The industry is leaving the "blockchain inspired" phase and moving into the "blockchain complete" phase.
To realize the true value of blockchain, CIOs have to strike a balance between ignoring the technology and rebuilding the business model around immature technology.
Blockchain is not one thing: It includes a range of technologies from smart contracts to tokens to consensus models. Because these products will continuously mature and become available, CIOs should plan for incremental evolution of their blockchain strategies.
Gartner analysts David Furlonger and Christophe Uzureau explain how to develop a blockchain strategy in their new book, The Real Business of Blockchain: How Leaders Can Create Value in a New Digital Age. Furlonger said the key to success with blockchain is understanding the timing of investments.
"Fully mature blockchain complete solutions will allow organizations to re-engineer business relationships, monetize illiquid assets, and redistribute data and value flows to more successfully engage with the digital world. That is the real business of blockchain," said Furlonger, a distinguished research vice-president and Gartner Fellow, in a press release.
Gartner sees four phases in the evolution of blockchain technology:
- Blockchain enabling technologies
- Blockchain inspired
- Blockchain complete
- Enhanced blockchain
The industry is currently moving out of the second phase--blockchain inspired" and into the third phase--"blockchain complete." Gartner predicts that the final phase will start by 2030.
SEE: Blockchain: An insider's guide (free PDF)
Real blockchain solutions have five components:
According to Gartner, most blockchain products currently on the market are incomplete because they lack tokenization and decentralization components.
Blockchain enabling technologies
These technologies are the foundation for future blockchain solutions. Technologies in this group include cryptography, distributed computing, peer-to-peer networking, and messaging.
This phase started in 2012 and will last through the early 2020s. Blockchain-inspired solutions leverage the foundational technologies but use only three of the five elements of blockchain — distribution, encryption, and immutability. While some of these solutions make use of tokenization, they are not sufficiently decentralized to create new value exchange systems. As a result, these solutions often aim to reengineer existing processes specific to an individual organization or industry while maintaining centralized controls.
Blockchain-complete solutions deliver the full value proposition of blockchain using all five elements: Distribution, encryption, immutability, tokenization, and decentralization. Blockchain-complete solutions will feature tokenization enabled by smart contracts and decentralization, two components blockchain-inspired solutions lack. These solutions enable trade in new forms of value (such as new asset types) and unlock monopolies on existing forms of value ad processes such as digital commerce or digital advertising.
After 2025, complementary technologies such as the Internet of Things (IoT), artificial intelligence (AI), and decentralized self-sovereign identity (SSI) solutions will converge and integrate fully with blockchain networks. These enhanced blockchain solutions will expand the types of customers and the value that can be tokenized and exchanged. This final phase will enable a large number of smaller transactions that would not be possible with traditional mechanisms.
Uzureau predicts that startups providing blockchain-native solutions will gain market momentum by the early 2020s and start to scale after 2025.
"Though not immediate, the proliferation of blockchain-complete solutions will push organizations to explore new ways of operating with greater degrees of decentralization than they have now," said Uzureau said in a press release.
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