5 Practical Challenges in Blockchain Implementation for Businesses
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When any new technology moves out of the initial research stage, and starts to getting used in commercial applications, it faces several challenges. Even with the internet or the "world wide web", it struggled to go mainstream until 1993 until we found the right tools to deploy this on large scale. Blockchain at its current stage, can be compared to the 'World Wide Web' in 1990-95. According to my understanding & experience, the following are the top 5 challenges that we face practically, when thinking to deploy Blockchain for our employer or business.
1) Integration with legacy systems
When experimenting with Blockchain, a prototype can be made which is a standalone application. You may even use stubs to mimic the real-world behavior. However, as you move out of this stage to larger adoption, integration with existing systems such as ERPs, CRMs, Billing & Invoicing, etc becomes a real challenge, especially in the case of large enterprises. This challenge is escalated further due to the inability of Blockchain platforms to handle low latency inputs and then, workarounds have to be made to handle this situation.
2) Garbage-in, Garbage-out
Blockchain consists of an immutable ledger, where the data once stored cannot be deleted. Therefore, in order to maintain the sanctity of this data, it is required that the data comes in from preferably a single source and in an automated manner - without human interventions. If a human is entering the data, and this data is flawed - additional efforts will have to be made to validate this data. Therefore, a significant amount of work needs to be done to make sure that the data entering into Blockchain is not garbage & will be error-free.
3) Initial cost of implementation
A business, specially large enterprises, are most inclined to use private & permissioned Blockchains. Unlike the public Blockchains, where the cost of network could be crowd-sourced, in permissioned Blockchains, this cost has to be borne by the participating or governing entities. This includes the deployment & maintenance costs of the servers - network, compute & storage. Therefore, a cost analysis for the pilot & the scaled application needs to be done upfront.
4) Human Resource constraints
People are required to think, apply & execute Blockchain to business use cases. This includes people right from top leadership to product managers to developers. In India, people who really understand the application of technology to a business scenario is in short supply. Even the qualified Blockchain developers who can at least setup, deploy & launch a Blockchain and can code smart contracts are scarce.
5) Legal & Regulatory modifications to recognize Blockchain as a trusted entity
Blockchain is known to reduce intermediaries. When processing transactions, the traditional intermediaries are currently recognized by our legal system. For example, during land registry, physical presence of witnesses is required to avoid fraud. While Blockchains could carry out this transaction in a fraud-proof manner through digital processes & digital ID (need to have a mature solution), but this would need our legal processes to recognize Blockchain platform as a trusted entity. While our Blockchain solutions improve, the legal & regulatory processes will take time to change as well. This could be a longer process.
With the above 5 key challenges understood, it would be unfair to say that these cannot be resolved. More and more Blockchain frameworks & businesses are working together to solve these challenges & will lead us to large scale adoption of Blockchain to disrupt our ways, like the internet did.
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