I was hit the other day, not by nothing related to the daily turmoil that we came to commonly associate with the most recent and existing currencies, tokens and white papers, but rather, from a Forrester report that claimed that 90% of existing corporate blockchain pilot experiments will never become part of their companies' long-term operations.
Feeling the opportunity to entertain a productive conversation with my colleagues and my professional network, I shared this news with anxiety, only to be caught off guard by the swiftness of discouragement in the answers I received. Almost everyone with whom I had discussed the report offered their pity, which was in stark contrast to my opinions on the subject.
Of course, tackling an adoption rate of 10% is an extremely persuasive statistic, but guess what else fails 90% of the time – all startups . To be sure, a high failure rate does not detract from the profitability of the blockchain ecosystem; in reality it elevates the whole space showing in a visible way the factors that do and do not lead to success.
The primary problem
Anyway, I found myself in due consideration with an exploratory research project in an attempt to decipher why the reported adoption rate had reached a minimum.
Ultimately, I have come to a single and general Conclusion – the protocol wars are still underway and corporate decision makers are eagerly awaiting to crown the winner.
Traditionally, technological innovation and investment have occurred at the application level, with the underlying infrastructures and protocols receiving relatively little fanfare or attention. For example, the Internet stack had a value in creating Facebook, rather than a more efficient HTTP solution. Applications were the most famous students producing the highest returns, while protocol games were not profitable at all.
This relationship is reversed in today's blockchain stack. The value is concentrated on the protocol level, with only a fraction of that value being distributed along the level of the application. This is never more obvious than when evaluating the Bitcoin protocol; the net itself has a value of almost $ 120 billion, while the market value of each application built on Bitcoin is worth at most less than a few billion dollars.
Being the rational selfish bodies that we are, human beings will always compete in the pool with the biggest cash prize. According to Gartner, there are more than 100 blockchain platforms / protocols currently under development, which would not be a big problem if most put a significant focus on interoperability, however, are very few.
In addition, around 100 platforms are being developed, only about 10% have been released, and only three of these are actually operational: Bitcoin, Ethereum and EOS.
We are in the arms race across the board to determine which technology is the most reliable and scalable to build on. Some are working to extend the functionality of other platforms (Elements → Bitcoin), others are working to facilitate the issue and management of digital resources (Openchain), and some others are working to solve the challenge of secure data exchange and private among trusted intermediaries using secure multiparty calculation (Spring Labs).
Separation of the advertising campaign against reality
The question becomes, how should the company assess the growing playing field of potential blockchain technology partners? Quite the dilemma, as conventional assessment methods (case studies, customer testimonials, product demonstrations, etc.) do not apply, but it is extremely important for the applicable decision makers to stay abreast with current and future developments so Do not lose a significant competition
My advice, drawn from my experience as a venture capitalist (VC), is simple: to bring any potential blockchain technological partner with a VC mentality, focusing mainly on three categories:
- Scope – By chance, how is their messaging defined broadly or narrowly? Are they trying to solve a hyper-niche problem or are they building wider solutions? Projects that place too much attention are often cut out by specialized competitors, while those that aim too tight are likely to inadvertently close themselves into a niche.
- Vision – Read each white paper mainly as a starting point, only. But then ask yourself, where else could this platform go? What are the possibilities outside of the initial use cases? In other words, if platform A could potentially solve four problems, but platform B solves only one, why not choose to collaborate with the first one? It is important to understand that every successful project will inevitably produce further solutions. Understanding what could develop is as important as understanding what is developing.
- Team – This is without a doubt the most important category of all. In VC there is a saying: "invest in the engine, not in the car". The most exuberant and most attractive product on the market can quickly prove useless without the right team that powers the engine. Professional networks can take decades to develop. Can the founding team attract the talent and partners needed to ensure the profitability of the product? Do not look for teams that are too stacked from a technical point of view. It is equally important to have those who understand that the market is targeted and the problems that concern it.
The corporate adoption rate of blockchain-based solutions has actually slowed down in 2018, but this sentence only tells half of the story. The search for why adoption has slowed down will paint a much clearer picture.
We are in an exciting period of development. The nascent stages of every great technological revolution bring hundreds of hungry competitors looking to be the next IBM, Microsoft, Google, Amazon or Uber. I can not wait to see who is next.
Adam Jiwan, CEO of Spring Labs
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