Gartner, the world’s leading research and advisory company, recently completed a report on blockchain technology titled “How to Position Blockchain Platforms to Increase Adoption.” Written by Gartner Senior Research Director Adrian Lee and other members, the report houses a wealth of insights on blockchain technology and its trajectory over the next decade.
Most interestingly, Gartner stated that blockchain technology will create more than $176 billion dollars worth of business value by 2025 and $3.1 trillion by 2030.
In fitting with the well-known Gartner Hype Cycle, emerging technology is often overhyped in its early phases, and underhyped in the long run at the tech actually progresses. The report expresses this notion, stating, “Many CIOs overestimate the capabilities and short-term benefits of blockchain as a technology to help them achieve their business goals.”
The blockchain uses case that will accrue the most business value in the short term is digital cash offered by various companies. This has largely been observed from the likes of JP Morgan, UBS, and Facebook which have all announced their own digital coins. Gartner predicts this trend will increase in popularity and attribute nearly a quarter of the total value generated by blockchain technology.
As time progresses, Gartner expects intracompany blockchains to produce significate value until cross-company blockchain reach a point in which they can generate the most benefit to businesses. This follows the common narrative that permissioned blockchains will meet the needs of businesses until public blockchains are able to scale significantly.
However, the future implications of blockchain will be powerful and occur throughout multiple industries. In achieving that, the Gartner report states that by 2021, 90% of current enterprise blockchain platform implementations will require replacement within 18 months to remain competitive, secure and avoid obsolescence.
Some companies have opted to build their own proprietary blockchain platforms rather than building upon standardized platforms such as Ethereum. With the rapid rate of blockchain development, it’s no major surprise that Gartner predicts a high turnover of blockchain usage. There will be companies that create platforms for niche industries and use cases until a larger platform can gain substantial market share.
What’s the Issue with Blockchain Adoption?
Perhaps one of the more interesting nuggets of information from Gartner’s research is that the firm believes the Trough of Disillusionment will occur something from 2020–2022. This means that Gartner believes we are still in the hype phase of blockchain technology, which many others believed end at the end of 2018.
The report identifies the main problem as a lack of standardization among blockchain platforms and fragmented offerings which make IT decisions challenging.
“Compounding this challenge is the fact that blockchain platform vendors typically use messaging that does not link to a target buyer’s use cases and business benefits,” explains Gartner’s Adrian Lee. “For example, ‘transactions’ was the term mentioned the most in relation to blockchain, followed by ‘secure’ and ‘security.’ While these may be functions of blockchain-enabling technology, buyers are still confused as to how these functions are achieved or what benefits blockchain adds compared to their existing processes.”
Blockchain enthusiasts, companies, and early pioneers have always struggled to easily explain blockchain, often using complex language and tech heavy jargon. There’s a strong need to demonstrate the added value of blockchain technology in practical, dare we say, boring business terms. Proof of concepts and consortium networks have begun to implement blockchain technology which will help offer more concrete terms and data to reveal the emerging tech’s true benefits.
Gartner’s Roadmap for Blockchain Scalability
Gartner examines blockchain scalability as operation and technical components, each with their own set of unique problems. Operationally viable blockchains are more near term solution, whereas Gartner claims technically scalable and programmable blockchains won’t be feasible for multiple years. Gartner mentions many of the solutions that the ecosystem is currently working to develop, such as layer 2 scaling solutions, more complex smart contracts, and data confidentiality. However, they clearly believe these problems will be solved within the next decade resulting in widespread blockchain adoption by 2030.
What Does This Mean for Enterprise Blockchain?
Enterprise blockchain companies will need to develop products and applications that provide value not only in the short term but for long term usage. With so many companies vying for blockchain market share, it will be more important to be better rather than to be first.
Most importantly, the blockchain network with the largest network and standardization is likely to take home the largest piece of the market pie. The battle for the crown will not be determined in a year or even five, as blockchain technology will continue to evolve over the next decade.