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Blockchain in 2020: 5 trends to watch
Blockchain “tourism” is giving way to serious projects, and standards groups are tackling key pain points. Here’s what IT and business leaders should watch for in 2020
4. Integration and interoperability becomes a bigger deal
Data protection and privacy is one of the biggest hurdles to enterprise adoption. Interoperability and integration – or a lack thereof – is the other, according to Spasov. That includes interoperability and integration between ecosystems like Hyperledger and EEA, as well as public blockchains.
Spasov points to an integration-in-progress between Hedera Hashgraph and Hyperledger Fabric – “allowing [enterprises] to take the best of both worlds,” he says – as an example of this trend. Hedera became a Hyperledger general member earlier this year.
This trend should help alleviate the legitimate concern among some IT leaders about placing too big a bet on a single vendor or platform. But it’s also about piercing what Spasov refers to as the blockchain “bubble” – meaning that blockchain proponents have had to come to terms with the reality that if blockchain technology is ever to gain a serious toehold in most companies, it will have to be able to coexist and integrate with existing systems.
“Think of your ERPs, CRMs, etc.,” Spasov says. “The DLT technology still lacks the developed components to integrate and interoperate with these existing systems. This puts a burden on the users to use two systems side-by-side – something that historically has been the downfall of many software [projects]. Naturally, busy users rarely used the DLT experiments.”
Spasov expects this to change in 2020, as the efforts of key stakeholders to solve this problem begin to pay off. Spasov isn’t alone.
“Up until this point, blockchain has mostly been discussed as an application in and of itself. This has in part contributed to the hype culture surrounding the technology, as some want to see blockchain-powered applications take on and replace legacy applications – which may or may not happen,” says Nikao Yang, COO at Lucidity. “More realistically, I expect blockchain to be integrated into more existing applications to serve tracking, auditing, and recording functions at a higher degree of efficiency than what we can do with existing technology today.”
Yang points to supply chains in the food and automotive industries as high-ceiling examples of where this type of integration between blockchain and existing systems is likely to generate significant results.
5. Adoption success will favor the tortoise over the hare
An overlapping 2020 theme for blockchain in 2020: Slow, steady progress. If you’re looking for an avalanche of adoption or disruption, or for quick-and-easy wins, you’re probably looking in the wrong place.
Instead, you’ll see the growth of blockchain solutions for actual business problems. Consider Honeywell’s GoDirect Trade, an online marketplace for used aerospace parts. That might seem mundane in more ways than one, but this is a multi-billion-dollar market, and completing a transaction is far more complicated than using a credit card or PayPal.
“What’s incredibly interesting about this industry is that $4 billion changes hands per year and almost none of the transactions are done online – in fact, it takes an average of two phone calls and four emails just to close on one of these used-part deals,” says Lisa Butters, general manager for GoDirect Trade.
Let’s underline this: In 2019, this is a $4 billion industry that has remained largely offline. And Butters says issues like customer experience or convincing sellers to go digital were merely table stakes.
“Instead, it all boiled down to one thing: trust,” Butters continues. “Unless we could find a way to manufacture trust between a buyer and a seller, there was no way we’d be able to open the floodgates on online transactions. Hence, the reason why we turned to blockchain.”
It’s still early days, but this is a good example of translating hype – a blockchain is not inherently secure, for example, though some buzz might lead you to think so – to practical application. That principle will be a market driver going forward across industries.
“We are seeing an increasing demand of users who want to be in control of their data with strong consent and protection model,” says Greg Wolfond, CEO of SecureKey, whose Verified.Me app is built on the IBM Blockchain Platform, which is based on Hyperledger Fabric. “The privacy and security that well-implemented blockchain solutions can provide also comes with other benefits users appreciate, such as convenience and time savings.”
Meanwhile, obstacles to blockchain adoption might be diminishing, but they’re certainly not disappearing. Wolfond says that a lack of overall understanding about blockchain will continue to be an issue, as will a lack of technical skills, among other challenges.
There’s another trap worth minding, too: Even as the blockchain buzz subsides, there’s still the potential for chasing the crowd in lieu of pursuing an actual business goal. According to Broderson, increasing corporate interest in blockchain will require IT leaders to ask not only “can we use blockchain here?” but “should we use blockchain here?”
“The largest potential blockchain pitfall is enterprises focusing on the hype created by blockchain enthusiasm and rushing into projects driven by fear of missing out, rather than having rational conversations of blockchain’s fit and purpose,” says Deloitte’s Broderson.
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