Every few years a new technology trend emerges that garners headlines and attention in boardrooms. In almost every case, the hype around these emerging trends peters out and gives way to more considered thinking. According to a number of reports, this is exactly what we're seeing with blockchain.
Blockchain's rise up the hype-cycle was initially driven by Bitcoin and other cryptocurrencies. What many people failed to understand in the early days was that cryptocurrencies that record transactions on the blockchain are applications and that blockchain is an underlying foundation - much like a database supporting an application.
As that hype increased, people started seeing blockchain as an almost universal solution. It was such a big deal that, according to report from Bloomberg citing data from WinterGreen Research, Microsoft and IBM have spent more than half of all the money that has gone to blockchain spending.
But that spending is winding back, In a recent report, Forrester Research says progress on blockchain has been hindered as "Marketer's oversold blockchain" and that "Teams applied blockchain-like approaches to problems that they could have solved with existing technologies".
While blockchain may be a viable solution for some business problems, it's not a panacea for all business challenges and may end up becoming a source of greater complexity. An article from Gartner, research vide president Nick Heudecker pointed to an often-forgotten challenge with emerging technologies.
"The bottom line is, blockchains are just another data source to integrate".
He added that nine of every ten blockchain implementations deployed over the next three years will need to be replaced within 18 months.
I've seen some business problems that have been elegantly solved though the use of blockchain.
For example, a blockchain-based collaboration between Commonwealth Bank and five Australian and international supply chain leaders was used to ship and track 17 tonnes of almonds from the Sunraysia region of Victoria to Hamburg in Germany. The new blockchain platform was underpinned by distributed ledger technology, smart contracts and the internet of things (IoT) to facilitate the trade experiment, tracking the shipment from packer to end delivery in parallel to existing processes.
On the other hand, I also attended the launch of what amounted to a loyalty card program that was hyped because it used blockchain.
We're on the cusp, I think, of the blockchain hype bubble bursting. We'll see the number of projects using blockchain diminish and businesses only use it where it makes sense and existing technologies, which are trusted and understood, don't work.