Challenges in the Enterprise Adoption of Blockchain

Challenges in the Enterprise Adoption of Blockchain

Sofocle is known for its Blockchain Evangelism, deep-rooted research, and pioneering when it comes to this technology. It is only natural for the company to raise awareness about the real challenges shadowing the enterprise adoption of Blockchains like slow transaction speeds, lack of standards and interoperability between different platforms and solutions, legal and regulatory concerns around data privacy and intellectual property, production/enterprise-grade deployment automation is one of the major challenges as well and the technical complexity involved, while busting the myths behind this potential but unproven emerging technology.

At the NASSCOM Product Connect Virtual Panel Discussion held on 25th June 2019, our three distinguished panelists who had an erudite discussion on the challenges of Enterprise Adoption of Blockchain, pointed out the major reasons why Blockchain has a long way to go in terms of its enterprise implementation.

Mr. Irfan Khan, Digital Economist Hypermine, articulately delineated some of the concerns which include,

Bitcoin as a standard is the first generation of Blockchain DLT. Initially, public Blockchains were created without enterprise requirements in mind. Thus, the aspect of privacy was not given much importance. Existing competitors like Visa and Mastercard have faster processes that prioritize privacy. The learning curve of cryptography and decentralization is slower.

Evolved DLTs like DAGS and HashGraps make it possible to achieve speeds above 100,000 GPS and speeds of 150-200 Mbps per node. The performance will soon reach enterprise-grade as expected by consumers and CIO with emerging technologies that should be performing. The fact of the matter remains that government support and more adoption by more enterprises are still lacking.

Availability of Talent is another issue where not enough developers, consultants, research scientists are available and not enough research papers are out to support findings on how this rapidly growing technology can be deployed in enterprise environments.

Blockchain is in the most preliminary stages of the technology life cycle where technology experts believe that it is still unstable for enterprise adoption. The evolutionary stage is the worst time to invest and thus all the enterprises are waiting to see which the best time to get good ROI is and that the technology does not become obsolete within one or two years.

With platforms like Hyperledger and Ethereum coming up with so many types of consensus, no definitive standardization mechanisms are in place currently.

Mr. Ravi Chamria, the CEO of Sofocle delineated the challenges of adopting Blockchain at an enterprise level with a focus on three key aspects, namely,

Security and Usability

One of the hallmark features of applications or networks on Blockchain is digital identity. A person or user can be identified by full authenticity on a Blockchain through digital identity. A specific user who has performed a transaction can be identified and verified on the system which helps in obtaining the timestamp and the details of the user, and in managing disputes and auditability of transactions.

The identity is based on a public-private key pair and the major problem is that of storing and managing the private keys at the user level to sign any transactions. In a proper decentralized system, this private key needs to be stored locally so that it is not available to anyone else. It is difficult for a non-technical user to manage the keys. Tools are still being built to support easy management by such users.

Transaction interfaces or technical interfaces are required in Blockchain for a normal user to comprehend. These interfaces depend on the complex architectures which are difficult for a normal user to understand.
The third challenge in usability is building connectors with legacy applications. In the enterprise domain, Blockchain is a layer that interacts with multiple applications like supply chain, ERP, automated claims management system, etc.

The identifiers on the enterprise-level application systems need to be compatible with the identity that is designed on the Blockchain system. The transaction verifiability and finality have to be defined or structured in an application for seamless interactions with the Blockchain system. Plug-and-play connectors need to be designed in Blockchain so that existing applications can be used without impediments. Data, user identity, access control, and specific set of transactions need to be coordinated between legacy enterprise applications and the Blockchain ecosystem using pipelines.

Network Deployment and Management

The next set of challenges lie in the DevOps area which requires clear coordination between the technology and business teams. Owing to the complexity of a Blockchain application, with decentralized nodes in Blockchain, some of the nodes are hosted outside an organization by external parties. Managing the deployment of such networks with a different set of permissions and privacy controls, to be managed in a single interface is a major challenge that IT teams face today. Manual deployments take a long time, thus, automating it becomes necessary requiring expertise. There are chances of error while defining access control and privacy. Having multiple protocols like Hyperledger Fabric and Hyperledger Sawtooth in the market today increases the complexity of managing Blockchain networks since different applications are built using different protocols.

Onboarding of new partners, multiple cloud players or nodes on an existing Blockchain network is another blocking factor in the enterprise adoption of Blockchain because of the requirement of technical expertise. Automation during this process is another pressing need that has to be addressed.

The final usability challenge lies in Benchmarking and Monitoring. Since only production-level deployments have been observed more, benchmarking data is not available. Monitoring Blockchain nodes outside an organization, cost-control, and managing exigencies that happen on an external network are three aspects that give enterprises limited autonomy.

Lack of Optimum Blockchain Expertise

In terms of education and Blockchain expertise, incremental innovation is backed by mending of broken processes or strengthening of existing processes. Due to the inherent lack of trust or data integrity among organizations, defining new business models is taking a serious blow. The know-how of sound token economics which is core to Blockchain needs to be shared among technical experts and Blockchain experts of different organizations. An incentive structure for each party has to be designed clearly to join the network. Transformational innovation involves transforming the entire process itself.

Dr. Vishwas Patil Research Scientist, Center of Excellence Blockchain, IIT Bombay, summarized the problems of enterprise adoption of Blockchain with an imperative question, “Where to start?”

He highlighted that it is easy to orchestrate machines to agree on protocols but is quite the opposite in case of people when it comes to Blockchain. According to him, the main hurdle lies in understanding the core concepts of Blockchain and propagation of knowledge. There is difficulty in circling down to one use case of Blockchain that a consortium of enterprise users can fathom and start engaging in.

Enterprises need to comply with the regulations laid out by their local jurisdictions in terms of Data Protection, Regulation, and Governance which may prevent them from taking complete advantage of Blockchain adoptions. Blockchain by definition is a shared database on which enterprises try to communicate with peers on the events that have occurred internally and what inferences these peer entities or collaborators should derive from them. Tricky questions like which data to share? Does the enterprise have control over the data once shared? Which parties have the ability to take a look into the issues and concerns since collaborators are also competitors? Top the list when it comes to enterprise collaboration on a Blockchain. Contextual access control that an enterprise can put over this data is another aspect that needs enterprises to pay heed on. Blockchain is a process and the control aspects are something one cannot design in the protocol and has to be developed on top of the protocol. The non-existence of readymade tools that can be installed easily like MySQL. A lot of planning has to be done to ensure that processes run smoothly.

Blockchain is an append-only and read-only database that currently does not have the flexibility to support deleting attributes or implementing protection mechanisms over them.

Specific purpose protocols like Bitcoin which are currency-specific in Blockchain and other platforms like Ethereum that provides general purpose solutions have different procedures that are followed and do not guarantee consistent performance for Blockchain as a whole unit.

Blockchain implementation does not have generic structure options like database schemas or XML templates that can be modified based on needs.

Cryptographic management of keys between organizations is another area where data confidentiality and integrity need to be carefully managed between enterprise Blockchain networks. Usually, credentials management or encryption are carried out by protocols like HTTPS or security layers like SSL online by browsers, servers, or applications without human intervention. But, in the case of Blockchain, these aspects have to be managed by people which will be a tedious undertaking.

Trade-offs between Blockchain properties like speed when laid focus on, leads to a compromise in other factors like governance. The five interdependent trade-offs in Blockchain are speed, openness, transaction costs, decentralized trust, and censorship resistance, where, every other aspect gets affected if one of them is compromised.

Next challenge lies in the robustness, reliability, and Smart Contracts vulnerabilities. The errors in Solidity language and Ethereum, and proof of stake consideration flaws prove that the promises made by frameworks in the past have not been met during time-critical implementations. The major issue lies in the confidentiality or privacy of data, contracts, and applications that are put on shared platforms which may be vulnerable to data leaks in enterprises through participants who do not have a stake on the workflow. Blockchain poses a problem when it comes to role-specific privatization of data.

Backward secrecy of data strategies through access control mechanisms are difficult to devise when new participants join the shared ledger platform, where they cannot read transactions that have taken place before them joining the network.

Standards pertaining to routers, firewalls, software, and any other hardware come with definitive standards. Complying with them by Blockchain is something that is difficult to promise for enterprises at the moment.

Finally, platform interoperability through consensus among machines and humans on standards, protocols, workflows, etc. is a challenge that still haunts the enterprise adoption of Blockchain.

The challenges faced by Blockchain Solution providers can be summarized in the following points.

  • Arbitrary Pricing
  • Protocol, Cloud, and Vendor Lock-in
  • No True Decentralization
  • Incompatible Blockchain Ecosystems
  • Interoperability issues
  • Complications in building applications
  • The assumption by clients that Smart Contract Technology is a solved problem
  • Customers mixing up foundation-level protocols with a complete business solution

Conclusive Reprise

On a higher level, the challenges in the enterprise adoption of Blockchain can be divided into organizational, economic, and technological challenges which have been delineated above.

conclusive reprise

With these current impediments standing in the way of enterprise adoption of Blockchain, the three panelists exclaimed that only time will tell how predictable, secure, and useful Blockchain will be for enterprises in different business domains, but were positive about enterprise adoption happening sooner than later.