How far are we from building practical business applications? What are the issues with blockchain now?

Image by Arek Socha from Pixabay

Some time ago, we asked industry experts to share their thoughts on overcoming blockchain adoption challenges. The insights can be found in “Blockchain Adoption Kit: 101 for business” ebook.

Because the market is still early in blockchain’s development, it’s good to learn the perspective of companies and executives who have built their organisations around blockchain. Such a company is Scrypt.Media, a consultancy and an innovation studio for Blockchain startups. I met its co-founder, Maike Gericke at Blockchain Fiesta conference last year.

This time, I asked her partner Khalid Belghiti to look across sectors, the latest innovations and reveal more from his expertise of working with blockchain startups.

Khalid worked with Global500 companies as a developer, project and product manager. He is using his technical and management skills to help startups succeed in the blockchain space.

Let’s dive into the Q&A!

How sufficient is blockchain literacy among businesses and organisations?

2 years ago when I was mentioning Blockchain to business owners and corporate decision-makers, I often had to mention Bitcoin and other cryptocurrencies to let them know what I was talking about. I don’t need to do that anymore, or at least not too often. Blockchain and Distributed Ledger Technologies are becoming some of the top strategic priorities for almost all companies developing or using digital solutions. The recent survey from Deloitte is confirming this trend.

Source: Deloitte’s Global Blockchain Survey 2019

This doesn’t mean blockchain literacy is sufficient. It mainly means that companies are aware of its potential and they are exploring the use cases and how they can integrate these technologies to their technical and strategic roadmaps.

More education effort is needed, especially for non-technical managers/C-Level to help them truly understand the technology behind and what it implies in terms of business opportunities, cost-saving, security, etc.

What are the best blockchain-based startup ideas you encountered?

What is a good blockchain-based idea? For me, simply an idea that helps people and our planet, while being sustainable economically. We care about social and environmental impact and that is what we try to promote and support, either with our company scrypt.media or in collaboration with our partners, PositiveBlockchain for example. We believe that you can, and you have to, bring a positive impact while having a good value proposition and viable business model. That is why I mention economical sustainability.

So considering my definition of “good projects”, it’s a bit difficult to provide examples right now as most of the Blockchain projects are in pilot phase and we don’t really have information about neither their impact assessment, nor their revenue. Even the ones we support are still early-stage.

But I would mention 3 main use cases and some examples of what I consider well-implemented products:

Digital Identity: More than 1 billion people live without any official identity, and till now identity management solutions weren’t really answering to this problem. Blockchain and DLT are bringing a trust level that was lacking in other centralized solutions and many companies are working on providing a Decentralized Digital Identity solution. I would mention here: Jolocom, Yoti, uPort. Of course having so many solutions is also not ideal as it might create many “identity silos” and users will be forced to have 3 or 4 identity “wallets” in order to cover all the services they want to access.

It is then important to develop and implement frameworks allowing digital identity solution interoperability. Many actors are joining efforts in order to overcome this challenge in Identity.Foundation.

Supply chain traceability: People are more and more cautious about the provenance of what they buy and what they consume. Most of the solutions right now use third-party certification that are quite opaque, complex and all the information are not easily accessible to the General Public. Blockchain, as a technology, seems to be designed for supply chain as it has built-in traceability and transparency features. And there are already quite a lot of pilots and projects putting it in practice: TBSX3, FR8 Network, IBM & MAERSK, IBM Food trust.

Finally, Financial services are probably the most “natural” use cases for Blockchain as it was its first application with Bitcoin. Of course it includes many trading platforms and speculative cryptocurrencies but the potential to bank the unbanked is huge. Around 2 Billion adults in the world don’t have access to financial services that we all consider as granted in the developed countries. They can’t have a bank account, contract a loan or pay with bank cards. Many projects are trying to remove the barriers for those people by providing them access to funds (Moeda), or to payment services (bitpesa or wala).

How a company can discover a blockchain implementation roadmap?

A Blockchain implementation roadmap won’t differ much from any other implementation roadmap. I would however mention 2 main steps to start with.

1st step: Education

Blockchain and many other emerging technologies (AI for example) are always coming with myths and misconceptions and the first step would be to bust and correct them. We don’t want to develop a Blockchain solution for the sake of developing a Blockchain solution, we want to do it because it is bringing a real value to the users of our solution. So the first step would be to understand the technology and what value can it realistically bring to your customers, users or employees.

2nd step: Is Blockchain a good fit?

Whether you are a startup with an innovative project (A startup can also be a division in a bigger company) or an enterprise with huge processes and countless products and services, you should start by asking the following questions when considering Blockchain and DLT technologies:

Do we need more transparency and traceability for what we do?

Do we think decentralization is needed? Will it bring any advantage? (trust from customers for example)

Will using Blockchain/DLT bring any significant advantage? (Cost? Efficiency?)

Will the final user have any benefit from using the Blockchain?

Are you a technology company that wants to stay competitive and explore new technologies?

The answer to all these questions can be “NO” and in that case, maybe Blockchain is just not a good fit for you. If the answer to some of those questions is “YES” then go on. After these 2 steps, we’re back to a basic valuable product roadmap.

What is the hottest / most controversial issue in blockchain sphere at the moment?

The hottest issue in the technical point of view is how to balance between, what I would call the triangle dilemma: Decentralization and openness-Scalability-Security.

The most known public Blockchain networks (Bitcoin, Ethereum) have a high level of decentralization and security but don’t scale very well. This is mainly due to the consensus algorithm allowing this “openness”. Attempts by Ethereum to increase scalability by changing the consensus mechanism to Proof of Stake will probably bring some security concerns and we will need some time to see if the mechanism are secure enough.

On the other hand, private Blockchain networks (powered by Hyperledger) can provide high throughput and good security but they are, of course, far from being decentralized.

This being said, if you also ask for a “controversial issue”, I would probably say the “crypto-space”. But don’t get me wrong! Crypto-currencies/assets/tokens are amazing innovations and they can help bring financial services to the unbanked population. They can also reduce the huge role banks are playing and thus give back to people full control of their money/finance, which was the primary and main goal of Bitcoin when it first came. However, the “get rich quick” trend brought a lot of speculators and, most of the time, uneducated gamblers.

I will not call it a scam, but I still find unhealthy to base this volatility on demand, supply and scarcity only and not on real value. This volatility doesn’t come out of thin air. It’s simple: You are making huge profit with Bitcoin because someone else lost his money when he bought at high price level. That looks more like a pump and dump scheme than like a healthy investment to me.

I still think cryptocurrencies are a big breakthrough and they will play a big role in the future of money. I just think right now they should still be considered as highly speculative assets and people should pay attention when dealing with them.