In short, blockchain is a secure, efficient transactional
medium that cuts out middle men. And if such a transac-
tional medium can be built, why is not everyone building it?
There are entrepreneurs who would like to. But, like cloud in
its early days, the technology is disruptive, it is hard to get
everybody on the same page, and there are many other
obstacles in blockchain’s path.
Start with the disruptive aspect. People resisted cloud at
first because it fundamentally changes the way they work –
the way they build, deploy, manage and use applications.
Managers worried about the security of putting information
into the cloud. Central IT had to get comfortable with giving
up control over the resources workers were using.
Blockchain is getting the same kind of cultural pushback.
Buying into a distributed system changes the way compa-
nies have been running their IT for decades. There is no
central authority – no so-called “gold copy” of information.
There is no individually identifiable master; the system is
the master. This is hard for people to get their heads around,
much less accept.
Establishing a System of Trust
Blockchain also requires participation from multiple stake-
holders willing to agree on a “system of trust.” In a supply
chain, this would require agreement from vendors, buyers,
transport companies, government agencies and countless
other entities. Different entities have different priorities.
Getting everybody to agree on a complex new system of
record keeping would be harder than herding a pack of
squirrels on an open field.
There is another challenge: talent. Blockchain is a new tech-
nology with new rules and new issues, so the talent pool of
people with skills in this area is shallow. This was the case
with cloud early on. Today, cloud skills are abundant, though
demand for sharp, cloud-focused professionals keeps grow-
ing, so companies find themselves paying a premium for
talent.
That will be the case for a while with blockchain. For it to
grow into a functioning ecosystem, companies will need to
hire developers who not only know how to code but also
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WINTER 2019
understand how blockchain works. Companies will also
need legal people who understand software and block-
chain. And they will need versatile administrators and tech-
nical workers who can adjust to a new mode of operation.
What has to happen to nudge blockchain into the main-
stream? At the moment, the technology faces a chicken-
and-egg problem involving payment situations. Until we
can get the masses to participate on a broad scale, there
will not be much change in value. And until there is activity
on the value front, we will not be able to get the masses to
participate.
So, there needs to be a successful blockchain implementa-
tion that shows real value to make the general public take it
seriously. Right now, there are companies doing proofs of
concept and scoping out pilot projects. But there are no
large projects generating real results. The only tested, vali-
dated use is bitcoin. Bitcoin has generated plenty of news,
but it has been so volatile the general public still classifies
the whole movement as hype.
Prospects for Success
There are, however, a few use cases being worked on that
might light a spark. One is a project Walmart and IBM have
been working on for a year to digitize the food supply chain
process, based on blockchain technology. The fact that a
couple of heavyweights are involved gives this undertaking
a better than average chance of succeeding. IBM has earned
its spurs in the development of forward-thinking enterprise
applications such as Watson. Walmart has the size to
strong-arm third parties into joining a new network based
on a whole new technology and a new way of conducting
business.
A second blockchain project is in development in the
recorded music business. If there were ever an industry that
could benefit from an efficient, transparent mode of pay-
ment, it is music. Artists, composers and publishers are
pushing for a new model that pays them equitably for their
work, and blockchain offers a potential solution. Music dis-
tributors, not surprisingly, are pushing back, because the
move would disrupt a system that made them rich.