Blockchain technology is still in its early developmental stages, despite the fact that it was first conceptualized back in 1991. Because of this, many enterprises are hesitant to adopt blockchain technology into their businesses. This blog post will explore some of the reasons for this hesitance and provide an overview of why enterprise blockchain adoption is not common in every industry.
Key characteristics of blockchain
- Blockchain produces a new record for each data input and presents historical data in chronological order.
- It is a distributed database that many different parties share.
- A new record can be added to the blockchain by any participant.
- A “block” is created and updated each time a transaction is made. The block is spread throughout the network of computers known as “nodes” after it has been sealed.
- Each block has a hash that connects it to the one before it, forming a “chain” of records that is said to be hard to forge. The data is synchronized and validated as a result.
- New blocks are validated by all of the peer-to-peer network’s users.
- Data on the blockchain is accessible to all participants, and records are not under centralized control.
Why enterprise blockchain adoption is not common in every industry
High costs of development
Due to the complexity of the technology and the distributed programming model it is based on, the cost of implementing a blockchain-powered system is frequently hundreds of times more expensive than creating a normal database.
Slow transaction speed and performance
Blockchain experts frequently point out that blockchain-powered solutions typically are not a good fit for immediate processes or where transaction performance and speed are key. If the blockchain has a large number of users, the problem will be especially serious. The more parties involved, the longer it takes to complete a transaction because the majority of nodes must validate it.
Blockchain and smart contracts can be helpful when numerous businesses need to deal with one another and when there is a lack of trust. Such transactions are easy to understand and can be utilized again.
When transactions involving two or more parties must be highly personalized and are subject to frequent change, however, things change. The process of making a smart contract for each potential transaction would therefore be excessively time-consuming. A blockchain solution would not be suggested as a result.
Not working in isolation
Blockchain only functions in situations when numerous organizations must collaborate to accomplish a single objective. When transactions must take place within one business without involving any external stakeholders, a (private) decentralized network is not an option. Different strategies can be used to build trust inside a company. Applying a blockchain solution is equal to driving a nail with a hammer.
The same holds true for smart contracts that use automation to make decisions. That will only be beneficial if outside parties are involved. In the alternative, artificial intelligence is an alternative.
Unchangeable recorded data
Since the data on the blockchain cannot be altered, you must generate a new record for each transaction if you add new information or alter a small aspect of an existing one. In other words, the enterprise blockchain adoption in this case leads to wasting money on a lot of unnecessary storage space.
Despite the numerous benefits of blockchain technology, its adoption is not common in every industry. There are various reasons for this, but one of the main factors is that businesses don’t understand how it can be applied to their specific industry.
At SmartOSC, we believe that blockchain technology has the potential to revolutionize many industries, and we are committed to helping businesses adopt it. If you are interested in learning more about how enterprise blockchain adoption can benefit your business, please contact us. We would be happy to discuss your needs and how our platform can help you meet them.
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