Blockchain has entered the “Trough of disillusionment” of the Gartner Hype Cycle. 2016-2018 were the hype years of everything Blockchain, and now we slowly start to learn when to use this technology and when not to do.
One of the biggest insights is that we learned how to position the role of blockchain in the area of data storage. The following Venn diagram was created during a talk with four architects within Sogeti Netherlands for around the past two years.
Source: Sogeti Netherlands 2018
This Venn diagram is a visualization of the context surrounding the various terms.
So, Bitcoin is a specific kind of cryptocurrency, and cryptocurrency is a specific kind of blockchain, etc.
This also implies that when you are in a business situation where the context for a distributed database is not available you also can conclude that there is also no context for using a distributed ledger technology. And following this, you can reason that in this situation there will be not the context available for a blockchain solution.
No distributed context implies…
We studied many business situations and tried to validate it and how blockchain or distributed ledger technology could help the business. Our conclusion in most of the cases (99%) was that there was no context for a distributed solution. This only already disqualified the situations for the application of Blockchain or Distributed Ledger technology.
One of the concepts behind distributed is that various parties form a network, in which every party separately can be removed from the network without effect on the functionality of the network as a whole.
This is a very powerful concept. To guarantee more continuity of your network, just add more players. In mathematics, the players are called Nodes and the network is called a graph. In business, the network is called an Ecosystem and the players are actors in the ecosystem.
Thus in a distributed business context, we are talking about an ecosystem where every actor can be removed/replaced without the ecosystem (e.g. network) losing its function.
And this is the big challenge.
Most companies have issues that are triggered by a pain they as a company are feeling. For example, an ice cream shop in the Netherlands wants to know if the ice cream is originated from cows in the Netherlands. Because then the shop can sell the ice cream as “local” with a small mark and differentiated itself from the competitors.
In the last two years, the business and IT consultants and the businesses themselves would say: “Use blockchain”!
The blockchain (or distributed ledger) technology needs a distributed context. This would imply that the “blockchain” solution should be able to work, even when the ice cream store would remove itself from the network and be replaced by two competing ice cream stores.
This would never be part of the solution because now the original ice cream store would not have a Unique Selling Point (USP) compared to its competitors.
And what applies for the ice cream store also applies to all actors in the supply chain.
This is a big problem. A business-driven problem is most of the time not compatible with a distributed context.
We as enterprise architects within Sogeti are looking forward to the next few years to see if the business is adopting the distributed model or of all will resume it original power distribution in the supply chain and aiming for Unique Selling Points defining their tailor-made supply chain.
We see it as our professional responsibility to on one hand help businesses to determine in which context their business issue is located, and then direct them to relevant business & its solutions. And on the other hand, help businesses to discover the possibilities and impossibilities of an ecosystem. In some business areas, an ecosystem is relevant to providing value.
For this, we usually need some coffee, a whiteboard and 45 minutes with somebody that embodies the business situation.
We would love to help you, feel free to drop an email.
About Edzo Botjes
Edzo Botjes is an Enterprise Engineer with more than 15+ years experience. His believe is that Enterprise Engineering covers not only Enterprise Architecture but also the skills needed to realistically implement innovation, governance and architecture. This implies that Group Psychology, IT Security Architecture, Technology Innovation and Ethics are a few topics that should be included into the developing strategy and architecture. Edzo is currently working on a Blockchain Reference Architecture and separately active as Principal Architect PKI.
More on Edzo Botjes.