Homelessness might not be the first application that comes to mind for blockchain, but it’s one of many uses cases organizations and municipalities have begun to explore as they seek cost savings, experimentation or to solve long standing intractable problems. How can blockchain technology help a person with few physical possessions and zero digital assets? A closer look into the problem shows that providing healthcare and social services to a city’s homeless population can benefit from a decentralized system that stitches together the identity of individuals who often lose documentation, shift places, and receive services in a variety of locations.
How close is blockchain to making a difference across industries and situations? In his presentation on The Blockchain Scenario at Gartner Symposium/ITxpo 2018 in Orlando, FL, David Furlonger, Distinguished VP, Analyst at Gartner discussed the key elements for the evolution of blockchain. A true shift to the programmable economy will require today’s data and financial assets to become digital tokens and smart money over the next decade.
The programmable economy is a natively “smart” economic system that supports and/or manages the production and consumption of goods and services, enabling diverse scenarios of exchange of value (monetary and nonmonetary)
Explore blockchain hype versus reality
To understand the blockchain trajectory, it’s helpful to review the Hype Cycle for Blockchain Business, 2018.
For all the hype and possibility of blockchain, the technology barely registers as a priority for CIOs. Furlonger noted that in the Gartner 2019 CIO survey, only 5% of CIOs rated blockchain as a game changer for their organizations, far below artificial intelligence, cloud, and data and analytics. Across all categories of CIO respondents (top, typical and trailing performers), 11% have deployed or will deploy blockchain in the next twelve months.
To help CIOs understand today’s blockchain reality and the future evolution, Furlonger shared the Gartner Blockchain Spectrum and discussed how blockchain will evolve until 2030.
Read more: A CIO’s Guide to Blockchain
A spectrum of opportunities with slow TCO
While blockchain provides for a spectrum of opportunities, private ledgers will struggle to achieve positive total cost of ownership (TCO) within the next four years.
“We have yet to find anyone who can produce a cost benefit analysts that shows positive return for private deployment,” Furlonger said.
Blockchain is more than a set of technologies, Furlonger said. The concept provides new paradigms in how business can interact, transact or how assets are represented. Today’s business and technology may be unable to optimally make use of the capabilities of blockchain technologies.
Gartner’s Blockchain Spectrum provides a model for examining the evolution of blockchain solutions and how its phases align to the value that businesses can derive.
Gartner’s Blockchain Spectrum
Blockchain enabling technologies: 2009-2020
This early phase of blockchain-enabled experiments are built on top of existing systems to reduce cost and friction in private, proprietary activities. They have only limited distribution capabilities to a small number of nodes either within or between enterprises.
Blockchain-inspired solutions: 2016-2023
The current phase of blockchain-inspired solutions are usually designed to address a specific operational issue – most often in terms of inter-organizational process or record keeping inefficiency. These solutions have tokenization or decentralized decision making. “They don’t want to give up centralized control,” Furlonger said.
Blockchain complete solutions: 2020s
Blockchain Complete offerings, starting in the 2020s, will implement smart contracts and deliver the full value proposition of blockchain including decentralization and tokenization.
Blockchain enhanced solutions: Post 2025
In this future state, smart contracts will have real autonomy and advanced technologies will enable exchanges and transactions that aren’t currently possible. This is when we’ll start to see Decentralized Autonomous Organizations (DAO) and microtransactions performed by machines.
“This is not just a technology, this is a societal change,” Furlonger said.
Business models will change
Given the horizon for complete and inspired blockchain solutions, be careful about the assumptions you have going into various use cases, said Furlonger. Seriously consider potential use cases and how blockchain fits into your organization’s risk profile and investment scenarios. Many people are still trying to understand what blockchain really is and what it could offer.
As you pursue blockchain use cases, ask questions including:
- Who will be in the blockchain?
- If it’s a consortia, are you comfortable collaborating with your competitors?
- Can you use existing technology?
- Who will your customers be? A machine? A car?
- Who has control of the service model for these new types of customers?
- What is the impact on pricing and cash flow in a real time transactional environment?
“The value will take time to accrue. Nothing is really happening for several years,” Furlonger said. “Be careful about promising anything to the business and show them the reality of the current situation.”