Why NOT Blockchain?
Michael Merz has uploaded a new video on Blockchain technology. This time, it is even more critical than ever before. While Michael has seen a likelihood of 1-2 percent of all industrial business processes to be disrupted by a blockchain-based approach a few years ago, this is now downgraded by magnitudes. Why so? Because blockchain technology complexity is underestimated. Here are a few reasons why blockchain projects fail:
- It is often not the core processes that cannot be decentralised on a blockchain basis, often there is a neighbouring process that requires decentralisation as well – but, unfortunately, that process is far more “centralisation sticky”.
- No paranoic trustlessness needed: In many cases, a consortium that initially consists of fierce competitors, finds out over time, that there might be room for fraud by a central operator – but they learn as well that most processes deal with less competition-relevant data. And as social beings, we have established sanctioning mechanisms should a platform operator ever play against the rules.
- Further, maintaining application software that is run on the blockchain (a smart contract) can be a nightmare. Just think of replacing an older version X by a newer version Y that requires access to the entire data set of X. This can get prohibitively complicated…
- Finally, the more a blockchain application is practically used, the more de-facto centralisation we may discover: Think of crypto exchanges or DeFi service providers or tokens pegged to fiat currencies: in all cases, there is a more or less trustworthy (centralised) organisation behind it.
This is why Michael (and PONTON) has been more and more involved in consulting projects over the past years that focus on question like: “should we participate in this new blockchain consortium or not?”. Or a project funding had been successfully requested last year, because “blockchain” was promised as the technological foundation in the project proposal. However, today, from a more sober perspective, a classical (i.e., centralised) implementation would make much more sense.
But is there possibly a chance to adopt a few of the blockchain features that could persist in the centralised setting? Maybe because they increase the level of trust and security? In such situations, PONTON helps out in tackling the problem with the appropriate technology.
Have fun watching the video, we are happy to receive your comments and feedback!