Top 3 Blockchain and Data Management Myths

For data and analytics leaders, blockchains are just another data source.

When you look at what is ultimately stored on a blockchain  data  — it makes sense that data and analytics leaders should take a leading role in their organization’s blockchain experiments.

They are uniquely equipped to capitalize on the early state of blockchain, after years of transforming how their companies use and value information, according to Nick Heudecker, research vice president at Gartner.

The bottom line is, blockchains are just another data source to integrate

However, hype around blockchain creates myths about how the technology will replace traditional data management technologies. Data professionals need to be prepared to debunk these myths, Heudecker says.

“Many of the proposed uses for blockchain are described broadly as shared databases,” he explains. “This oversimplifies the complexity of blockchain-based systems, while overstating the data management features available in today’s blockchain implementations.”

Myth No. 1: Blockchain will replace existing data management technologies

According to Heudecker, there is widespread confusion that blockchain is a kind of database.

The truth is, blockchains are write-only ledgers and cannot manipulate data. They don’t enforce data integrity. Only block and transaction metadata is self-describing in a blockchain, with attributes like format, structure and history embedded in it, while the actual information stored is largely opaque.

Through 2021, 90% of enterprise blockchain platform implementations will require replacement within 18 months

Unlike databases, data structures are not insulated from applications. With blockchain, the applications must embed data structures. Transactional throughput and scalability for commercial blockchain currently remains well below established database management system (DBMS) implementations.

Creating rich analytics using blockchain platforms is currently impossible without pulling data into an adequate — and separate — platform. And data integration is complex.

“The bottom line is, blockchains are just another data source to integrate,” says Heudecker.

Myth No 2: Blockchains are inherently more secure

There are two parts to this blockchain security myth:

  1. Blockchain provides software-based, digital rights management capabilities for organizations to track and revoke data access, even if the data has left the blockchain platform. Think of this as a “magic token.”
  2. The cryptographic methods inherent in blockchain provide a form of permeable vault for data, where the things you want to expose are exposed, while those that you don’t are not.

Unfortunately, neither of these statements is true.

“Don’t confuse blockchain, which is a mechanism for distributed consensus over state changes, as security infrastructure or as a magical encryption solution for your data,” advises Heudecker.

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Myth No. 3: Vertical-specific blockchain platforms simplify vendor selection

By early 2018, there were more than 100 blockchain platform providers. Emerging platform vendors are attempting to carve up the market by either focusing on targeted verticals, like finance or media, or intercompany functions like supply chain.

Vendors competing in the ecosystem today range from community-driven projects (such as Bitcoin and Ethereum) to vertically focused consortiums (such as Hyperledger Fabric and R3 Corda) to venture-capital-funded startups. The business models also vary widely, from open-source tools to open core to proprietary products.

Organizations investing in blockchain today need to take this unpredictability into account. There is no uniformity or interoperability between platforms, making moving to another platform — from a data, process and skills perspective — extremely challenging and expensive.

“Given the early, volatile state of blockchain technologies, limit your long-term commitments,” Heudecker says. “It is too early to pick a winner.”

Gartner expects that through 2021, 90% of enterprise blockchain platform implementations will require replacement within 18 months to remain competitive and secure, and to avoid obsolescence.

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Gartner clients can read more in the report Debunking the Top 3 Blockchain Myths for Data Management by Nick Heudecker et al. This research is part of the Gartner Special Report “Blockchain-based Transformation.”  This collection of research highlights the scope of blockchain’s transformation, how it impacts various industries, and the current state and evolution of these technologies.

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