With blockchain being touted as the next big thing, a multitude of businesses are rushing to embrace the technology. However, experience has shown that not all blockchain projects make it to the top — but why?
According to the Blockchain Market Analysis Research Report 2021-2028 provided by Fortune Business Insights, the global blockchain market size is expected to reach about $104 billion by 2028, as the technology keeps rising in prominence.
These days you can find many inspiring blockchain success stories which will tell you exclusively about the positive impact and transformation that blockchain has brought about.
However, some blockchain projects have been less than successful, or even not successful at all, leaving stakeholders and business professionals disappointed with the technology. But why?
In this article, we have covered the most common mistakes that might lead to project failure and gathered useful insights from our experts about what you should do to guarantee the success of your blockchain campaign. Check it out!
What are the most common blockchain project mistakes and how to avoid them?
Blockchain has made its presence felt in numerous industries, including supply chain, healthcare, eCommerce, real estate, gaming, and fintech. The technology has captured the attention of many tech evangelists and sparked genuine interest across the globe.
If you own a business or are a CIO and wish to apply blockchain to your operations too, be careful and consistent in your actions.
Some enthusiasts prefer to rush straight to the development process, forgetting about the key pillars that contribute to the frictionless flow. It’s unsurprising that in the long run they end up totally dissatisfied with the result and cannot extract value from their projects.
Below, we will look into the most widespread mistakes that hamper the development of a powerful blockchain solution and explain what you can do to avoid unnecessary troubles.
Inability to properly define your vision
It all starts with ideation and your vision of a project. The majority of all challenges related to the development of a blockchain project stem from the customer’s failure to clearly explain their idea and outline what they wish to achieve with blockchain.
If you have your sights set on blockchain and wish to implement it in your processes, make sure that you can clearly define the scope, objectives, and ultimate aspirations of your project. Preferably, you should also pinpoint which particular problems you want blockchain to tackle and for what purpose you wish to implement the technology.
In addition, the poor project vision can also be the result of an insufficient understanding of how blockchain works and what it needs to operate at full throttle. Concentrate therefore on the specifics of the technology and check that you or your business possess the infrastructure needed to ensure smooth functioning.
Also noteworthy is that you should always deliver on your initial promises and meet your users’ expectations. This is also part of a well-defined vision since you need to foresee all associated risks and be ready to react accordingly. That was the case with GetGems. Created in 2014, it solemnly promised to upend the entire crypto landscape. Unfortunately, the founders didn’t manage to fulfill many of their promises, which in the long run clogged the platform’s functioning.
Your industry is not receptive to blockchain
The (pain)point here is that from time to time business owners try to keep up with the times, haphazardly embracing the latest tech trends — like blockchain — and zealously attempting to incorporate the technology in their processes.
Meanwhile, they fail to understand that if their domain does not particularly require a shakeup and simply won’t benefit from blockchain implementation, all resources and time will be wasted. Remember this golden rule — if it ain’t broke, don’t fix it.
Execute exhaustive research to gauge the applicability of the technology to your business and make sure it can address your issues. Generally, CIOs opt for ledger technology for a number of reasons, e.g. to securely manage and operate with massive data, to establish greater transparency of processes, to create a trustless environment, etc. If some of these points click with you and your objectives, then you can confidently proceed further with blockchain.
If you find it a bit challenging to properly analyze the feasibility and potential of blockchain in your domain, reach out to consulting services within the field of expertise. They will do the hard work for you and provide answers to the most controversial questions.
Legacy system issues
Enterprise blockchain apps cannot function independently — on the contrary, they need to be in sync with already existing legacy systems, apps, and data sets.
If blockchain is not seamlessly integrated with traditional systems, there may be different challenges such as lack of data consistency, an unsatisfactory user experience, lackluster performance, and so on.
Moreover, you might think that after integrating blockchain, non-blockchain parts of the project will deliver lower value. But given that we haven’t explored the full potential of blockchain yet, it is advisable to continue to modernize and enhance your processes on the basis of your conventional technology. Or, consider running blockchain in parallel with your current system if you do not feel like making a full transition to ledger technology. This will help reap benefits while entailing less risk.
As well as this, do not forget to educate your staff about blockchain since they can find it difficult to adapt to the new technology and the way it works. Provide your employees with efficient blockchain training sessions and cover the most important aspects, so that they get a good grasp of the distributed ledger concept and can effortlessly embark on using it.
Before venturing into blockchain implementation, some stakeholders tend to overlook — or understate — the total costs. Ledger technology is not that simple to implement and demands an advanced and fully-fledged surrounding infrastructure that is costly.
Besides, blockchain adopters themselves may also want to move quickly from simple functionality to new and more sophisticated features, which consequently will entail unplanned additional spending.
Inappropriate blockchain platform
These days there is a wide variety of blockchain platforms available on the market, each of them having its own set of features and peculiarities. If you choose it at random, you might fail in the long run.
Therefore, before kickstarting your blockchain project, you are to thoroughly analyze and compare different platforms and decide which one will be a perfect match for you.
To make the right choice, you will need to consider blockchains’ characteristics such as:
- Consensus mechanism
- Transaction speed
- Transaction cost
- Smart contract functionality
To shoulder the burden, we have already outlined a detailed comparison of top ten blockchains based on the above criteria — check it out and discover which platform has the potential to address your needs.
What’s more, it is crucial to figure out if the chosen blockchain is going to be compatible with the existing systems and solutions that your business is currently using. Otherwise, you may end up having to tackle extra challenges. Carry out research, consult with experts, and try to comprehend if a blockchain will smoothly fit in your processes and hit it off with your employees. Adhere to the “primum non nocere” approach and act accordingly.
Last but not least, find out in advance how much the platform’s maintenance will set you back. Remember that once you have integrated blockchain within your operations, you will need to maintain and enhance the functioning of blocks, nodes, databases, and network connections. The more advanced and feature-rich blockchain you choose, the more expensive its maintenance will be.
Inexperienced blockchain engineers
Another big risk here is that CIOs might seek different ways to cut down on total costs and, as a result, hire inexpensive yet insufficiently experienced blockchain developers. If blockchain engineers do not possess the necessary skills and qualifications, the final quality of the project will suffer.
For example, back in 2016, the Ethereum-powered decentralized autonomous organization called The DAO was hacked due to mistakes and vulnerabilities in its code base. The hacker detected a loophole in the coding, which allowed them to drain 3.6 million ETH from the platform. Had it not been for the code’s imperfections, users wouldn’t have had to undergo such unpleasant experiences.
However, searching for seasoned developers requires time, due diligence, and attention to detail. If you decide to ignore this, you are unlikely to find a robust team that will deliver a top-notch solution. Consequently, you will be totally dissatisfied with the end result and experience troubles with blockchain adoption.
When looking for a suitable blockchain company, you are strongly advised to:
- check out the company’s portfolio to understand which blockchain projects they have previously delivered
- explore feedback from previous customers to see how they evaluated the work
- find out if the company has worked on similar cases to yours and what route they followed to achieve success
Preferably, the blockchain development company that you will be working with should also offer consulting services. That way they can advise you on the most appropriate and effective solution, evaluate your project idea, describe the project vision from a technical perspective, and delve into software development methodologies themselves.
Importantly, blockchain experts should be able to identify which consensus mechanism and blockchain platform will be a perfect fit for your project. They should specify which technology components need to be added to the blockchain ecosystem to ensure high and frictionless performance.
All in all, make sure you find reliable experts in the domain. Otherwise, your project might end up going pear-shaped.
Which questions do you have to ask yourself before starting a blockchain project?
Apart from considering the most common mistakes that business owners make when opting for blockchain, our blockchain experts strongly advise you to take the time and carefully analyze some of the crucial questions represented below. This will help you establish a broader vision of your project and move forward with clearer objectives.
- Do you seek to exclude intermediaries to execute transactions?
- Do you operate with a lot of personal and sensitive data that needs to be securely recorded?
- Do you want to establish traceability of all transactions and processes across the entire business network?
- Are you eager to further expand the capabilities of your business, e.g. by introducing it to tokenization, NFTs, or crypto capabilities?
- Is your staff ready to embrace blockchain? Do they require additional training/education to effectively work with the ledger tech?
What should you know when launching a blockchain startup?
We have touched upon the most widespread mistakes that interfere with the smooth implementation of blockchain in a business that is already up and running. But what about blockchain startups that are eager to conquer the market with their novel products?
Well, when working on a blockchain startup you should also clearly define the project’s objectives and goals, hire a professional development team, provide adequate investment, and so on. But here we can add some extra points.
First off, your startup should focus on a promising sphere where your blockchain product will enjoy great popularity. This means that you need to keep abreast of the latest trends and understand the needs and problems of your potential clients.
For example, non-fungible tokens have become highly sought after. So, it’s really worth thinking about building your own NFT marketplace that will help NFT traders operate easily. Or, you could experiment with integrating NFT functionality within your blockchain product and introduce your customers to exclusive opportunities.
The metaverse has been in the limelight too. Multiple metaverse startups have been popping up, offering extraordinary experiences and pushing the boundaries of the impossible. In addition, you could also look at other prominent blockchain innovations including DeFi, yield farming, GameFi, etc.
Another key consideration is that your blockchain startup should choose the most suitable blockchain platform. You will need to thoroughly analyze all options available and decide which blockchain will be a perfect match for your startup campaign. A wide variety of blockchains is now available. To make the right choice, you will need to analyze characteristics such as consensus mechanism, scalability capacity, the blockchain’s impact on the environment, transaction speed, and so on.
Before launching your project, it’s essential to develop a viable prototype that consists of mockups, design, and an MVP version. This will allow you to forecast the project’s possible ROI as well as check users’ engagement rate.
Last but not least, do not forget to properly market your blockchain startup. Go the extra mile to catch the eye of investors and, of course, users. Choose the most suitable marketing strategy which will get your blockchain startup going.
Though still in its infancy, blockchain has established itself as an advanced technology capable of working within literally any industry and solving its pain points. That is why companies across the globe are rushing to implement blockchain in their operations and give their systems a new lease of life.
However, integrating blockchain and developing a blockchain product are both pretty tricky. Make sure the key details are sorted before venturing further in: have a clear strategic vision, examine the industry’s specifics, calculate spending accurately, and team up with experienced blockchain architects.
Having delivered 80+ blockchain projects, our experts at PixelPlex will be glad to map out a route to your blockchain success story. We know what it takes to develop an effective and cutting-edge blockchain solution that will hit it off with users and help you generate revenue. Share your business idea with us and let’s get your project started today!