Next to artificial intelligence (AI), blockchain is the most disruptive technology in business today.
In addition to financial transactions, distributed ledger technology (DLT) is beginning to impact business processes, legal obligations, the supply chain, and a host of other activities.
And yet, it’s been more than a decade since the first blockchain was introduced, and it still largely exists on the fringes of most enterprise data architectures.
Of course, it’s not uncommon for new technologies to go through lengthy rollouts en route to mainstream success. The earliest cloud services date back to the mid-1990s, but the technology didn’t really catch on until around 2010.
But blockchain has the potential to fundamentally transform so many key business activities that it shouldn’t hurt to look at the current headwinds and how they can be mitigated.
Blockchain Challenges
According to a recent joint article published on LinkedIn, the biggest hurdles currently are:
- Technical Complexity – As a mix of cryptography, consensus algorithms and other highly specialized tools, DLT is challenging to implement and maintain. And technology is advancing rapidly;
- Regulatory Uncertainty – Because blockchain operates on a global scale but in a decentralized manner, it spans numerous jurisdictions, most of which have different ideas about how it should be governed and taxed;
- organizational resistance – Many legacy processes need to change significantly to integrate blockchain, challenging the traditional roles of individuals and even entire teams or departments.
- business value – Blockchain effectiveness is not perfect in all implementations, so proving its ability to enhance existing solutions or outperform alternative solutions can be difficult.
Another important factor in blockchain deployments is creating the interoperability it needs to work with emerging intelligent platforms.
In many ways, these two technologies complement each other: blockchain brings trust and transparency to the data used to train AI models, while AI can automate many data transactions across a chain. But creating this environment is neither easy nor free from setbacks.
Intelligent blockchain at scale
A recent Block Telegraph post highlights some of the key pain points in this effort, starting with the scalability issue.
Not only does the company need to significantly increase compute and storage resources, but the demand for data processing and complex computing capacities is also straining the decentralized nature of blockchain environments, slowing performance and driving up costs.
Data protection also becomes an issue when AI is introduced to the blockchain. If handled improperly, the data an AI model pulls for training or executing contracts could be exposed to all members of the chain, which poses a problem when handling health records, legal documents, and other types of sensitive information.
A number of tools and techniques can be used to address these issues, but they add cost and complexity to the environment.
Vertical Peculiarities
Major vertical industries also have their own unique implementation challenges.
One of the most difficult challenges to overcome is integrating with numerous specialized legacy platforms, says Kirsten Peremore of HIPAA-compliant platform developer Paubox.
Healthcare organizations in particular are typically equipped with complex IT infrastructures covering everything from electronic health records and medical billing processes to diagnostics and maintenance of prescription drugs.
All of these systems tend to interact with each other in a delicate balance that could be upended by the gradual adoption of blockchain.
At the same time, a single, catastrophic upgrade can result in significant disruption that healthcare organizations cannot tolerate.
In all likelihood, the medical field will use different blockchains for different purposes, depending on the level of privacy, transparency, and other factors required for a particular transaction.
But it will take some time to sort that out. Additionally, the most sensitive health information resides on private or consortia-backed blockchains, which have a smaller footprint than public ones and are therefore at greater risk of compromise.
development options
Blockchain is also presenting a new challenge in enterprise software development, and there are already a plethora of development platforms to choose from – each with their advantages and disadvantages for key applications.
Tarun Nagar, CEO of app developer Dev Technosys, points out that while popular platforms like Ethereum (ETC) have powerful tools and bring credibility to the resulting applications, others like Corda offer features like permission-defined distributed decision-making that are essential for Privacy provides benefits for financial transactions and smart contracts.
In general, choosing a blockchain platform requires the same fundamental analysis as traditional development environments. Is it compatible with existing systems? Does it have high usability and accessibility? Is it safe? And perhaps most importantly, does it fit your budget?
The conclusion
All technologies require a learning curve before they can be trusted with critical functions in the enterprise. And since blockchain is such a complex and far-reaching development, it’s understandable that companies would want to take the time to become familiar with it before pushing it further into production environments.
But the pressure of competition must not be ignored either. Blockchain will soon find its way into the mainstream, but hopefully only after it has been tested to the point where the likelihood of causing significant harm is minimized.
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