance models for public blockchain technology.
3. Considering Protocols as Business Solutions
There is no denying the fact that use cases and business application of blockchain technology is growing rapidly. Businesses make the mistake of considering blockchain technology protocols as complete business solutions and ends up paying a hefty price for it. Blockchain is a technology that relies on applications to fulfill business needs.
Yes, you can use blockchain technology and its protocols in conjunction with applications to complete certain tasks but if you are using blockchain technology or its protocols without its application, it won’t work. You can not expect a blockchain protocol to handle a full-fledged e-commerce system.
Take the example of mobile app development. Blockchain technology can accelerate the app development cycle, minimize the time and cost required to create a mobile app. Blockchain app development can share information quickly and take action to make the app more powerful and efficient at the same time. As a result, they can create more advanced mobile apps that cost less and are more secure, just like app development company does.
4. Maturity of Smart Contract Technology
Smart contract technology is one of the biggest assets in the blockchain technology arsenal as they leverage business automation applications to dynamically change the behavior of your blockchain transactions. In fact, they are software scripts that are used to save procedures linked to transaction records. This means that if you are a manufacturer who is waiting for raw material to continue your manufacturing process, you can easily get notified when the cargo-carrying your raw materials reach an entry point.
Since smart contracts stored procedures are executed on all the nodes connected to a peer to peer network, this can give rise to scalability issues and make management a hassle. We will see smart contract technology go through significant changes in a couple of years to overcome these challenges.
5. Considering Interoperability as a Non-Issue
If you think that you can use blockchain technology as traditional hardware and software, which is compatible with newer versions of operating systems, you are wrong. There is no interoperability standard that can glue everything together. Another reason why you are more likely to bump into compatibility issues is that both blockchain platforms and protocols are still in their developmental phase. You might see many vendors talk about interoperability, but they are nothing but marketing gimmicks to convince you to tie into their ecosystem.
6. Believe in Myths About Scalability
Businesses tend to treat blockchain as a data storage system or database. They think that it does not offer the scalability options that businesses are looking for. With each node receiving a copy of distributed ledger every time it is updated; it not only reduces the performance but also increases the size of the distributed ledger.
Blockchain technology was primarily designed for offering trusted records of events extracted from an ever-growing collection of financial transactions from untrusted parties. Sadly, you will have to compromise on database management capabilities. You won’t be able to “create, read, update and delete”. Instead, it works on “write once, append many times” mechanism.
7. Not Creating Data Audit Trails
Business leaders who have already dipped their toes in blockchain technology are using it as a proof of concept tests. Things go wrong when they try to solve conventional problems associated with databases with blockchain technology. Most IT and business leaders are not using it as a decentralized ledger. They are not using it for conducting data audit trails needed for exchanging transactional truth. This was the core purpose of blockchain technology. Most businesses that have implemented blockchain are using it the wrong way to identify problems.
Which is the biggest blockchain mistakes you have ever made? Let us know in the comments section below.