Moving Past the Blockchain Hype: Overcoming Challenges to reach Production
Authored by: Matt Shaw, Director, Synechron
As the blockchain wave took over industries, namely financial services,it ha s been the trend that everyone has wanted to follow. However, often blockchain use cases have been named just for the sake of blockchain. At this point, the blockchain sector has matured in the past year and has reached a level of maturation to move past the hype and into reality, with the next phase being production in 2018. Initially, firms were drawn to the innovation potential for blockchain but many soon realized that the technology is only as powerful as it being applied to the right use cases and that they will need to traverse a (perhaps more difficult than anticipated path) to evolve their solutions from proofs of concepts (POCs) to pilots and then out of innovation environments into production where they can begin to achieve real business value. Given this, financial organizations on the path to production must define and challenge their business cases to pre-qualify if blockchain is indeed the best and only technology to solve the problem and understand how long it will take them to begin to gain value from the investment. In this article, we define the criteria for a strong use case that could stand the path to production and advise on how financial institutions can overcome some of the top challenges and barriers to successful Distributed Applications (DApps) moving into production.
What makes a good use case for blockchain?
Since blockchain has now been proven and piloted, financial services firms should now be looking to invest in projects that stand a strong chance of moving from pilot to production. As blockchain has matured, there is a common set of use cases that many firms have gravitated toward when creating DApps, and while there may be a temptation to test new use cases and innovate around new applications for DLT, given the path already forged and the need for large networks to coalesce for DLT to create value among trustless participants, it is advisable for firms to focus at least 75% of their time on already proven use cases and only 25% or less on outlier use cases. These proven, traditional use cases are those involving non-repudiation or provenance of assets (such as in highly regulated markets and/or for high-cost, high-value assets), syndicated ledgers, inventory and records management (for all parties to have the same starting point and be on the same page where an immutable ledger is valuable), and distributed settlement and escrow (delivery versus payment to remove transactional risk and reconcile more quickly and efficiently, potentially removing the middle-man to do so).