Industry Insights

Ten things blockchain is NOT

Over the past months, I’ve written much about how blockchain – as a trusted, distributed ledger with shared business processes – can provide transformational value to almost all industries.

One of my colleagues recently suggested I should also say what blockchain is not.  Since I try hard not to practice blockchain religion (“blockchain is the answer, what’s the question”) I jumped at the chance . . .  So here are my ten things blockchain is not:

[1] Blockchain is not Bitcoin:  bitcoin is an unregulated, shadow currency – often termed a “cryptocurrency”.  Whilst Bitcoin was the first blockchain application, it has fundamental differences from a business blockchain.  For example, a business blockchain usually prioritizes identity over anonymity and uses selective endorsement of transactions in place of computationally-intensive proof of work.

[2] Blockchain is not (yet) mature:  Gartner stated in their 2016 report that blockchain is at the peak of inflated expectations on their hype cycle.  They say it’s some 5 to 10 years from the plateau of productivity, which I regard as conservative for some use cases.  Problem is, with all the hype, it’s easier to think blockchain for business is more mature than it is.  A sense of reality must be maintained, especially when seeking out the use case for a blockchain first project.

[3] Blockchain is not a product:  we refer to blockchain as a fabric (like middleware, or plumbing) that can be used to build an exciting array of business solutions.  Blockchain’s utility comes from an appropriate set of applications built on top of it.

[4] Blockchain is not needed when there is no business network:  the existence of a business network is the mandatory test for a blockchain use case.  Quite simply, with no business network means blockchain is an overkill, and probably a distributed database would be a more appropriate (and more mature) solution.

[5] Blockchain is not a transaction processing system replacement: blockchain can transform transactional processing across a business network for sure, but ONLY when one or more additional criteria are met – specifically:

Blockchain Tests2

If none of these criteria are important, or our customers are happy with the levels provided by their current solution, then a blockchain replacement is not needed.

[6] Blockchain is not a distributed database replacement: blockchain complements distributed database technology, with appropriate information partitioning between the two. And as cited in [4] above, a distributed database is likely a better solution where a business network is not involved.

[7] Blockchain is not a secure messaging replacement:  there are many excellent secure messaging solutions which are invaluable in integrating together disparate business systems.   Blockchain technology is complementary – indeed has much to learn far from secure messaging systems – and is certainly not a replacement for them!

[8] Blockchain is not just about currency:  whilst blockchain is an excellent choice for a regulated digital currency, it can be used keep a trusted audit train of ownership of a vast range of asset types – both tangible (house, car, diamond, antique violin) and intangible (digital music, digitized video, financial instrument, document, digital goods) assets.  This makes for a highly diverse choice of blockchain use cases.

[9] Blockchain is not usually suited for high volume, low value transactions:  as blockchain for business matures, fabric developers will turn to non-functional requirements including transaction throughput.  In the near term, the technology remains better suited to low volume high value transactions, because of the additional qualities of service that a distributed processing system provides.

[10] Blockchain is not (necessarily) anonymous:  depending on the choice of fabric, blockchain can support anonymous transactions across an “untrusted” network.  However, blockchain for business prioritizes identity and trust over anonymity.

Want to know more about blockchain?  These blog posts talk about different aspects of blockchain for business

  1. Boiling Down Business Blockchain
  2. Blockchain Smart Contracts
  3. Blockchain Privacy Services
  4. Consensus for Business Blockchain
  5. Cyber Security & Blockchain

and these cover some cross industry use cases:

  1. Supply Chain Management
  2. Provenance
  3. Asset Management
  4. Blockchain for Asset Registration

Comments and discussion VERY welcome!


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Reto Trinkler

Refreshing and insightful view, Thank you.

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