Businesses and investors worldwide leverage blockchain technology for auditing, securities and crypto trading, smart contracts, financial transactions, and other applications. Reasons? Blockchain has outdone itself in streamlining the above processes by facilitating secure transactions, upholding transparency, eliminating intermediaries, providing unparalleled user experience, and more benefits.
Who wouldn’t want a piece of cake for a technology whose global market value has steadily increased since its inception, gearing $1235.71 billion in 2030? Interestingly, blockchain has not rewarded everyone who jumps on its wagon, as some companies have nothing to show but failed projects.
In everything you intend to do pertaining to the blockchain, do not gamble with your choice of blockchain development company. So, what are these mistakes, and how can you avoid repeating them?
While there is no doubt that the distributed ledger innovation has helped large, medium, and small businesses achieve efficiency in their daily operations, it is also clear that mistakes have been part of this journey as individuals and companies count losses in failed implementation. One proven cause of failed blockchain implementation is reliance on rookie blockchain services providers who have yet to grasp the entire blockchain concept.
7 Root Causes Of Blockchain Projects Failure
It is beyond frustrating to run to the blockchain as a solution to your business problems only to end up with another problem; failed blockchain implementation. If you want to avoid this from happening to you, familiarize yourself with the primary causes of failed blockchain projects so that when you immerse yourself in the technology, you know what not to do. Below are eight reasons a blockchain project may hit a dead end:
1. Lack of Purpose and Vision
You don’t need it if you cannot justify your reasons for embracing blockchain. You should outline what you want to achieve by incorporating blockchain into your business; otherwise, you may not gain any objective. Without a clear vision or purpose, you may end up with a project that doesn’t meet your business goals or the users’.
Just because other businesses take the blockchain route doesn’t automatically mean you should. Avoid succumbing to market pressure unless you have convincing reasons for integrating blockchain into your business.
2. Lack of Cybersecurity Understanding
People venturing into crypto sometimes underestimate the importance of protecting their keys and not sharing them with another user. Not all crypto exchange platforms enforce two-factor authentication or other sophisticated wallet protection techniques, and if you do due diligence on security, you can avoid such platforms.
Avoid exchanges with little regard for cybersecurity enforcement and cryptography management. Protect your keys by keeping them private and avoid platforms that rely only on usernames and passwords to protect strategy. You can lose your crypto assets if someone accesses your credentials without your knowledge.
3. Failure to Understand that Not all Businesses Need Blockchain
Business owners will carelessly hop into any technology that pops up without confirming if they need it. The fear of missing out pushes most investors and companies to embrace technology that turns out useless after implementation. If your business is doing fine in all aspects, there is no reason to incorporate blockchain for the sake of it.
If you already have a system that effortlessly handles business data without failure, you don’t need blockchain for the same. A reliable blockchain consultant not driven by greed will advise you to rule out blockchain if their assessment convinces them that you don’t need it. Understanding that your industry does not need blockchain to improve can save you resources and time.
4. Over and Underestimating Costs
Budgeting for implementing blockchain technology requires a carefully executed estimation backed with facts. Most blockchain projects, especially the complex, are expensive, but if you are not careful, you may end up overspending in situations you could have spent less. You will waste resources if you overspend and risk getting a quality project if you work with a tight budget.
Striking a balance is essential, and you can get all your calculations right if you consult a transparent blockchain company committed to breaking down all blockchain costs to their clients. Also, take your time to explore available pricing options from different blockchain service providers and settle on the one that aligns with your budget.
5. Assuming Blockchain Technology is Fully Baked
Blockchain innovation has been here for a while, and its reception proves beyond doubt that it is a technological breakthrough to reckon with. However, the sensationalism surrounding blockchain does not mean the technology is fully baked without loopholes.
The truth is that blockchain is not immune to breakdowns or cyber-attacks because, if you look back, the coding is built by humans hence mistakes cannot be ruled out. Also, hackers keep honing their attacking skills to keep up with blockchain milestones.
There is always a blockchain startup or an established company that succumbs to hackers’ antics, which means blockchain is yet to contain cybersecurity concerns. Until then, it hasn’t fully matured. If you thrust into blockchain headfirst, assuming the technology has fully developed, you will be in for a string of disappointments.
6. Assuming Employees Will Catch Up on Their Own
If you fail to train your employees to operate the newly integrated blockchain technology into your business, you are preparing for disaster. The earlier the staff familiarizes the technology, the sooner you will see results. Not all employees can learn to operate a new technology independently, so training them all is essential.
7. Overlooking Compatibility
Before integrating blockchain into your business, you must confirm the technology’s compatibility with the existing system. That is one of the areas that you should cover with a blockchain consultant before the commencement of the project. If blockchain technology doesn’t align with the existing business infrastructure, poor performance and data inconsistencies may emerge.
As you’ve seen, launching a successful blockchain project is not always guaranteed, but you can take measures to avoid a similar fate. To implement blockchain without a hitch, engage market experts, train employees, work with a clear goal, select a business-friendly blockchain platform, and work with a clear budget. In blockchain, shortcuts and assumptions do not apply; either you play by the rules or perish.