Blockchain, the cryptographically-secure digital ledger technology has escaped the limitations of the cryptocurrency market and found use cases in a variety of industries, including finance, supply chain management, entertainment, real estate, and more. Because of this, many companies are rushing to start blockchain projects, hoping that the technology will give them an edge over their competitors. This is certainly possible, but not all blockchain projects are successful. In this article, we’ll take a look at why some blockchain projects fail and how to avoid common pitfalls.
Common Reasons for Failure in Blockchain Projects
Let’s assume that you have found a reputable blockchain development services company to supply the development team for your organization’s product, and you want to make sure the project goes as smoothly as possible. Here are the most common issues that can cause problems down the line:
Before you get somewhere, you have to be able to visualize where you are going. This holds true for any project, tech-related or otherwise. Most blockchain projects run into difficulties because the client fails to clearly communicate their vision for the product. In the initial meetings with the development team, you should define the project’s:
- Intended users
It is helpful to clearly state what problem your blockchain product will solve for users: people will not adopt a product that does not make life easier for them. When discussing the technical specifications of the project with the development team, cover what kind of infrastructure your company will need to smoothly run a blockchain at the intended scale, and listen to feedback from blockchain experts about this—the computing requirements may surprise you, but the blockchain can be planned from the beginning to be as energy-efficient as possible.
Blockchain is Not Right For Your Industry
Blockchain may be the hot tech trend right now, but is it really the solution for your business? Don’t throw resources into mindless trend-chasing. Instead, assess your business needs and think about whether blockchain will meaningfully transform things for you in a positive way—what problem is it solving? Broadly speaking, blockchain is useful for:
- Securely managing huge amounts of data
- Transparent collaboration and verification
If you don’t need either of these things, then carefully consider what blockchain will add to your business model and consult with blockchain experts on whether it is right for your needs.
A business does not run entirely on the blockchain, so, when building an enterprise blockchain app, consider what else the blockchain needs to work with. A common pain point is the failure to integrate the blockchain with legacy IT systems in your company. Inform the development team what other tech products you use and discuss how the blockchain should interact with them.
Budgeting is an important part of any project, and it is easy to underestimate the costs. A digital ledger is complex and needs sufficient infrastructure around it to function properly. Also, while it is a good idea to plan flexibility into the project from the start, scaling up the project to meet market demands can also result in corresponding costs. It is advisable to set aside some funds that can be injected into the project if it needs to be quickly upscaled.
Choosing the Wrong Blockchain Platform
There are a variety of blockchain platforms on the market, and not all are created equal. It’s important to research which one will be right for your needs before starting the project. Think about:
- Consensus method: proof-of-work, proof-of-stake, or a hybrid model?
- Transaction speed and costs
- Smart contract capabilities
Factor these aspects of the blockchain into your decision-making.
Inexperienced Blockchain Engineers
You may consider various compromises to save money on your project, but do not hire inexperienced blockchain developers! Previous high-profile projects have suffered from hackers exploiting vulnerabilities in the code (notably, The DAO in 2016, which lost millions of ETH). Only by doing due diligence and making sure to contract experienced, senior-level developers with specific experience in blockchain can you minimize this kind of risk. When shopping around for blockchain developers, check:
- The company’s portfolio – which blockchain projects have they worked on before?
- Feedback and reviews from previous clients
- Experience in developing for your industry
Before You Start Your Blockchain Project
To avoid the common pitfalls detailed above, it helps to consult an experienced blockchain development company and discuss your idea for a blockchain product. Raise issues of feasibility, scale, and costs. A reputable company will have something to say and be able to address all the above concerns if they are raised in advance.
AccelOne’s expert nearshore development team has a proven track record of delivering successful blockchain solutions on time and within budget. To find out how we can help your company meet its business needs with great software, contact us online or call 800.863.6814.
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Chief Development Officer/Co-Founder