The costs of early blockchain hype

Not that long ago banking institutions and numerous companies were happily observing the positive dynamics of the blockchain industry and pouring billions into related projects. As the hype wave wen down, though, many of the early evangelists for the technology realized that production-ready deployment still remains a distant goal. World Economic Forum and Accenture have conducted a research that involved a series of interviews with 550 individuals and a close-up on 79 blockchain projects. The input analysis showed that there is little belief that the technology will successfully reach its early promise.

The average expected return on investment into early blockchain projects among survey respondents was 24% return, yet in reality this figure went down to only 10% return. 59% of surveyed individuals said they initially had little assurance in the fact that the project would be capable of delivering a positive return on investment. Turns out, much of the efforts were only initiated for a reputational increase: 42% of respondents launched blockchain projects to reach a noticeable or significant brand improvement and follows the mainstream industry trend.

A similar analysis from Reuters, which involved 33 projects of large companies announced over the past four years and interviews with numerous related executives, tells pretty much the same story. At least half of these projects initiated by major banks, exchanges and technology firms, did not succeed to survive the testing phase. But those that made it through are also far from showing high performance. Overall, there is high skepticism about the future of blockchain-based projects that were earlier guaranteed to succeed. The problem is that most of them were developed in R&D in highly controlled environments and moving them to production phase would require stakeholder buy-in, which is a real challenge.

After all it must be acknowledged that blockchain is still at the early stage of its development and faces severe limitations, primarily regulatory ones. Security, speed and efficiency matters are still to be addressed. It is, therefore, important for institutions to consider various approaches to digitization that could possibly help achieve the objectives more effectively in a more rapid manner.