“Blockchain” and “distributed ledger” continue to generate plenty of headlines in both the specialist and mainstream press. If these — and vendor publicity materials — were anything to go by, we’re on the cusp of mainstream adoption. But that’s far from the case. And judging by the questions Forrester receives about the topic, there’s still quite a bit of confusion around what the technology can actually do, how mature it really is, and how to assess the many initiatives and software offerings that are out there. Here's what to bear in mind:
- There’s no such thing as “the blockchain”. Blockchain technology is best described as a concept that involves a number of key components, including (but not limited to) validation, consensus, replication, and storage. Which components are implemented, and which ‘flavor’ of each, differs between deployments and is determined by the exact use case and requirements; there'll also be differences between public (trustless) and private (trusted) blockchain deployments. Like “cloud” and “big data”, the term “blockchain” should be regarded as useful shorthand, but no more – any discussion should start with the participants clarifying what they mean by the term.
- A “distributed ledger” can, but doesn’t have to be, a blockchain. The term is often used synonymously with “blockchain” – whether that’s appropriate or not is a matter of debate, and is closely linked to your definition of blockchain (see above). And while a year or so ago, many companies rushed to hang a “blockchain” tag on their offerings, today those same companies – and many others – are distancing themselves from the “blockchain” moniker again and are adopting “distributed ledger”, or “distributed ledger technology” (DLT) instead.
- Whatever it says on the tin, you need to open the lid. Whether you’re talking to a well-known software powerhouse or a tiny start-up, make sure you get clarity about what’s actually on offer. Don’t be afraid to ask simple questions – the answers to these typically reveal early on whether it’s worth continuing the conversation. Such questions include, but aren’t limited to: Is there working code? Does the company have live PoCs or pilot projects with real clients? How and to what degree does the software scale? Has this been proven? How do you help your clients with regulatory compliance? What about security and risk management? And of course you need to understand exactly what are the components of the blockchain or DLT stack, as these will determine whether the solution is appropriate to your use case and requirements.
In terms of timeline, Forrester sees blockchain adoption happen in three phases: Irrational exuberance, rational assessment and mainstream deployment. Many organizations have started the transition from the phase of “irrational exuberance” to that of “rational assessment,” with a strong focus — use case by use case — on all that needs to be addressed from a technology, process, and regulatory perspective. Mainstream deployment of blockchain technology for entire processes, in particular industry-wide, is likely ten years away.
If you’re interested in a deeper dive on any of the above, you can find more details in my most recent report Q&A: Forrester’s Top Five Questions About Blockchain.
And of course I’m interested in your take on these views around blockchain and distributed ledger – whether you agree or disagree, or just want to offer a different viewpoint, please use the comment facility to contribute to the discussion, or contact me directly at email@example.com.