According to Forrester Research, a US-based market research firm, about 90 percent of currently active U.S. companies’ blockchain initiatives will ultimately be abandoned. The firm predicts that most blockchain-powered projects initiated by American companies will be put on hold in 2018.
Back in 2017, the company published an article entitled “Predictions 2018: The Blockchain Revolution Will Have To Wait A Little Longer,” claiming that 2018 will be “the year of reckoning for blockchain initiatives.”
“Those who failed to translate the headlines into reality will write off their investments and give up, while others that have a deep understanding of the technology and its transformational potential, in the long run, will continue to forge ahead.”
Is Blockchain Living Up to its Hype?
“The disconnect between the hype and the reality is significant — I’ve never seen anything like it,” said Rajesh Kandaswamy, an analyst at Gartner Inc. “In terms of actual production use, it’s very rare.”
That could be bad news for makers of blockchain software and services, which include International Business Machines Corp. and Microsoft Corp. They’re aiming to make billions on cloud services that help run supply chains, send and receive payments, and interact with customers. Now their projections — and investors’ expectations — may need to be tempered.
“Blockchain is supposed to be an important future revenue stream for IBM, Microsoft and others in equipment sales, cloud services and consulting,” said Roger Kay, president of Endpoint Technologies Associates. “If it materializes more slowly, analysts will have to make downward revisions.”
IBM, which has more than 1,500 employees working on the blockchain, said it’s still seeing strong demand. But growing competition could affect how much it can charge clients, according to Jerry Cuomo, vice president of blockchain technologies at IBM.
Microsoft also remains upbeat. “We see tremendous momentum and progress in the enterprise blockchain marketplace,” the company said in a statement. So far, IBM and Microsoft have grabbed 51 percent of the more than $700 million market for blockchain products and services.
For a large swath of companies, blockchain remains an exotic fruit. Only 1 percent of chief information officers said they had any kind of blockchain adoption in their organizations, and only 8 percent said they were in short-term planning or active experimentation with the technology. Nearly 80 percent of CIOs said they had no interest in the technology.
Upgrading Blockchain Standard
One reason behind the delays: Most blockchain vendors don’t offer compatible software. Companies are worried about being beholden to one vendor – an issue the EEA group hopes to resolve by setting standards. The organization will launch its certification testing program for blockchain software in mid-2019, Resnick said. Rival industry effort Hyperledger, which represents companies such as IBM, Airbus SE, and American Express Co., is preparing to connect its blockchain software to a popular platform called Kubernetes.
Most blockchains also can’t yet handle a large volume of transactions — a must-have for major corporations. And they only shine in certain types of use cases, typically where companies collaborate on projects. But because different businesses have to share the same blockchain, it can be a challenge to agree on technology and how to adopt it.