Is Blockchain Simply Hype or Are There Lessons to be Learned?

I came across a very interesting blog post late last week. The article appears on MERLTech and is by John Burg, Policy, Planning and Learning Fellow at USAID; Christine Murphy, Monitoring, Evaluation and Learning Capacity-Building Specialist at Social Solutions International, Inc; and Jean Paul Pétraud, Monitoring and Evaluation Fellow at USAID.  The authors state that they researched over 40 blockchain use cases and to their surprise, they found nothing beyond “a proliferation of press releases, white papers, and persuasively written articles.” They go on to say,

However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development.

We fared no better when we reached out directly to several blockchain firms, via email, phone, and in person. Not one was willing to share data on program results, MERL processes, or adaptive management for potential scale-up. Despite all the hype about how blockchain will bring unheralded transparency to processes and operations in low-trust environments, the industry is itself opaque. From this, we determined the lack of evidence supporting value claims of blockchain in the international development space is a critical gap for potential adopters.

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Blockchain firms supporting development pilots are not practicing what they preach — improving transparency — by sharing data and lessons learned about what is working, what isn’t working, and why. There are many generic decision trees and sales pitches available to convince development practitioners of the value blockchain will add to their work. But, there is a lack of detailed data about what happens when development interventions use blockchain technology.”

To some extent, this would echo what ComTech discovered during research for its disruptive technology report where our conclusions were that real, tangible commercial applications for blockchain in commodities remain mainly POC-type initiatives. The authors of the blog article quoted end with the following statement,

“Our approach, as it turns out, echoes others in the field who question whether the benefits of blockchain add value above and beyond existing technologies, or accrue to stakeholders beyond the donors that fund them. This trio of practitioners will continue to explore ways MERL professionals can help their teams learn about the benefits of blockchain technology for international development. But, in the end, it may turn out that the real value of blockchain wasn’t the application of the technology itself, but rather as an impetus to question what we do, why we do it, and how we could do it better.”

 

Interestingly, we spoke to Richard Williamson of Gen10 recently and he told us that “If the future will be full of blockchains, people throughout the supply chain will need new business apps that can interface with them. And if it isn’t, all that effort won’t have been wasted.  At the very least, the blockchain activity has highlighted the importance of standardizing data and processes in order to get to the next level.”  We hear similar statements from others in the industry who see the blockchain (and other digital) initiatives as getting businesses focused on their data and processes. Despite this, late last week, Vakt announced it had gone live stating that Vakt, “the company re-imagining commodity post-trade processing underpinned by blockchain, has launched its platform in its first market. Participants in the physically traded BFOET crude oil business – including some of the world’s premier energy traders – will now benefit from improved security and efficiency. This private launch marks the world’s first fully operational, enterprise-grade blockchain platform to enter the market.” VAKT has created a secure, real-time blockchain-based digital platform, working with global software consultancy ThoughtWorks and underpinned by JPMorgan’s Quorum private distributed ledger. The platform manages physical energy transactions from trade entry to final settlement, eliminating reconciliation and paper-based processes. A quote from Shell in the announcement also provides some additional input,

Digitalisation is changing how the energy value chain works. It’s an exciting time,” said Andrew Smith, EVP Trading & Supply, Shell International Trading and Shipping Company Limited.  “Collaboration with our peers and some of the industry’s key players is the best way to combine market expertise and achieve the scale necessary to launch a digital transaction platform that could transform the way we all do business. Ultimately the aim is improved speed and security, which benefits everyone along the supply chain from market participants to customers.

 

From our perspective, it remains early days for Blockchain with much to be learned from the activity around utilizing distributed Ledge technologies in the commodities pace. We believe true widespread commercial blockchain apps are still several years away, at least in this industry. However, part of the raison d’etre behind many of the pilots and POCs is to answer questions around the technology and formulate the business case for broader deployment. If, as the authors of the MERLTech blog seem to believe, sharing data and lessons learned simply isn’t happening, then this might take longer than originally anticipated. From our perspective, however, we haven’t found the commodity industry blockchain initiatives to be opaque and in fact, we will be speaking with Vakt later this week and even getting a demo of the solution. We do agree that blockchain and digitalization generally are forcing a relook at data and business processes and this can only be a good thing. Yet, without the sharing of lessons learned, blockchain and its ilk might remain viewed as overhyped technologies?

What do you think?

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